What is the difference of personal liability between S Corp and C Corp

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What is the difference of personal liability between S Corp and C Corp

I am starting a private therapy practice part time in La
Habra, California. I have ruled out as establishing as a
sole proprietor as I would like to protect my personal
assets from any future lawsuits. I am wondering what would
be the better choice establishing as S Corp or C Corp
since in California I am unable to establish as a LLC.
What kind of impact would it have on my taxes?
Additionally what type of licenses would I need to obtain?

Asked on November 12, 2017 under Business Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

There is no difference in liability protection between an S-Corp. and a C-Corp.: both are corporations, and both offer the same liability protection.
An S-corp. is a "disregarded" or "pass though entity": it is not taxed, but rather its profits or loses go to you (the owner's) income and are taxed only once, as your income, with any other income you have. A C-corp. has double taxation: any profits are taxed first at the corporate level (the corporation pays taxes), then, if and when the the owner takes money out (takes a distribution), those profits are taxed again as part of his or her income. Generally, a small business finds the S-corp. structure preferable.


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