Advantages of C-Corporation over S-Corporation
- Fringe Benefit. C-Corporation allows all fringe benefit deductions while shareholders owning more than two percent of an S corporation only receive partial fringe benefits by the corporation.
- Cash Distributions. Since the business income flows through to the shareholders, the shareholders always have to pay taxes on the profit even when there is no cash distributed to shareholders. This is not an easy concept for many first-time shareholdors of S-Corporations. Cash distributions do not equal the income from the company. It is possible to have a tax liability without receiving any cash distribution.