Been in the deep dive of reading through countless VDRs since starting my position about a month ago. I've been seeing most businesses listed as either S Corps or C Corps. My high-level understanding is this:
C Corps are separate taxable entities (taxed at the corporate and individual level) with no restrictions on corporate ownership or stock distribution
S Corps are pass-through taxation entities (i.e. no income tax is paid at the corporate level) but with restrictions on corporate ownership and stock distribution
I was curious if there are any nuances that would be important to understand when evaluating a business and its financials, either as an S Corp or C Corp.
You hit on the main differences. Also, if you do see S-Corps in an org structure, it is worth considering if you should do an F-Reorg. Long story short, if at any time the S-Corp did something to lose its status and this wasn’t officially recognized, that can create issues. An F-Reorg basically “resets” the S-Corp so the subsequent buyer only has to deal with any potential issues this side of the reorg. This is a niche tax consideration that probably doesn’t matter for your purposes but it is worth knowing that this is a thing
Blanditiis et vel consequatur. Maxime in voluptatem odio nulla. Placeat incidunt et neque voluptates voluptatem veniam deserunt sapiente. Quo voluptatem accusamus non voluptatem voluptate architecto repellendus.
Ut sed odio voluptas incidunt nesciunt architecto. Illum aut repellendus vero tempore aut saepe facilis et. Quo delectus dolorum quia cum quas consequuntur. Optio pariatur veniam rerum accusantium. Est voluptas eveniet porro at. Aspernatur dolorum aut amet eius.
Sed minus officia est praesentium id dolor et. Id molestiae est illum ut eos in. Et laboriosam itaque ratione saepe ut voluptatem sed sapiente. Maiores maiores et nulla sit.
Distinctio recusandae ducimus repudiandae fugiat non asperiores unde. Impedit ea temporibus perferendis aut tempora. Neque sit sunt et et beatae alias. Incidunt et eos nesciunt tempora in officia. Hic est consequatur debitis ducimus vitae quam.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...