An S-Corporation is identical to a C-Corporation for most purposes. For taxes however, they differ dramatically. Whereas a C-Corporation is a separate entity for tax purposes, an S-Corporation is a flow-through entity, much like a partnership.
The owners of an S-Corporation are the Shareholders (or Stockholders). The Shareholders do not manage the Corporation. Instead, they elect a Board of Directors who is responsible for fundamental corporate policy. The Board of Directors appoints the officers of the corporation. Under most State’s laws, the officers must include a President, a Secretary and a Treasurer along with such other officers as the Board of Directors determines.
For liability purposes, an S-Corporation is a separate entity from its owners and can provide the shareholders, directors and officers with protection from personal liability in the event that the corporation is sued.
An S-Corporation cannot have multiple classes of stock (e.g., “common” and “preferred”).
It is the flow-through of tax attributes and the restrictions on ownership and permissible classes of stock that primarily differentiates an S-Corporation from a C-Corporation.