What are the pros and cons of forming an S corporation?

What are the pros and cons of forming an S corporation?

Some of the benefits of forming an S Corporation are that it's treated, your corporation, the C Corporation that you actually had when you first filed it is treated more like a partnership, and that is that the profits that it's receives are going to flow straight through to every one of the individual shareholders in proportion of their ownership. That allows for no what's called "double taxation" - in most C Corporations when the company makes a profit it will get a corporate tax on that profit. Then, if it wants to take those profits and distribute them to it's shareholders as a dividend, that "shared dividend" would also be taxed on the individual level, essentially, the one chunk of money that you make gets taxed twice. So that's a great thing to have whenever you're an S Corporation. Now, some of the disadvantages are, a lot of people when they have a C Corporation, they want the ability to retain earnings at the corporate level, to hold money in a sense, and not distribute it to all the shareholders. They might want to take the money and grow, they may want it to do a strategic acquisition, and they would be able to do that without asking for individual investments from each of their shareholders again.