None whatsoever. They both provide the same limited liability to its stockholders. Many people think that because the S corporation is taxed as a proprietorship or partnership, it has the unlimited liability characteristics of these entities. Of course, that’s untrue. It is true that it is more problematic to protect S corporation shares because these shares cannot be owned by limited partnerships, trusts and most other protective entities. But as we talked about earlier when we spoke about investments, we have several options to shelter S corporation shares – and they ought to be protected.
Is there any difference between the S and C corporations for liability protection?