A C Corporation is, under the Internal Revenue Code, a corporation that is taxed separately from its owners. By default, all corporations are C Corporations. A C Corporation differs from a partnership and an S corporation which are taxed under different section of the Internal Revenue Code. A C Corporation also differs from pass through entities such as limited liability companies. A C Corporation is subject to “double taxation” in that the corporation, as a separate legal entity, pays taxes on the earnings it generates and then the shareholders, when they receive a distribution of earnings from the corporation, pay personal tax on the earnings. C Corporations can elect to be taxed as S Corporations, which eliminates double taxation by not being subject to corporate tax. However, S Corporations face certain limitations including a cap on the number of shareholders and the ability to have different classes of shares. For pre-seed and pre-angel investment startup companies, an S Corporation or pass-through entity may be more advantageous for the founders tax liabilities, especially if the company is generating revenue. Later stage companies looking to attract larger investment may need to be able to offer preferred stock and may need to expand beyond 100 shareholders, making an S Corporation election less feasible.