To combine corporate liability protection with the tax aspects of a partnership, consider this popular structure. There are, however, restrictions as to who may participate, which can be problematic when raising capital. For example, in addition to the restriction on the number of shareholders, foreign nationals may not hold subchapter-S stock.
Creating a subchapter-S corporation is about as complicated as forming a standard C corporation (see above).
Shareholders are taxed as if they were in a partnership, and they file individual rather than corporate tax returns.
As with a C corporation, there is no stockholder liability beyond the assets of the corporation.
A subchapter-S corporation can have up to 35 stockholders. That enhances its ability to raise working capital. However, if you wish to offer shares to investors at large, you will have to form a standard C corporation.
A subchapter-S corporation offers the same flexibility as a C corporation (see above).