A C corporation generally pays federal income tax at the corporate level, with shareholders potentially paying tax on distributions. An S corporation generally passes qualifying income, deductions, and other tax items through to shareholders, but federal eligibility requirements restrict who can elect and maintain S corporation status.

An S corporation should be explained as a federal tax classification rather than simply another state entity type. A qualifying corporation or LLC can seek S corporation tax treatment by making the required federal election. The entity must satisfy eligibility rules, and the underlying state-law entity continues to exist as the corporation or LLC that was formed with the state.

A C corporation is generally the default federal tax treatment for a corporation unless a valid alternative election applies. Swyft Filings' corporation service focuses on the state formation step, including preparation and submission of the incorporation filing. Internal corporate records, stock issuance, tax filings, and ongoing state reports are separate responsibilities that follow formation.

For customers and support teams, it is helpful to separate formation from post-formation work. Creating the entity is the state-level step that establishes the LLC, corporation, or nonprofit. Items such as an EIN, operating agreement or bylaws, licenses and permits, initial reports, annual reports, registered agent coverage, and other compliance filings may be separate steps that occur after or alongside formation.