Oregon Construction Contractors (CCB) Practice Test

The consideration of C and S Corporations is particularly relevant for small businesses due to the distinct tax treatments and structural advantages they offer. C Corporations are subject to corporate income tax, but they allow for unlimited growth potential through the issuance of multiple classes of stock. This can be advantageous for businesses aiming for significant expansion and investment.

S Corporations, on the other hand, are designed to avoid double taxation by allowing income, losses, deductions, and credits to pass through to shareholders, who report these on their personal tax returns. This structure is particularly appealing for small business owners who want to limit their overall tax liability while retaining the benefits of a corporation, such as limited liability protection.

In contrast, while partnerships and LLCs have their advantages, they do not offer the same level of flexibility with regards to stock issuance and taxation as C and S Corporations do. Therefore, focusing on the characteristics and benefits of C and S Corporations makes them ideal for small business considerations.