The main difference between and S corp and a C corp is tax treatment. S Corp income "flows through" to the owners and is reported on their 1040 form. C Corp income is taxed as corporate income, and is also taxed as dividend income if and when money is paid out as shareholders. This is the "double taxation" issue you might have heard about.
Note that you must "elect" to be an S corporation by letter to the IRS; otherwise, your corporate entity is assumed to be a C corporation. You may make the S corporation election if you meet all the rules. The S corporation must
- Be a domestic corporation
- Have only allowable shareholders
- including individuals, certain trust, and estates and
may not include partnerships, corporations or non-resident alien shareholders
- Have no more than 100 shareholders
- Have one class of stock
- Not be an ineligible corporation i.e. certain financial institutions, insurance companies, and domestic international sales corporations.
Source: IRS Website
BTW, you also asked
Are there other types of corporations other than C and S I should be
aware of as a startup?
C and S corporations are the main types of corporations in the United States. The other type of business organization (not a corporation) you should be aware of is the LLC. Both LLCs and Corporations (C or S) offer liability protection to their owners, which are not available if you run your business as a sole proprietorship.