S-Corp v. Sole Prop

If yes, and you are not incorporated, you are subject to double taxation. Along with your income tax being assessed, self-employed taxpayers pay an additional tax of 15.3% on the net profit of the business. S-corporation tax treatment can provide a way to take some money out of your corporation without paying self-employment taxes (Social Security and Medicare). This is because you do not have to pay this tax on distributions (dividends) from your S corporation—that is, on earnings and profits that pass through the corporation to you as a shareholder. This is the main reason S-corporations have been, and remain, popular with small business owners.