Hi, Meg1756,
Great question. This analysis often comes down to a cost-benefit analysis. S-Corps have many requirements, including the completion of an annual S-Corp return (1120-S) that does not generally apply to a sole proprietorship unless you make such an election. This additional return could well increase your reporting requirements and completing business returns can be an expensive proposition. On the other hand, there are a lot of benefits with an S-Corp. TurboTax has provided this reference with some great information that can help you weigh alternatives. It's also worth taking a peek at this page from the IRS.
Keep in mind you may have additional reporting requirements at the state level, likely including the need to register with your state's Secretary of State. If you query business registration along with your state name in a search bar, you should learn more about that.
Hope this helps.
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Regards,
Karen
TurboTax Expert
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