Hi! I'm a TurboTax Live CPA. The major advantages to being taxed as an S-Corp is that it is possible to avoid some of the self-employment tax associated with the earnings of your business. As a single member disregarded entity, 100% of your profit will be considered self-employment income and subject to the self-employment tax. As a shareholder in an S-corporation you would be only subject to employment taxes on what you earn as a wage from your business and not the profits entirely. It is important to note that you would have to be compensated via W-2 if you were to render services to your S-corp if you render services as an employee. The major drawback of the S-corp approach is that it is much more complicated since you will be filing 2 returns. You can use TurboTax Business for the preparation of your S-corp return but it may be advisable to get professional assistance doing it the first time or two. The self-employment tax is the equivalent of contributing to social security.
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