As an S-Corp shareholder, your income from the business is calculated on its own tax form and “flows through” to your personal tax return on form K-1. Your tax rate is based on your individual situation. Some states tax S-Corp’s at the entity level, which turns out to be beneficial for the shareholders. You will also receive a W-2 from the S-Corp if you perform any work for the business. A sole proprietorship files form Schedule C as part of their individual tax return. A Schedule C can be a simpler method to file your business tax, but an S-Corp could save a business taxes if the situation is right.