Income tax differences based on business structure

Flow-through entity
or sole proprietorship
C corporation
One level of taxation: The business’s income flows through to the owner(s). Two levels of taxation: The business is taxed on income, and then shareholders are taxed on any dividends they receive.
Losses flow through to the owner(s). Losses remain at the corporate level.
The top individual tax rate is 39.6%. The top corporate tax rate is generally 35%, and the top rate on qualified dividends is 20%.