[delinka]

The S Corp pays you a "reasonable income" which gets taxed as income (withholdings, FICA, etc) and the remainder of the corporations profits that's passed on to the owner is taxed as capital gains (%15, IIRC).

With an LLC, all profits fall through to your income and is taxed as such.

Edit: revenue -> profit

[cullenking]

This is incorrect, the profits are not taxed as capital gains, see my above post. Only time you get taxed on profits as capital gains is when you make the mistake and take distributions in excess of your basis in the company, basically a rookie mistake, and then you get taxed cap gains on the amount in excess, and it's a double tax :(