Karen,single with No Dependents,wants to Set Up a Business

Essay

Karen,single with no dependents,wants to set up a business.She will use either a sole proprietorship or incorporate as a regular corporation.She expects the business to earn $45,000 after all expenses and payments to Karen except for federal taxes.Karen will take $25,000 from the business for living expenses (as a distribution from a sole proprietorship or a salary from a corporation).Considering only income taxes for 2015,should she establish the business as a C corporation or as a sole proprietorship?