If you file a Schedule C, all your profit will be subject to Self Employment taxes (which is really Social Security and Medicare taxes). If you expect to draw SS benefits, you must have 40 quarters of payment in order to qualify. If this isn't an issue, you can reduce the amount of SE tax by paying yourself a 'reasonable compensation' on which you pay SS and MC tax (in other words, you need a W-2), you don't have to pay SE taxes on the remaining profits of the S-corporation. Reasonable Compensation is what you would pay another to do the work you do. Be careful though, Sole Member LLCs are treated as 'disregarded entities' by the IRS and income is reported on Schedule C.