The owner cannot be held liable for busipests in the form of a satary for their work. It is easy to raise capital by selting shares to investors. Fewer regulations apply to this type of business, and the Mark for follow up Question 20 of 35. If a sole proprietor converts their business to an S corporation, how is their income taxed? Compensation for services is taxed as wages reported on Form W2. The owner's share of the busin Schedule K1 and taxed as ordinary income. Compensation for services is reported on Schedule K-1 and subject to ordinary income tax and se All income from the business is reported on Schedule C (Form 1040) and is subject to ordinary in tax All income from the business is taxed to the business. The business owner pays no income tay