A lot of small companies file their tax returns as a 1040 Sch C (Sole Proprietor) Since corporate tax rates are lower than Individual tax rates, doesn't it make sense to create a corporation, and file your small business taxes as a corporation Form 1120? What are some of the issues and benefits of filing as a corporation instead of as an Individual? One solution that has been discussed is to create another tax rate for individuals who file their business taxes as a pass-through on their individual income Sch C tax return - would this work?