If you do not have any profit - for tax purposes there will not be any advantages of having S-corporation. You may be solo proprietorship or choose LLC treated as a partnership if you concern about legal liabilities.
S-corporation would require additional overhead - so you will have tax benefits only if you make a substantial profit.
If you are an employee - your employer should withheld FICA taxes from your wages 6.2% social security and 1.45% Medicare tax. At the same time your employer is required to pay employer's portion of FICA - 6.2% social security and 1.45% Medicare tax and FUTA and SUTA taxes (unemployment).
If you are self-employed - that would be your responsibility to pay self-employment taxes 12.4% social security and 2.9% Medicare tax. However SE taxes are applied on net income after deducting all eligible expenses.
So it is very important to identify your status. The IRS publication 15 - http://www.irs.gov/pub/irs-pdf/p15.pdf is the main document that addresses employee status - page 7. A general rule is that anyone who performs services for you is your employee if you can control what will be done and how it will be done. This distinction is important because an employee and self-employed are taxed differently.
The IRS has developed a list of factors which are used on a case by case basis to determine whether a worker is an independent contractor or an employee for IRS tax purposes. The twenty common law factors of a perfect independent contractor relationship that are published here - http://www.wwwebtax.com/general/independent_contractor.htm
These factors should be used in determination. The laws - the employee vs. independent contractor issues - are extremely complex and you should obtain the help of a local tax attorney. It is also possible to use a federal "safe harbor" rule which can exempt certain workers from the common law factors listed above. To be exempt from these factors, you should establish that you:
- have consistently treated the worker and similar workers as independent contractors;
- have filed all the required forms; and
- have had some reasonable basis for treating the worker as an independent contractor because there were similar rulings or court cases, or because it was an industry-wide practice or because prior tax auditors had never questioned the practices.
Please let me know if you need any help this matter.