An S Corp has both advantages and disadvantages compared to being a sole proprietor. From a self employment tax standpoint, by designating a 'reasonable' amount of her income as wages, which is subject to self employment taxes and the rest as a distribution, which is not subject to those same self employment taxes, so she would end up paying less than if she was a sole proprietor. As you know, there are some downsides to the S Corp. The downsides are that there generally higher costs for legal and tax preparation. Only you can tell if the payroll savings outweigh the additional costs.