Here's another issue with the S-corp idea. If you use a personally owned car, the S-corp can reimburse you tax-free for your expenses (actual method or standard method) before paying your salary. That's the same deduction you would get if you were a sole proprietor. But if the S-corp owns the car, and if you drive it for personal (non-business) reasons, the company has to include the value of personal use of a company car as part of your taxable W-2 wages.
