You really need to seek the services of a Tax Professional in your area to get property and completed education on this, so you can make an educated decision. The laws for corporations differ state to state, and you will find the cost of the knowledge of a tax professional to be well worth it.
Generally, the primary reason to have an S-Corp is if your business is high risk of being sued as for example, a medical surgeon is. The S-corp protects your personal assets from the legal liabilities of the business. The monetary concerns are secondary, and for someone such as you and I who have a sole proprietorship or single member LCC small business, it just doesn't make sense, short term or long term.
"How does the cash flow through a s-corporation?"
It's complicated. Basically, you are required take a minimum taxable draw referred to as "reasonable compensation" from the business each year, and that's not reported on a W-2 either. The W-2 pay you receive as an employee is separate from the minimum draw amount, and taxed as such.
Employee salary is subject to payroll taxes, but S Corp distributions to shareholders are not. Therefore, to the extent the S Corp pays the owner distributions instead of a salary, the owner can save big on payroll taxes. But how big depends on how much income the S-Corp produces each year. It may not make enough of a difference to be a worth while endeavor after paying the costs of maintaining an S-Corp year to year.
