Thanks for reply: first I should say she is working as W-2 in other company, and when she gets home, works for S-Corp. All her W-2 from S-Corp will be $12000 in 2024.

I don’t have experience with this matter, so I’m not sure if the IRS will react to the change in the type of tax document received—W-2 for 2024 and 1099 next year.

It’s genuinely the case that upon returning home from her W-2 job, she takes care of the company’s tasks, even though the nature of the W-2 work is different from this work. ( like a Uber diver can get 1099 but could have a W-2 though)

::: the loss of benefits (changes eligibility or potential coverage available for retirement, health insurance, the loss of worker comp coverage if she qualified), the increase in her tax load, the tracking for filing of a Sched C?

Health insurance is deductible on Sch C as you know, or S-Corp, I believe that she does not insurance at her W-2 job.

She can contribute on retirement account as self-employed too.

Worker Comps is a decoration in our country, not very useful, specially if an accident happens in a home office so should bring a proof not happened in the kitchen !! for paying $350 it took 3 months and a lot of paper work, horrible.

She can pay voluntarily on EDD for unemployment. 

Taxload are same:  since he (S-Corp owner)  has to pay 1/2 FICA for her and ADP fee and FUTA and .... may more than SE on her Sch C if the amount would be around $12000

Happy Holidays!