Thomas and his wife Diana have operated their own children’s daycare for the last three years. They also own the daycare facility, a building and the adjascent land located on 1322 Glades Road. They have a limited amount of working capital but do not forsee the need to make additional capital improvements in the near term. Their total business assets are about $250,000 with a $120,000 mortgage on the building as their only liability. In recent years they have not kept exact records, but have been able to withdraw any unneeded assets at the end of the year, which totalled aproximately $50,000 in cash in 2013. In 2013 they reported a net income of $85,000. In addition, Thomas has used his personal car for business travel and has charged the business mileage at the appropriate mileage when he has traveled to Miami for continuing educational credits and Diana has traveled to New York once each year for a trip with girlfriends and to attend a conference on childhood development. Although Thomas and Diana have never been sued, in recent months they have started to think about possible legal liability. As a good friend of Thomas and Diana and a CPA, what is your opinion about incorporating the business going forward? List at least two reasons for or against incorporating, and any change the S-corp status would have on their taxable income from the company?