He could have done an S Corp or something to keep more of the profits in the business and avoid paying personal income taxes on all of it, no? Depends on long term play I guess.
The real benefit of S-Corp is to shift the cashflow from earned income (subject to self-employment taxes) to profit distributions (not subject to SE tax). But you pay the same Federal income tax on both. However, whether an S-Corp is worth it financially depends on a lot of factors, including how much you make, what constitutes a reasonable salary, your risk tolerance, and how your state taxes these different forms of income.
Had a windfall years ago and really regret not doing this.
No self employment tax on distributions from an S Corp.