If you can get yourself another employee, becoming an S-Corp will allow you to take a meager salary, charge rent to the business, and use draws on any other cash you might need from the corp in a pinch.
S-Corp is pretty much synonymous with "I have an actual payroll"
An S-Corp is little different than an LLC in that sense in that it's a pass-through, and an LLC may make more sense in some situations. (And certainly cheaper to get rolling properly than an S-Corp.)
But, it still wouldn't matter in this case. There is no money, except that which I put into it. If I were to take a partner retainer from that same pool of cash, or pay myself a salary via an S-Corp, they would both show as income at the end of the year, even though I just moved money from one pocket to the next.
If one is in the same situation, observe how much you need to cover expenses, set that aside, and invest the rest - do not try to be funny with paying yourself out one side and looking for losses on the other.
S-Corp is pretty much synonymous with "I have an actual payroll"