Correct me if I'm wrong, but that does not apply to corporations and the like. (How many decades did Amazon lose money in a row?) S corp costs pennies to set up, so I don't know why you wouldn't. I spend more on my slimy registered agent service than I do on actual filing fees.

Even if you just used a sole proprietorship, are you really gonna stick around with the same merch account and business name for 3 years? Worst case it gets labeled a hobby and you lose all the deductions you took. You still don't owe any taxes though.

As for the IRS getting suspicious... if you're following the law (and you would be), I don't see any major problems. Unlike CC companies and networks, the IRS does not have the power to shut you down because something is fishy or isn't in the spirit of the law. I would think your major problems would come from violating the terms of the merchant agreement and that is not criminal.