BroadLea - 3:55 pm on Dec 26, 2002 (gmt 0)

Mikie recommends always incorporating, but I disagree that this is the right answer for everyone. Incorporating brings with it additional ongoing paperwork and tax consequences (sometimes beneficial consequences, sometimes not).

With an LLC (even moreso with a single-owner LLC, if your state permits it), there is very little (or zilch) extra paperwork beyond the initial organizing papers. Like as S Corp, all income/loss is reported on your personal income tax return.

Forming an LLC in most states is pretty darn easy (my Georgia Articles of Organization was two paragraphs), so if the choice is between a sole proprietorship and an LLC, I'd pick the LLC 9/10 times. It is just too simple not to, and it provides tangible benefits (some liability shielding) and some intangible ones as well (more "professional looking", at least to some).

(insert usual "I'm not an attorney or CPA" disclaimer here)