Welcome to WebmasterWorld Guest from 22.214.171.124
I'm not a lawyer, account, etc - just someone who happens to be restructing their business and have had to read up on a lot of stuff lately.
The purpose of an LLC is limited liability. There have been many instances where the courts found the LLC was set up by one person for the purpose of isolating their own income, but did not run the business as an LLC, but as a sole proprietorship (a lot of this has todo with how you treat your bank accounts and if you buy stuff for the company from personal funds, or if you pay for household items from your company budget - an accountant can help you greatly with this). If found to be a sole proprietorship type LLC, you will not be insulated from lawsuits to personal properly.
If you form an LLC for tax purposes, but run it as a full company (most of us with few employees, loose structure, etc - will never fall into this), the feds might require you to be considered a full corporation, but mostly this doesn't happen unless you get audited.
The paperwork is relatively simple to form the business, however, eventually you should make a business plan as this makes it appear you are more of a llc than sole proprietorship.
www.sbaonline.sba.gov/starting_business/planning/writingplan.html is a good site to see the structure of a business plan, and even has many good examples of plans you can work from.
It's easy to get lost in the paperwork, don't let it overwhelm you, as in the end, you need a good product to make money, no matter how your paperwork is organized.