I think being self employed to start of is a good thing. Incorporating requires a lot of paperworks to do.

I chose to incorporate my online business, but only because there were 4 people involved in it and partnership structure would be too complicated to maintain. If I was alone, I would definitely remain as a sole proprietor because it's so much more simple to maintain. In addition, during the start-up stage when your expenses are highest you can take advantage of the reduction in personal taxes. I can explain, but I suggest you go to your accountant for more details just in case I forget to mention how it works exactly. - Pavel Apartments for rent - The Rentables ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.

I was in the same situation as you (but its not an online business per se) and I took up sole propreitorship, it is cheaper at first since you dont need a bunch of paper work and much simplier to apply.    But the down side is your security the government can attack your personal property whereas it is a different story when it is in a corporation. they can sue the corporation and get only what the corporation is worth.    

I was in the same situation as you and chose to incorporate. It's a relatively painless process and the benefits far outweigh the small hassle and fees associated with it. It's a nice layer of protection and security for both your personal and professional life. Speak Spanish software ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.

I am employed full time. When the Automotive downturn happened it hit us hard here in Michigan. I started my own eCommerce business and it has grown tremendously. I am on my way to becoming self employed and will be incorporating very soon. It makes sense as your business grows to switch from a DBA or assumed name to a Corp. The taxes are hefty for DBA  type business.

For more on this topic, read How to Become (and Stay) Self-Employed, According to the Law at Business.gov

Self-employment might be shifting to industries in which incorporating is more valuable. I'm self employed and a few years back, my accountant recommended that I took the LLC route, but the more I look into incorporating my business, it makes a lot more sense on the tax side. I can definitely see why many people take this route.

Yes, you should have some sort of legal entity. You likely are required by your local government to have a business license and be registered with a DBA for a sole-proprietorship or something similar.   You can simplify taxes and file your business earnings and expenses on your personal taxes but will still need to meet some requirements.   Basically, the federal government (IRS), your state gov. and your city or municipality all have varying requirements.   If you aren't too concerned with legal liability and want a relatively simply and easy organization to operate, you should seriously consider and look into forming a sole-proprietorship.

afischer, I would suggest looking at our Self-Employed page. This has some links to the IRS where they can explain some of the tax specifics. Another good article is 10 Steps for Starting a Business. See if some of this will help you research to see what is best for you. -JimD