[grosgrainobsessed]

There may be tax benefits to you if you incorporate as well, depending on whether you go with S-Corp or C-Corp structure. My business is online as well, but the yearly tax breaks in self-employment tax saved me enough money to find the switch to incorporate valuable, even though, yes, it is a little more complicated. I had my accountant prepare and file all the paperwork this time, as I just didn't want to deal with it and I wanted to be sure it was all done correctly. He showed me the differences in my previous years taxes between filing as a sole proprietor (single member LLC) and being incorporated. Had I done it sooner, I would have saved about $4500 in income tax liability for 2006. So the way I look at it, since it is more complicated, I pay the accountant $250-300 to prepare my corporate taxes...but if I am saving thousands by going this route...so I am happy to do so.

Between the liability protection and the tax savings, it's the best choice for me. But, it sounds like if you are making sure you are protected in terms of liability with insurance (make sure your attorney is comfortable with the policy that you choose and the language and coverage seems that it WOULD indeed cover you under the types of lawsuits you would be most likely to be subject to), that continuing with sole proprietorship may be the best choice for you. Maybe for now atleast, and if things change within your business, it or takes off and soars you can re-evaluate your decision later on. I would recommend opening a bank account specifically for your business and keep all the funds, expenses, etc. separate. Even if you can't open a business account, you can just open another regular checking account for your business.