[tptacek]

Well. Be a little careful. If you're an unincorporated sole proprietor of a single-person company, many large companies will try to withhold taxes when they pay you; it's a problem several friends of mine have run into in trying to start consultancies and small product companies.

[redtexture]

The sole proprietor simply files, via his/her income tax return for the withheld income at the end of the year. This is merely one aspect of the panoply of issues to consider on incorporating.

[tptacek]

You're talking about the business owner's relationship with the IRS. I am talking about what happens in the real world between the business owner and their large clients, who will indeed sometimes try to withhold if they aren't actually incorporated.