[tptacek]

I'm not a lawyer, but I think you should (a) get an LLC, and (b) not spend real (meaning: hundreds of dollars) money on it. You can get a DE LLC online about as easily as you can order a book from Amazon.

The LLC allows you to enter into contracts as your firm and not you yourself. If any arrangement you enter into ever blows up and threatens you with tens of thousands in liabilities, the company eats it, not your home equity. If you're savvy at negotiating, you can even get some of your overhead expenses (rent, Internet) in the LLC's name, so if the firm dies you're not on the hook.

Having an LLC also makes it possible for you to do business-to-business transactions with big companies. Consultant friends of mine have learned that invoicing a bigco as a sole proprietorship is likely to end up with that bigco withholding taxes, or worse, severing the contract altogether.

The reason not to spend money now is that contract liability protection is really the only thing an LLC is getting you. Most of what you're spending legal dollars on with a new company has to do with equity allocation. With neither partners nor investors, there's no reason to get that stuff nailed down perfectly. In fact, should you ever raise a round, chances are you're going to rip all your current incorporation stuff up anyways.

[lsllc]

I am also not a lawyer, but unless O.P. is in DE, he/she will almost certainly have to register as a "foreign entity doing business" in his/her home state despite being registered in DE. In many states, this is about as expensive as simply registering the LLC there in the first place. Some states (such as NY) have somewhat byzantine requirements such as having to publish the application for your foreign (or even native) LLC in two local papers.

But otherwise, an LLC is the way to go; you might however want to elect to have the LLC taxed as an S-corp so you don't get taxed twice.

[pw]

Diddo. My understanding is if you're doing an LLC, you should just do it in the state you're operating in not Delaware.