When do I incorporate?

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I want to start an Internet business in Florida, where I would re-sell goods, but the need for setting up a corpporation, or a Limited Liability Company at this point confuses me.

1) Should I need to set one of these entities up at this early stage?

2) When do I know that the time is right to set either of these entities up?

3) What is the difference between them and what should be the deciding factors in choosing one or the other?

Thank you for your expertise.

 

[ed]

It is advisable to set up your corporation or LLC before you engage in any activity for which you could incur a liability. The main difference between the two types of entity, in the case of a small business, is that although they both protect the owner from liability, the LLC requires less formality to set up and maintain. If you start off with a LLC, and later you grow enough so that for financing or other reasons, you would be better off with a corporation, you can incorporate then.

Most small businesses that incorporate, do so as S corporations, which are taxed about the same as LLCs. If income is large, the c corporation form has some tax advantages.