Gerald

You may find this link helpful:
http://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business/establishing-business/incorporating-registering-you-0

The decision depend on a number of factors - risk, taxes, size of organization and more. Are you a start up? Are you the only one in the business or is it an organization? Most small biz start as sole proprietors and change structure as the business is established and grows.

Consider contacting your local SCORE office for help. They offer free business counseling where you can sit done face to face to discuss this and other questions. While SCORE does NOT offer legal advice but can help you understand the options. See www.score.org and use the find experts option to find your local office.

Alice, SCORE Pittsburgh edit

Corporation
A legal entity such that it is separate from its shareholders (who are its owners) is termed as a Corporation. It comes into existence after filing some papers with the identified Secretary of State and other formalities. A corporation continues to exist irrespective of status with its shareholders. Every corporation is comprised of shareholders (owners), officers and directors to govern them. Each category is embedded with different roles and responsibilities. Directors are appointed by the shareholders who govern the corporation and its daily routine. A sole individual can satisfy all the three roles mentioned above. Debts cannot be recovered from each of the three parties. Thus the personal assets of each party are protected from any obligations of the corporation.

Limited Liability Company
In a limited liability company (popularly termed as the "LLC") is arranged by the state to offer limited liability just like a corporation but with an extra option i.e. "pass through" of taxes. Actually an LLC is a compromise between partnership and a corporation. A LLC is owned by one or more "members" who are the interest holders. Members can designate managers for the purpose of managing entity like in corporations. Perpetual existence can be exercised, i.e. the LLC can continue its business after the expiry of its shareholders. The owners of the LLC put only their investment at stake within the LLC. Owners’ personal assets are not at stake. edit