Legal Question in Business Law in California

There is no way to answer that question without a full consultation and evaluation of your business and personal affairs and finances, and discussion of your intentions and objectives for the business.

If you want to limit your personal legal liability, either a corporation or an LLC would be fine. Additionally, presuming you would like to minimize your tax burden, it probably is a good idea to run this question by your accountant to see what he/she suggests. A sole proprietorship can be okay, but you don't get the limitation of liability or the tax benefits a corporation or LLC provide.

With either an LLC or an S-corp., you'll be paying an $800 a year (minimum) franchise tax to the State of California. Think of that as being a liability-insurance premium when deciding whether to use one or go sole proprietor. There are some other benefits and detriments for a small business, but basically you are buying insulation from business debts.

I agree with Timothy McCormick, and furthermore, you should consider the tax benefits and operational benefits of each structure specific to your situation and your desired goals.