It can be well worth it to form an LLC or incorporate your new business as soon as possible. The tax benefits alone may make it worthwhile. If your business is sued or runs into other legal problems, you can’t form an LLC retroactively. In other words you don’t want to wait until it’s too late. You may also find that without an LLC or formal business structure, you may miss out on opportunities for growth because potential clients or customers may not take your business seriously. Building business credit can be easier as an LLC or corporation. Finally it can be harder to get financing in the name of your business if you haven't formed an entity; after all, without a formal business structure there's really no distinction between you and your business. While most small business credit cards don't require your business to be an LLC or corporation, there are some small business lenders that won't lend to sole props.