Choosing a business structure affects how you are taxed, how you keep your records and how your personal assets are protected. Here is a brief overview.
Sole proprietorship
It is the simplest structure. Business income is reported on your personal return. There is no legal separation between you and the business.
Limited liability company (LLC)
An LLC separates personal and business liability in many situations. By default it is taxed like a sole proprietorship or partnership, and it can elect other tax treatment.
What changes in your books
Whatever you choose, keep business and personal money separate, use a dedicated bank account and record every transaction.
Rules differ by state and by situation. Talk with an accountant and an attorney before deciding.