if you don't intend on selling your company, selling any part of your company, or getting funding from VCs, you sould form an LLC. its the easiest to deal with and its just a liability shield that will help protect personal assets form lawsuits, basically. it can be more if you treat it as more, but if all you want is protection from lawsuits, LLC is it.

delaware is the ideal place, but if you don't live there, it'll cost you a little extra. it doesn't matter that much, it'll just be better for you if you do get sued, as delaware has the most established body of legislation on LLCs. consider a vermont LLC, also, because iirc, they are allowing purely virtual companies.