An excellent discussion of the pros and cons, with useful comments from 'tptacek, is at http://news.ycombinator.com/item?id=359155.

Another one: http://news.ycombinator.com/item?id=2925222; see especially the comments by 'grellas and 'tptacek, as well as the discussion between the latter and 'idlewords.

Thank, I'll go through both of the threads.

If you are a team, incorporating is important to clarify ownership. You dont want to have to figure that out later, after you are successful. You can also do that with a document among the team. But don't wait too long. It's amazing how everyone's recollection of an oral agreement is sincerely completely different a few months or years down the road.

If you are an individual, it's not that big of a deal either way. You can wait till you get traction to do it.

If you hope to raise VC money some day, I'd suggest creating a delaware corporation and not an LLC. But it isnt that big of a deal either way.

There are of course tax questions, liability concerns, etc. Talk to a professional (attorney, accountant) if you're not familiar with these.

The pros to not incorporating are to save money and hassle. Especially if you're bootstrapping an idea you're not sure of and you don't have a lot of cash.

If you have no income or don't expect to have income for a while and your liability chances are low then its worth considering not incorporating. You can always use your first bit of income to incorporate 6 months down the road.

I think people underestimate the amount of money needed to incorporate properly. Yeah, you can do it for $500, even less in some states, you just need to file a form. But what your LCC or corp agreement says actually does matter and it pays to do it right if you're going to do it at all.

Its $500 incorporation fee, plus lawyers fee. Then $800 minimum tax even if you don't make any money.

Wow, NY has a minimum tax? That's crazy. I'm also glad I live in WI, our fee is about $180.

You, personally, have full liability if your app burns the retinas of your users out. You also get slammed with taxes.

It only costs ~500 to create an LLC in NYC, and it takes ~48 hours. I imagine it's less in almost every other state.

You might want to resubmit with your question in the subject line. Good question, but most people won't bother clicking and reading it b/c there's no subject.

Fixed..Thanks

Limited liability and credibility (people DO read legal mentions!)