For what it's worth, most serial entrepreneurs I've talked with tend to advise waiting a while before incorporating. If you're still in the kitchen table phase, which you say you are, then your co-founder may be right. Until you graduate and begin working full-time on the project and have a demo that are you pitching to investors, incorporating is really just a distraction. At best it doesn't really help anything and at worst you screw it up and it takes thousands of dollars to fix.