I noticed Nevada was mentioned a couple of times. I live here in Nevada and have looked into doing an LLC here for my business. Right now I am a sole proprietor. It seems to be a fairly easy process for forming the LLC here, can do it right from the Secretary of State web site. But it is not nearly as cheap as Tess mentions for doing it in Colorado. I figured here it would cost me about $175 total. They have an application fee and then some other kind of fee after you are approved. Not sure why I had it in my brain that it would be better to do it in the state I live in......but think I'll check out DE and CO.

Thanks for all the great info Tess. Its great to get a confirmation of some of the things I thought I knew, and the answers to other things I didn't. Can I ask a question? Right now I am on a payment plan for last year's taxes with the IRS. Now, to avoid this same situation next year, I know I should be paying quarterly taxes now. But, I'm concerned that if I do, they will just suck the money up to go towards last year's bill. Am I right in thinking that? Also, if you become an LLC say, now, in the middle of a year........do you pay taxes on the net income only after the date of the LLC? Or will you be able to do just the net income for the whole year when you file next year?

Thanks,
Denise