First of all...what is an LLC? Basically, a Limited Liabilty Company (LLC) has a tax structure like a sole proprietorship with the limited liability of a corporation. Consider the differences.

With a sole proprietorship any income from your business (plus any personal income) are combined and you pay taxes on this total amount. With a corporation income solely from your business is taxed as corporate tax, AND and any dividends you've decided to pay yourself from your corporation are taxed as personal tax.

On the liability side, the owner of a sole proprietorship is "liable" for any and all debts of the business. If your company gets sued...you get sued. If you can't pay, any and all of your personal assets can be seized! Ouch! With a corporation...the total liability is that of the corporation. If the corporation gets sued you can only lose the assets of your corporation...your personal assets are safe!

So with an LLC, taxation is just like personal income (if it's your sole source of income) with the added benifit that you can't lose your house if things go very bad. Many small business owners choose the LLC form of business exactly for the "limited liability" part. It's not any more complicated to start an LLC over a sole proprietorship and your assets are protected.