This is a question I see really beaten to death, but can you even just briefly summarize the major advantages/disadvantages of LLC vs S-Corp vs C-Corp in Nevada vs Delaware vs Wyoming vs your state of residence, specifically for the needs of IMers.
Sean
I have to stay away from the "state" specific stuff, because I'm only licensed in one state jurisdiction, and its probably not yours. On the corporate formation/taxation issue in general I would say the following:
The reason most every major corporation files their articles of incorporation in Delaware is because that is the state that is still considered the most "pro business". The courts there are viewed as friendly to business, the regulations and filing requirements are pretty business-friendly, etc. Nevada is right up there ( I actually prefer Nevada corps personally) with the added advantage that Nevada is notoriously difficult about releasing the names of the principals/owners of a business, which is nice if you are are trying to hide/remain in the shadows when it comes to your association with a business.
Many business owners I know, myself included, consider California at the opposite end of the spectrum, they are much more "pro-little-guy-suing -a-business", have higher taxes and reporting requirements, overall useless red-tape and beauracracy, etc.
LLC vs S-corp vs. C-corp.
This is somewhat state specific, but any of these structures will give you some protection from personal liability (this is huge, you want this, trust me). C-corps are what you think of when you think of big corporations, they can last forever, they remove personal liability, they are their own legal entity, they can have lots of unrelated shareholders, etc. The disadvantage with C-corps is basically a double taxation issue, they are taxed first at the corporate profit level, then when they pay the leftover profits to their owners (i.e. shareholders) those profits (dividends) are subject to taxaction again at the personal level of the shareholder.
I personally prefer S-corps. They can't have quite as many shareholders as C-corps, their are limitations on having any foreign citizen owners (this is important in the IM world for non-US residents), but otherwise they have all the benefits of a C-corp,
without the double taxation problem because an S-corp is a "pass-through" legal entity; the taxation issue occurs only at the owners' personal level instead of first at the corporate level. An S-corp doesn't really pay federal "taxes" per se, just the owners do on their profits (this is simplifying things, there are often some random excise, B&O taxes, etc at the state level, but its still less than a C-corp would pay). These smaller random taxes vary by state, but remember that S-corp status is just a regular corporation with some potential tax advantages as long as you meet some basic requirements, and the more income you make, the better those tax advantages are because of the way you can classify income between being salary vs. dividends. S-corps can be single owner.
An LLC (limited liability company) is my third choice, but still way better than doing stuff as a sole proprietor. LLC filing paperwork requirements, liability treatment, reporting rules, etc vary by state, check your local jurisdiction for how it works in your particular situation, some states won't allow single owners, there aren't really many tax advantages, etc.
To say it again, if your are a serious IMer, get some sort of business structure; C-corp, S-corp, LLC, whatever. If you are (a U.S. citizen in particular) making a living in this industry, and you are still doing it as a sole proprietor, you need to think really hard about making a change. Its not that complicated, its not particularly expensive, so go do it. Personal liability is no fun, plus you'll likely make a profit just by switching to a corporate status on what you can legally do on your tax bill. It looks more professional, vendors will probably take you more seriously, and you are lot less likely to lose your house/car/diamond watch if someone comes after you for your business dealings. I can't speak for the international crowd here, except to say you are probably in a similar scenario and should look to having a formal business identity.