Tyler Danann said:
Is it not difficult to maintain a company without yearly tax returns and accountants though?
It is only as complicated as you decide to make it. The key thing is to button everything up BEFORE you start, instead of trying to backtrack later.
First, check with your municipal clerk regarding your local law for Trade Names/DBAs (Doing business as). This will vary from state to state (and even county to county in some places). In some cases, it is filling out a one page form and paying a small registration fee. In others, you may have to jump through a lot of hoops. A word of advice, make sure they understand you are running a virtual business. I had a heck of a time trying to make the clerk understand I was NOT operating printing presses in my basement to print books!
In the U.S. getting an EIN number is as simple as a phone call to the IRS. You would use the EIN in place of your SSN for things like setting up a business bank account, sending out 1099s to vendors, etc. Get the EIN under your trade name.
The easiest thing is to set up as a sole proprietor. You can always incorporate later if you feel a need. At the beginning, a sole proprietorship gives you the most flexibility, particularly insofar as moving money from your personal accounts to your business one. As Edward said, taxwise it is a matter of one additional form, Schedule C, but you will want to fill that one out regardless so that you can deduct your business expenses. And unless you have a lot of complicated tax issues, most of the DIY software can walk you through the form.