Should an independent contractor form an LLC

When should I form an LLC for my part-time work?

The main reason to start an LLC for ancillary work is if you have the extra personal liability protection wish that an LLC offers. If you are a sole trader, you can expose yourself to liability: Debt and judgments against your company can put your personal wealth at risk!

So if you intend to continue and grow your side work in the future, consider the LLC sooner rather than later.

It's also an important one legal Decision, and you should consider getting a professional opinion.

The Wall Street Journal has a brief guide entitled How to Form an LLC. Here are some notable excerpts:

A limited liability company, or LLC, is similar to a partnership but has the legal protection of personal assets that a company provides without the onerous paperwork, paperwork, and fees.
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Some states impose annual fees and taxes that can reduce the economic benefit of choosing to become an LLC. LLC benefits include through taxation - meaning that profits and losses are passed through the company to the people who own the company and who provide this information on their own personal tax returns. The result may be less tax paid as profits are not taxed on both a business and personal level. Another plus: the owners are usually not responsible for the company's debts and liabilities.
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Also check out onstartups.com's Startup 101: Should You Form an Inc. or an LLC?

Here are some additional articles that explain the pros and cons of starting an LLC: