If you are engaged in commerce it is best to form an LLC or to incorporate. It creates a legal identity separate from you personally. It will shield your personal assets from claims of contract breach so long as you observe the proprieties and formalities of conducting business as a corporation or LLC.

Generally LLC's are less expensive to set up than corporations and easier to run. Externally they operate much like a corporation, but internally they operate like a partnership with less formality than a corporation. 

If you decide to incorporate or to set up an LLC do not make the mistake many people do of cutting corners, and going the cheap route. Consult your accountant to find out the state and federal tax advantages/drawbacks for each. Consult an attorney for the actual set up. The set up expense is generally a one time expense, and it is worth the peace of mind that a corporate/LLC shield provides. 

If you decide that an LLC is the best business form for you ...make certain that you have an operating agreement drafted to govern the internal rights of the members of the LLC with respect to each other. Most if not all states have laws governing the operation of an LLC. Not all states protect the members of an LLC when there is dissension among its members. Connecticut is one of them. Connecticut's law goes into great detail in protecting the members against external threats, but is weak when one member becomes dissatisfied, and wants to exit from the LLC. Without the protection of the operating agreement a dissenting member may find himself at the mercy of the majority of the other members. You can address these problems through a carefully drafted operating agreement, and state law governing LLC's usually defers to the operating agreement.

Have an operating agreement drafted even if you are the only member of the LLC. There may come a time when you want to include someone else at a later date as a member. If you have had the operating agreement drafted prior to his/her entry you can have it set up the way you want. You may also avoid the additional expense of negotiating the terms of the operating agreement with his/her attorney if it is drafted at a later date.

Your attorney can search the your Secretary of State's business records filings to determine if the name you have selected for your corporation or LLC is available. Do not worry about duplication of the name. Most if not all states will not permit corporations to have the same or deceptively similar names. Although I have run across instances in which a corporation and an LLC have very similar names, and the state relies on the designation Inc. or LLC to differentiate the two. Therefore, when your attorney searches for name availability it is best to search both the corporate and LLC records for name availability. Have several names in mind for your corporation or LLC in the event that your first choice is not available.

You will need to have e & o insurance for both your corporation/LLC and you personally. Talk to your insurance agent about the expense involved. Make certain that you have continuing coverage for yourself personally. The corporate/LLC shield will protect your personal assets from claims of contract breach, but may not shield them from tort claims. In Connecticut it does not. Corporate officers/directors are personally liable for their torts regardless of whether they were perpetrated in their corporate capacity or their personal capacity. Negligence is a tort that your e& o insurance should cover. Nothing will protect you against intentional common law and statutory torts (e.g. tortious interference with a competitor's contracts, trade slander/libel, fraud, unfair trade practices).

Hope this helps. Good luck.