I've written a couple of related answers already. Take a look at this one and this one.
Generally, the benefit of incorporating or forming LLC is limited liability, i.e.: you personally will not be liable for business debts (if managing the business appropriately of course). There are significant taxation implications though that you should familiarize yourself with.
In California LLC's pay $800 yearly franchise tax and LLC fee (income tax) based on your gross receipts of $250K or more. Corporations are exempt from the $800 fee for the first year, and pay corporate taxes (both S and C pay income taxes, at different rates and different terms).
For Federal tax purposes, LLC is either a disregarded entity (all your business taxes reported on Schedule C or as a partnership if its not a signle-member LLC) or a corporation (you can choose to be taxed as a corporation, and if qualify - S-Corp). Corporations are taxed at higher rates, and have the problem of double taxation and re-characterization of income (unless it's S-Corp).
You should get a qualified tax and legal advice. My answer is not such an advice. This answer was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer.
