You don’t have to ever become an LLC, if you don’t want to. There’s no legal requirement to set one up. You would be considered a Sole Proprietor, and it’s fine to run your business that way (but we still recommend you have separate business/personal bank accounts!)
However, you may want to consider becoming an LLC for the legal protection is can offer to you. Let’s say, for example, you are operating as an LLC and your business is sued. Only the assets of the LLC are subject to the lawsuit, not any of your personal assets like your personal bank accounts, your home and more. Likewise, if you are sued personally, none of your business assets can be attached in the lawsuit. You are essentially building a brick legal wall between your personal assets and your business assets. Without an LLC, your business and personal assets are all fair game in the lawsuit.
And, of course - this assumes that you are in compliance, operating the LLC properly, not commingling funds and other things - more on that to come later!
From a tax perspective, the LLC pays their taxes just like the Sole Proprietorship, on your personal return as a Schedule C, and all of the profits are subject to self employment, federal & state income taxes. That can get expensive as your profits increase. Once you start generating a consistent profit in your business, you will want to look at some other tax elections you can make, but your legal structure can always stay an LLC, no matter how much profit you make.
So, the LLC gives you great legal protection and also a head start on some future tax strategies. It’s a great best of both worlds choice!