In California (may or may not be similar) if you are a sole proprietor and purchasing product, most people ask you for your business license for tax reasons. For instance, I had a SP and purchased items from a manufacturer. I got a business license (sellers permit) from the California State Board of Equalization. The manufactured didn`t have to charge me tax.
Well, generally speaking the drawbacks to forming an LLC are slight, if anything. The larger question is whether or not you`re actually benefit from forming an LLC. (If you won`t gain anything, why take the time and money to form one?)
Potential benefit of forming an LLC: a level of liability protection. Whether or not this will actually work depends upon your situation. (Does your business provide a service rather than a product? And if so, are you the only one providing the services? If yes to both, it`s quite possible you could be held liable in the case of a lawsuit stemming from services provided by your business.)
Potential drawbacks to forming an LLC:
Provide them with your registered DBA certificate (Assumed Name Certificate, doing business as) .