I'm sort of going through this question with my brother in law right now. Personally, I think incorporation is too much for almost anyone just starting out. It makes things much more complicated (now you have to deal with corporate taxes as well as personal taxes), and as a result is much more expensive.
The system is set up so if the business grows enough, it is fairly easy to transition from a sole proprietor into a corporation. So unless there is a very good reason to incorporate now, such as liability issues as already mentioned, I'd recommend staying away from that in the beginning.
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