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I promise that this is the best advice you will ever receive from a business lawyer who uses a picture of his boner for his avatar.
I typically advise small business clients to wait a year before starting an S corp. It doesn't make sense to incur the expense and headaches associated with S corp (adequately discussed above) right out of the gate, since it is not uncommon for a business to shut down within the first year or two or you end up not making enough 'jack' to benefit from the tax play that is available. Also, it is very important to note that the IRS knows this tax play is common and they are getting much more agressive at pursuing people who abuse this tax play. Given that you will be a service business and deriving almost all (if not all) of your income through your own efforts, it would be hard to justify this tax play if you were caught. This means penalties and interest.
Having said that, I typically recommend clients start out as a single-member LLC (vs. sole proprietorship) for the following reasons: (i) They are extremely cheap and easy to setup; (ii) they offer you the same sort of contract / tort protection you would have with an S corp; (iii) the separate entity gives your business more credibility; (iv) you are treated for federal income tax purposes (and often state income tax purposes) as if you were a sole proprietorship, which means your tax compliance expenses shouldn't be any greater than if you were a sole proprietor; and (v) it is easy to have the LLC taxed as an S corp down the road should your business prove viable and there is sufficient $ coming in to take advantage of the discussed tax play.
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