FIRST, and before you do anything else, you need to choose what type of business you want to have-this effects how you will register your company with the government.
There are four (4) main types to choose from in the US:
1. Sole Proprietorship: this is the simplest form of business type. They are inexpensive to form, easy to dissolve and generally have no tax aspects, since profits and losses of the business are simply part of the owner's personal income and the company is disregarded for tax purposes. However, since legally the company is nothing more than an individual using a trade name, you are liable for the company's obligations. On the death of the owner, the company immediately ceases to exist. Highest Personal Risk.
2. Partnership: relatively inexpensive to form, and can be as simple or complex in structure and administration as the partners want it to be. Partnerships are formed by two or more persons who make an agreement to share profits and losses. Each partner has what is called joint liability to the partnership, which means either partner can be made to pay the entire debts of the partnership, regardless of what they contibuted. Partnerships have pass-thru taxation, which means the partnership itself pays no taxes; it is only required to file an informational return to the government to report what the profits and losses of the partnership were and how these were split between partners. A partnership ceases to exist at death or bankruptcy of a partner; or if they decide to end the partnership. Medium to High Personal Risk.
3. Limited Liability Corporation/Limited Liability Partnership: this is a hybrid of corporations and partnerships, combining the features of both. LLC's are extremely flexible, and can be used for a very wide range of businesses. The members (equivalent to shareholders or partners) can, but do not have to, have limited liability. LLCs can, but but do not have to have, managers (equivalent to directors and officers in a corporation) and can elect to be taxed either as corporations, or as partners (if they have two or more members) or be disregarded for tax purposes like a sole proprietorship. Like partnerships, LLC's can be as simple or complex as the members desire. Depending on state law, an LLC can have the same limited liability for members as a corporation, or have some members with limited liability and some without limited liability (like a limited partnership), or even have no limited liability for any members (like a general partnership). Unlike corporations, some States require that their LLC's designate a date in the future at which the LLC will automatically dissolve. Some States also require that if a member dies, goes bankrupt or meets some other calamity the remaining members of the company must either dissolve or vote to continue. LLCs are more expensive to set up, and although a lawyer is not required, one would be very helpful in guiding you through the process. There are more fees involved in set up, and the main partner/officers must pay a registraton/renwal fee every year. Medium to Low Personal Risk.
4. Corporations: much more complex than partnerships or sole proprietorships, in that a new legal person (entity) is created. A corporation is an entity that is separate from its owners, so that regardless of what happens to shareholders, the corporation continues until it is legally dissolved. Depending on state law, a corporation can be owned by just one person and have just one director and officer. The owner(s) of a corporation are known as shareholders. The shareholders elect directors to set the policies of the corporation and represent their interests. The directors appoint the officers of the corporation to manage day to day operations. Corporations are legally required to follow more formalities than any of the other entities, including annual meetings of the shareholders and directors, as well as board approval of most significant acts by the corporation. Because a corporation is separate from its shareholders, for example, even if one person is the sole shareholder/director/officer, that person cannot just take company funds for him/herself without documenting the reason and entering a board resolution into the corporate records. Taxation of corporations is much more complex than sole proprietorships or partnerships: depending on the number of, residency of and type of shareholders, a corporation can elect to be treated for tax purposes as a if it were a partnership (an S corporation) and therefore not pay taxes itself, or it can be treated as a taxable entity (a C corporation). Definitely consult with a lawyer before forming a corporation. There are many forms and fees that will need to be filed properly. Low Personal Risk.
Choose your business entity based on your current needs as it can be changed as you grow: a sole proprietor ship can choose to form an LLC or C Corporation, a partnership can become an LLP or C Corporation. A C Corporation can elect to become and S Corporation (usually for tax purposes).
Notice to those planning to form partnerships: please but keep in mind that partnerships have a higher failure rate, usually based on lack of unity in vision and goals. If you choose to form a partnership, have a lawyer draft an agreement that assures all of your partners are liable for exactly what they put into the business and that you have an exit strategy (a plan for how one or both of you can get out of the agreement).
Most artists can set up a small business as a sole-proprietor with a minimum of labor, and it is probably a good way to start out, since you can always change to a LLC or take on partners as your business grows. Just keep in mind that as a sole proprietor, your business finances directly effect your personal finances.