Why form a business entity anyway? After all, you can run a business under your own name. From a lawyer's perspective though, it is always best to incorporate. Here's why:
First, if you form a corporation or LLC, you can protect your personal assets from creditors or other liabilities of the business. So if someone sues your plumbing company when a pipe you installed breaks their head open, you don't have to worry about losing the cabin to cover the loss.
Second, you get a level of name protection in forming a business, so if someone starts using your business name, your incorporation documents may be good proof of your ownership and/or prior use of the name.
Third, properly formed businesses can have perpetual existence. So if you or your partner dies, the business can continue operating and will not have to be dissolved.
Finally, there could be tax advantages. For example, in a corporation, the ability to determine and deduct owner salaries may enable the owners to take other distributions at a lower tax rate.