Micro Company started, do they need to incorporate, or there is a better way?

If one individual has been delivering services to other corporations. So far they have been paying the individual to his name "John Doe". The individual now is hiring sub-contractors, to do other things.

At this point what is best:

1. The individual to incorporate, LLC, etc.
   or
2. The individual can continue with status quo

For legal protection you should incorporate. If you are hoping to take investment in your venture, likely you should incorporate. If you have partners, you want to incorporate so you can divide up the equity.

Other than those points, you should focus your available resources (time, effort, money) solely on making your product as good as it can be.

If you hire subcontracters, and you get into legal issues, you should incorporate. Also make sure you really consult with a lawyer well-versed in these things.

In general, keep out of situations where you can have legal issues or disputes. If you win or lose, it is not the company culture you want. You want positivity in your venture.