I have a few questions about:

Billing: Is this software included in the reseller plan, if not, where to get it from?

Accepting Payments: Do i need to use a payment gateway, create a merchant account and so on, or can i do it manually, by charging payments to the customers credit cards manually, which is a hassell.???

LLC: do i need to make my business a LLC so i dont get sued solely???

Packages: Depending on my packages, is it fair to make customers pay monthly or 3 monthly or yearly...which one is better??

Reseller accounts: Is purchasing bulk from a hosting company and then reselling under my own packages a good idea???
Should i start by buying small amount like 500 MB disk space, less bandwidth, and slowly increase as the customers start coming in...???

these are just some questions on my mind, and i feel all the experts here can help me well...

Generally billing software is not going to be included with a reseller plan.

You should get a merchant account, but to get started, you might want to go through a credit card launderer like revecom or 2checkout.

You may want to incoporate to save yourself the liability, but insurance can help with that too.

I don't think you can justify locking in a shared hosting customer to a contract over a month. But you can allow them prepay discounts as long as you still offer a prorated refund.

There are at least two ways that reseller accounts work. Some you will resell the whole package, and some you will just get one big account and resell the space. You should probably get started with resellong, and you might want to start with reselling whole packages.

IMHO.