Why would you want to know this? (Just curious)
I'm sure there's alot of small "young" hosts here running without registering a company. I don't recommend it. To me it shows poor business planning. You open yourself up for personal lawsuits and it also shows that you have perhaps no business plan and very little money to invest in your business. (Registering a business is typically less than $1000, especially if you end up doing it yourself instead of through a lawyer)
It also depends from country to country, here in Switzerland until you reach a certain turnover rate/year, you don't have to register your business, it's enough that you declare yourself to be one and pay the taxes at the end of the year.
Jail term, numerous law suits (which don't last a couple of months), criminal record...
You'll probably never find someone to trust you business wise ever again, you'll carry a guilty conscience.
Some people are even killed over it. That's what happens when things go under the table.
You may think I'm far fetched, but I don't care; it's your life.
Let's be clear... it depends on which country you are in.
For example... in the USA, here in Texas, it's perfectly legal to run a business as a sole proprietor without "registering" any legal documents or forming any kind of legal entity. Depending on your situation, you may or may not have to file a permit for state sales tax... but as long as you are using your name as the name of the business, that's it. Even getting an assumed name is not difficult or expensive. And adding employees does require two more sets of paperwork. But there's nothing "under the table" about it, and becoming an LLC or corporation is certainly not required.
All that being said, there is the liability issue. Without the protections afforded by an LLC/LLP, corporation, or whatever other structures may be available in your particular jurisdiction, you are personally liable for anything the business does (or doesn't do) and can be sued.
The bottom line - seek local legal advice, because this is something you want to do right.
There are far too many details (which shouldn't be revealed on an open forum anyway) that you need to discuss with a business lawyer and accountant before deciding whether to incorporate or otherwise register your firm.
There are many benefits to having something like an LLC including limiting any damage to the company and its assets and not you personally. If this "company" is sued, then do you want them coming after you personally or your company?
You can minimize potential losses and protect yourself by doing that.
That's just one example of the many benefits of having a registered company, grab any introductory business management book and you should be able to find listings of the types of corporations as well as why people would pick a specific one.
Ankit Gupta - Cernax Hosting
"We're always second in the industry, the customer comes first."