I agree with the LLC recommendation. It's much easier come tax season to be a sole proprietor, however you risk your personal assets being taken if you were to get sued. With an LLC you are creating a separate entity for which has nothing to do with your personal assets, therefore they cannot be touched.
When you become an LLC, in regards to tax season, you just have to fill out a schedule K-1 and file it with your personal taxes. If your business makes a profit then it's considered income on your personal taxes. However, if your business takes a loss then it actually benefits your personal taxes. Either way!! It's VERY IMPORTANT if going with an LLC that you choose the proper tax status. Once you choose your tax status you cannot change it for 5 years. And if you've chosen wrong it will be a HUGE pain in the butt each tax season.
I HIGHLY recommend hiring an accountant or at least having a consultation with one to determine what's best for you and your situation. Once you've become a legit business I also recommend keeping an accountant. It will save you a lot of frustration down the road. Plus, do what you do best..cakes! Not accounting. I don't do accounting that's why I say that