A consultant is selling themselves... their skill set and their time.  If you are a consultant with no clients, then sure you don't need a business, but good to have one set up before you get clients.<p>Sometimes having a business is as simple as a DBA... cheap to do and a couple hours, looks more professional to have a client pay a company than cutting a check to Joe Smoe.<p>In my opinion, any time you are entering into a contract with a third party, it is best to have a legal entity set up.  Talk to any company whose been around a while, consultancy or product company, and you'll hear war stories about deals gone bad.  When you are still small, there'd be nothing scarier than having a deal fall through and leaving your personal assets exposed if they decided to sue.