If I may make one suggestion: even if you want to be a sole proprietor, look into getting an LLC.
If you run into trouble with a client, a properly-done LLC can save your house or other large assets.
With a sole proprietorship, all of your personal stuff can be on the hook too.
It's essentially the same advice as keeping separate devices for work and for personal use.
LLCs also generally aren’t useful for protecting you from creditors, because any lender will require you to give a personal guarantee.
If you are really worried about protecting your assets, you can purchase liability insurance.
> As a software developer you’re unlikely to be sued over anything that can’t be classified as personal negligence or malpractice.
Unlikely doesn't mean never. And a client's definition of negligence might also be malicious.
It is difficult for a company to successfully show that your LLC was at fault for some large dollar amount of damages, but that you the sole decision maker running that LLC, weren’t at fault through negligence or malpractice.
My point is not that you shouldn’t bother to protect yourself if you are worried about the risk, but that insurance, not an LLC is the best way to do it. By all means start an LLC too if you want.
The common advice of that every tiny business setup an LLC because it will save your house is wrong because it is only applicable to very specific circumstances that don’t apply to most sole proprietors. It’s also dangerous because most people that take this advice take it face value. Then they go online, start an LLC, and believe they are protected from all personal liability related to their business. When in fact they are protected from a very small fraction of likely potential liability.
An LLC can protect your personal assets from enforcement of contractual obligations. Say for example you agree to indemnify your client against patent infringement, and then through no fault of your own some of your code coincidentally happens to violate someone’s patent (and the patent holder finds out and successfully sues or settles with your client).
But don’t sign contracts like that in the first place. And it’s a good idea for contracts to have a clause allowing both parties to terminate the contract and to not make promises in your contract you can’t guarantee.
For the short term (contracting) I'm simply working as a Sole Proprietor, but I don't really have much work or significant income yet.