When should I form an LLC for my business?

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From a tax perspective, if you are the only owner (called a "Member" in an LLC), the IRS does not see the LLC as separate and distinct from you. It is "disregarded" from you for tax so it doesn't matter.

So basically, if you are just getting started and you are by yourself, then there really isn't a tax reason to form an LLC.

Once you reach a certain level of profit (approx $30k if you have no W-2 income) then it might make sense to form an LLC and elect to tax it as an S Corp.

If you have a business partner you still do not have to form an LLC. You can carry on business as a partners and it will be taxed as a partnership.

If you and your partner form an LLC, it will also be taxed a partnership.

Note that when you have a partner, having a formal legal entity like an LLC with an operating agreement could be very beneficial if a dispute arises from a legal perspective.

With a partnership, just as by yourself, as you make a certain level of income in your partnership, it might make sense to have it taxed as an S Corp and you would need to form an entity (LLC or Corporation) to do that.

In the end, from a tax perspective, forming an LLC or other legal entity often doesn't make a lot of sense (and is an administrative burden) until a business is profitable and is expected to continue to be profitable going forward.

A caveat is that there may be legal (as opposed to tax) reasons to form the LLC earlier, e.g., if your business carries certain product liability risks, potential partnership disputes, etc.

In either case, tax or legal, seek a professional to help you with advice on your specific situation.