HI ErnestSt,
That is a great question and as often, there is not one set answer to it. First of all, let me clarify that a single member LLC and a sole proprietor are the same thing for tax purposes. An LLC is a state level entity and may matter for legal purposes. Some will claim that it can protect your personal assets, other will claim that is not really the case. Since I am an Enrolled Agent and not providing legal advice, I recommend you check with an attorney in your state about the legal benefits and/or consequences.
From a tax perspective, forming an LLC doesn't affect your taxes directly, as long as you don't incorporate (S-corp/C-corp) or have more than one member (yourself) in the LLC. If you have more than one member, you are in reality a partnership and will need to file a separate partnership return. (Form 1065 due in March)
However, you should keep in mind that forming an LLC (versus sole proprietor, which means operating without forming an entity) may have different consequences like filing requirements in different states or state fees. For example: CA requires LLC's to file a separate form and pay a fee of $800 a year. Texas has a franchise tax for LLC's and Delaware has a flat franchise tax for LLC's.
The income you earn as an independent contractor should be deposited in your business account and reported as business income. Additionally you should keep track of your expenses and pay those from the same business account.
Here is a great link for sole proprietors and LLC's:
Sole proprietors IRS
Limited Liability Company
