Can't resist giving a shout-out to the sole proprietorship without outside funding. It's pretty amazing how much cheaper it has gotten to start a whole range of software businesses in the last three years.
Lots of smart people seem to use sole proprietorships, but I don't understand why. I mean that seriously, not rhetorically: this is something I don't understand. LLCs are comically easy to set up.
I don't mean that to be flippant. I can see many good arguments for it, including the ones you list, but in my specific circumstances (no clients to invoice, clear line between personal and business expenses) it has been simpler to remain a sole proprietor.
That said, what I wanted to stress was the idea of not taking outside funding, however you choose to structure things.
I just want to advocate for the stance that, if you're not sure, you should err on the side of having limited liability. Your business is probably going to fold, and when it does, it's probably going to have liabilities.
What I've found by far the hardest as a one-person business is finding a lawyer and an accountant. It's hard to know where to start looking, and there's so much startup money sloshing around that it crowds out smaller fish like me.
That said: I'd be very surprised to hear a lawyer say that incorporation makes you more exposed. You make a good point, but I'm still pretty sure the default should be "incorporate somehow".