My husband has a construction (service) business in Illinois. He was as sole proprieter when I met him. He is now an S-Corp. Here is my advice/comments:
I found an accountant that was reasonable that I trust. I've used him for all my guidance. He charged me by the hour at first for consulting, and it was well worth it. He's located in Northbrook. If you're in that area, I can pass on his information.
My husbands business is a service business and does not manufacture. So he (we) do not need to pay sales taxes on the goods he creates. Taxes are already paid by him on the materials he purchases. I unfortunately don't have guidance on how you pay sales taxes on items.
Insurance is critical. There are people out there who would do and try anything. Make sure you are covered. This is why my husband's business was changed to an S-Corp. The business would be sued, but no one can go after personal assets as long as everything shows we treat this as a business. Check your home owners policy, or look to get an additional rider.
My husband ran his business as a sole proprietership and everything was tied to his SSN. I don't think he did anything else. (Schedule C for filing purposes).
My accountant recommended the S Corp and guided us through that process. We registered with Illinois for a State Tax Id. We also have a federal tax id as well. I think we had to do the federal id first. We were able to do this all through the internet and faxing in forms. It's been 6 years since I've done this, so things may have changed.
My husband is an employer and receives a paycheck from his company (under an S-Corp). I take out taxes, FICA, Medical and do the unemployment filings. It's not that difficult, and we use QuickBooks and pay for the payroll piece to help us with all that.
Recordkeeping is key. Mileage, expenses, sales. Keep it all and keep it organized.
Good luck!
--A.