I see this post is very old, so you may have found out your answer by now. I don't know a whole lot about this, but I'm currently researching this stuff myself. I'm pertty sure that the difference of an LLC and a sole prorietorship, is that an LLC offers the protection of your personal assests. Which a sole proprietor does not. An LLC also bypasses the "double tax," in that the profit is only taxed when it's passed down to the shareholders.

Basically, an LLC has the tax benifits of an S-corp, and none of the investor limitations.