An LLC will help seperate your business and personal assets AND DEBTS as long as you avoid doing anything that will "pierce the corporate veil". Keep your finances seperate, do not put personal charges on a business credit card and vice versa and the LLC will protect you.
The reason I capitalized debts is because the protection from liability is not just from things that occur if you get sued by a customer, but also financial liability. If you can get financing for your business without a personal guarantee, then if your business fails, that creditor can only go after business assets. The challege there is that most banks now require personal guarantees on everything, so that is not as big of a deal as it was just a few years ago. However, building business credit seperate from personal credit will help your business get financing down the road and will help minimize the number of business items reporting on your personal credit report.
As for the product liability, just like any other document or contract, a signed waiver can be challenged in court. It is only one layer of protection. The next layer is O&E insurance, then LLC or corporate protection.
For the cost of an LLC, it's cheap protection. In my state, when I formed my LLC, my initial filing fees and publication costs came out to around $400 and there is an update fee of $8 every 2 years. I elected pass-through taxation, so there is no tax difference for me between an LLC and SP.
There is also the marketing benefit of having an LLC...it implies that your business is more mature. all other things being equal, when someone (especially business owners) sees that on your business card, they will most likely give you the business over someone that charges the same price but hasn't put through the effort of being an LLC.
