I would not have a business without a LLC but I guess that depends on your personal situation and tolerance for risk. Years ago when my net worth was actually negative I ran a business without one but now I have too much to lose. Sure insurance helps and I would not be without it but an LLC is just really another safety net. If something horrible happened they could sue you for more than the insurance amount. They could go after your house, your car, your bank account, and on and on. The LLC would help protect your personal assets if this happened as the business is a seperate legal entity so they would be suing the company, not you personally. So in theory they can only take what the company has, not things that are yours personally.

I don't really know what you mean by file under your husbands taxes. I assume you file a married filing jointly return now? I am not a tax expert by any means but the self employment tax rate is 15.3%. This is the amount you will be taxed on the 12,000 to pay social security and medicare. Then on top of that you pay regular income taxes based on what tax bracket you are in. This is probably around 15%. So you could pay around 30% in taxes including social secirity, medicare, and fed income tax. Maybe $3600/yr