How to start a company?

A friend of mine recently graduated college and is currently doing freelance work. It's currently quite profitable and she is interested in starting her own company. I told her that an LLC is probably the way to go. Are there any Slashdotters who have gone through this experience willing to give some advice? I have heard that Delaware is the best place to start a business, but does this only apply to major corporations, or can the small business owner benefit too?