For eBay sellers, the most common types of business structures are C Corporations, S Corporation, Limited Liability Corporations, and Sole proprietorships. Each have different advantages, for example:
Sole proprietorships require little legal structure and allow you to take advantage of tax benefits. It works very well for a one-man operation working from home. However, you are held personally responsible for anything that might go wrong and there is no scalability.
On the other hand, Corporations offer you personal protection with limited liability and also have the ability to be expanded. On the downside, they are have a minimum taxation of about $800/year, whatever the profit/loss situation, and they also require a formal legal structure. (See Appendix A on steps for forming a C Corporation).