I think that's pretty misleading. What protects you when you've incorporated is that your contracts are between your company and your customers, vendors, or partners. It's not the nature of the contracts themselves. Consolidated Gypsum can put your company out of business by dragging you through a lawsuit until you BK. It can't take your house.
The reason contracts don't protect businesses is that they cost too much to enforce. When you're not in the same league as your adversary, they will simply outlast you. The same dynamics do not apply to an attempt by Consolidated Gypsum to make themselves whole on a debt by trying to take your house.
Good advice. Also, in most states setting up an LLC is cheap and easy. Here in Colorado, it's only $50 and a fairly thin form that only ask for the obvious stuff like; what's the company name, what's your name(s), etc.
The reason contracts don't protect businesses is that they cost too much to enforce. When you're not in the same league as your adversary, they will simply outlast you. The same dynamics do not apply to an attempt by Consolidated Gypsum to make themselves whole on a debt by trying to take your house.
Incorporate early. There's no good reason not to.