Ask HN: What is legally required to run a small service-based web application?

I am gearing up for releasing a web application, targeted at a small audience where I'd like to sell monthly/yearly subscriptions. I am wondering what kind of a legal structure do I need to have in place in order to do this properly. Specifically, I want to (1) limit my liability and (2) make sure that customers trust it enough to sign up. And of course, I'd like for it to not cost an exorbitant amount to set up.

Also, I am deciding between PayPal and Google Checkout for the payment processor. I have little experience with integrating either, and while PayPal is more widespread, Google's documentation seems to be clearer. Any recommendations?

Not sure if this matters, but I am doing all of this as a side-project, and have a full-time job.

Thank you.

EDIT: I am in North Carolina, US. There is nothing about this service that's region specific. Ideally, I'd be able to have international sign-ups. So far, I have had as many hits from Europe + Asia as from the US.