You need a legal structure and tax advice. You need also a CPA. Basically you need o be educated to these aspects so to start with the right foot and save money later. Look for an attorney in your area. Good luck
This reply is offered for educational purpose only. You should seek the advice of an attorney. The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than an educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the undisclosed individual asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of New York. Responses are based solely on New York Law unless stated otherwise. Pursuant to Internal Revenue Service guidance, be advised that any federal tax advice contained in this written or electronic communication is not intended or written to be used and it cannot be used by any person or entity for the purpose of (i) avoiding any tax penalties that may be imposed by the Internal Revenue Service or any other U.S. Federal taxing authority or agency or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
As noted by my colleague, you really should speak with an business attorney and a CPA to get your business started the right way.
The SBA has good general discussions on some of the issues here http://www.sba.gov/category/navigation-structure/starting-managing-business.
Contracts are a critical aspect of providing goods or services and as a key means to reduce risk. Good luck on your venture.
This answer is for informational purposes only and is not legal advice regarding your question and does not establish an attorney-client relationship.
Do you "need" contracts? No. Is it a good idea to have contracts? Almost always, yes. However, you don't state enough information to fully answer your question.
As for the legal steps to take. First, you should consider forming the company as an LLC (or, potentially S-Corp). There are many benefits to doing so - you can view the linked guides for some basic information. Note that you have other obligations also, likely some business licenses or permits will be required. You will also need to obtain a federal employer identification number for your business. Finally, you can possibly start accepting money prior to forming as an LLC - you would just be operating as a sole proprietorship. To be safe, however, it would be best to get everything in order prior to starting up.