should someone starting a small online business incorporate in nevada or do a proprietorship and risk lawsuits

Answer 1

Part of it depends on the degree of liability and risk you are likely to suffer from.

For example, if you sell fire extinguishers, and one doesn't work properly then a person (or insurance company) could sue you to recover the cost of a billion dollar fire.

On the other hand, if you are selling t-shirts, the liability is much less.

Generally the way to go is to start with a proprietorship and incorporate when your business is more of a going concern.

Answer 2

That would depend largely on what you're selling, and what the likelihood is of injuries being caused by it.