I don't know about the "incorporated" thing - but you DO need a sales tax/business license and a DBA to do business - which would include collecting money.  I don't know what state you are from - but if your state has a website like mine does (Michigan) there should be a page within it that will tell you what you need to do to start a small business (which is essentially what you are doing).  Or call your local Chamber of Commerce or town organization - they can possibly point you in the right direction. 
Hope this is at least a little helpful.
Sheryl Stephens
Cool Moon Creations & Beads
Lansing, MI
www.coolmooncreations.com

Hi Mary

I would believe that all you need to do is pick a name,and submitt it to the State. (Along with  money of course) They should issue you a business license, and with that number you  are in business. I would suggest getting a checking account for the business as well, just so as to transfer money into from PayPal and to PayPal. Book keeping wise, it is best to transfer all the invoice payment to you and then send the PayPal charges back to them

I am sure you can be a Sol Proprietor to do business in any state.

 Mary,

As shanks said, check with your state or the local Chamber of Commerce, because every state/town is different. You should be able to get a resale license for your business (which will enable you to buy TRUE wholesale - not "wholesale to the public) as a sole proprietor. You SHOULD have a separate bank account in your business name as well. That keeps the business separate from your personal money and makes it MUCH easier for whoever does your income taxes. (Take it from me - I worked in an accounting/tax office for 20 years and saw plenty of sole proprietorship "horror stories" that would make your hair curl!) 

 Good Luck!

Deb