I suppose officially I made the switch when we launched a website but even then, I wasn't terribly serious about it. I didn't even have a separate bank account for the first four months or so.
Get your ducks in a row before your first sale if possible. Get a business license, a separate bank account, insurance, etc. Don't make any huge investments (we boot-strapped big time) but get the paperwork done so you don't have to worry about it later. If you end up having a very small business, no big deal. But if it grows completely out of control quickly, you'll be glad you had that stuff set up in the beginning.
Yes, our taxes are more complicated than they used to be but that's what Turbo Tax is for right? The first year wasn't bad (we'd only been in business 4 months) although I certainly didn't take all of the deductions I probably could have
Last year was much harder and I literally hired a CPA the next week. I swore I'd never ever do them myself again.