Continuing with JT's questions regarding business matters, today we'll talk about some other things you might want in your author's toolkit. She specifically asked about letterhead, credit cards, and websites.
Why do you need it? Very little business is done via snail mail these days. If you suspect you might need letterhead, you might simply invest in a box of good cotton or linen bond. You already have a good quality printer, right? It's easy enough to print your own letterhead onto good paper if your printer is capable of handling the job. Word processing software gives you lots of options for designing on the page. You can change font and type size. You can lay the text on the page in a particular place. You can incorporate a logo, lines, and other design features, all without anything fancier than what comes in your program.
If you have a good color laser printer or a photo-quality inkjet printer, you might even use the graphics from your website as part of your letterhead. Check the dimensions of your artwork files to make sure they'll fit on the page. You can easily re-size artwork using the standard MSPaint program that comes on most PCs. Just open the artwork in the program, click the Image tab, and select Resize/Skew. Under this same tab, you can choose Attributes to learn the dimensions of the file. Or, if you prefer, you can ask your artist to re-size them for you. If you're trying to enlarge, this might be the better option because MSPaint gives a better result with shrinking and cropping than with enlarging. That's been my experience, anyway.
Do you need a credit card in your pen name? Probably not. Eventually, you may get to the point where your writing income is high enough to justify incorporation. At that point, you can use your pen name as your corporate name and set up all kinds of bank and credit accounts, get an FEIN, etc.
In the meantime, check your state's rules on DBAs. DBA (which stands for "Doing Business As") standing might be enough to allow you to apply for credit cards in your pen name. This varies a lot from state to state, though, so I can't really offer more insight than to point out that it might be an option. Your local banker should be able to give you more information on this.
For most writers, a garden variety checking account will be a perfectly workable solution. Set up a dedicated account for your writing income. It can be in your own name. Record-keeping is very important for freelance income earners, so you can use your check register to record every penny earned and expended. Many banks provide debit cards or credit cards to account holders, and these cards will frequently suffice for most of your needs.
When will you know it's time to incorporate? Your agent or accountant will probably let you know, but a good rule of thumb is that if you need an employee, you need to incorporate. But even without employees, when your income gets large, you might want to incorporate to take advantage of tax and other benefits. Again, this is something that will vary a lot from state to state. Check with your accountant for more specific information.
You need a website if you want an easy way for people to find more information about you. If you want to be a mysterious recluse, you get to skip it. But then you also get to worry about whether you're hurting your sales, alienating your readers, and setting yourself up to need a second job when you're 70.
It's easy enough to build a web presence even without a formal website. Take this blog, for example. I asked my good friend Red to design us a banner and avatar. We signed up for a free account, and we did most of the link-building and design work (such as it is) ourselves. If you want something spiffier than a blogspot blog, you can use wordpress, which is a bit harder to learn but gives you many more layout and format options. You can set up your blog to look like a standard website by only allowing the newest post to appear on the front page, and then using the post links to act like links to new releases, backlist, and so forth.
If you want to spring for a domain and standard site -- and when you start to rack up releases, you might want to do exactly that -- you'll need a couple of things like a domain name, a basic working knowledge of html, maybe a wysiwig editor like Frontpage or Dreamweaver, some graphics, and so on. You might want to hire a web designer to create your website, or you might want to do it yourself. Websites run from a few hundred to many thousands, and reputable web designers will quote prices for you. Remember to keep records of all these expenses for your taxes and accounting.
Consider other free options, too, like your publisher's website and blog, facebook profiles and fan pages (which can be made fully find-able by search engines), twitter, myspace, and so on. See if you can get added into the rotation on an existing group blog, which will be less work overall but will still help you reach readers.
For more ideas on branding and web design, take a look at some of our past posts on PR. And I'm sure our commenters can offer more ideas on this topic. Most people start out baffled by business and PR requirements, but it's easy enough to learn. Time, dedication, a good network, and maybe a little cash are all you need.