Ask HN: running startup as a sole proprietorship until you receive funding.

So I am entering an agreement with someone who is starting up a company. He asked me to work for the company in exchange for a percentage share, and the agreement states that until the venture receives funding it will be run as a sole proprietorship to save on legal fees. Is this a good idea? Are there any risks, for me or for the startup? I'm not familiar with the legal aspects of business, so I'd really appreciate the guidance.