This is absolutely the correct next step. When considering starting a pretty sizeable FOSS project in the past (was going to be AGPL-3, we had a team and had just left another project to start this), we considered registering an e.V. in Germany, for many of the same benefits. Ultimately, the team disbanded for other reasons, but if this was in place, we would have likely been able to start much earlier and the team would not have disbanded most likely.

We were concerned about finances and legal protection.

To add some details actually; we were concerned about three major points:

1. The project would deal with user's data to some degree

2. The project was going to "annoy" an existing, much larger, project who would have likely tried to take some legal action to keep their "place at the top"

3. The project was going to both a) need to generate funds (and pay core developers), and b) be guaranteed to generate funds, based on our experience. However, we did not want to register a company as not having a company complicate things was one of the central goals of the split from the larger project. Try paying people a couple hundred bucks (less than minimum wage, more like Aufwandsentschaedigung) without having to jump through various hoops and without doing it illegally.