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Step 1
Think about what your hobbies really are and which ones have any business potential. If you love to fish, then being a fishing guide or consultant might be a possibility. Maybe you love art of music. If you don't have a hobby, that doesn't mean you can't create a business. A business is more a way of thinking and organizing finances and tax structure than it is about buying and selling.
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Step 2
Now create a name for your business. Nothing too clever, but something that is generic and has your name in it.
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Step 3
Open a personal bank account in your name. For the kind of business structure we are talking about, maximum flexibility, minimal compliance requirements and low cost are the most important factors. Probably using your personal name is best and simply designate this account for business only--but don't mention this to the bank.
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Step 4
Create an email address account with this name using your high speed Internet email account--usually you can have up to 10 free accounts. You can name this email account whatever name you want. It doesn't have to match your bank account, but any payments you receive in the form of checks--if you ever collect from a customer--will need to be written to you. You can always refer to the business name at that point.
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Step 5
Develop a website with this business name. Nothing says you are in business more than a website and a bank account, and now you will have both. You might also go ahead and print some simple inexpensive business cards with your email, telephone and website URL on them.
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Step 6
Convert a room in your house into a study or office. You will be able to deduct up to ¼ of your mortgage or rent payment as a business expense.
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Step 7
Get a telephone account for the business in your personal name. If you don't have a second phone, now would be the time to sign up for a voice over IP account through your ISP. Of course you can always use your regular home telephone or your cell phone, but the more you structure your business like a business, the more convincing your tax deductions and the more positive the signals you send to yourself and others will be.
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Step 8
Purchase whatever electronic equipment you need and charge it to your business. Same with office supplies or any kind of related materials. You will begin to see spending money in a completely different light.
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Step 9
Keep the receipts for everything you spend, then sort out all the ones that even remotely relate to a business expense. You will have the opportunity to deduct vacation trips, restaurant tabs, gasoline, car expenses, or anything you can imagine you might use for this business. All you have to do is collect a few business cards and talk to a few people about your business. You might even find a customer.
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Step 10
Maintain good records. Develop a set of books--probably best to have a bookkeeper or accountant. Select someone who has a good understanding of IRS policy and procedures who can advise you on whether a deduction will be allowed.
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Step 11
Enjoy being in business for yourself and loving what you do. Even if you never receive the first dime in sales, you will be making money through the legal deductions provided by law for up to two years. Every time you buy something or talk to someone about your hobby, you will be conducting business--and you are eligible to receive the benefits of stepping out on your own.
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Step 12
Expand your business to include other interests. If you don't create an income flow from your original activities, you can start another business with new ideas or hobbies. You can diversify at any time. After all, you are in business for yourself, you're the boss, and you can do whatever you want.
