When should my hobby become a business? It sounds like a simple question but there isn't a simple answer, unfortunately. Whether it's sewing, painting, cooking, or performing - any hobbyist and business owner should understand the IRS's rules for what qualifies as a business or a hobby. Whether your venture is a hobby or a business affects your tax liability. In addition to the tax implications, you should also consider your legal requirements and protection.
Before deciding on a legal structure for your business, you need to consider how you will perform management functions and keep financial records. Also, become familiar with the primary advantage of the four types of legal structures. Once you determine how you want things done, an attorney may will be able to advise you on local laws and procedures, and file your business formation documents.