It is refreshing to learn how simple it can be to make money from a hobby. Maybe you like baking, making soap or candles, or fixing phones or lawn equipment and have learned that you can make money by doing this for other people. If it becomes clear that, with the right amount of time, you could turn your hobby into a living, then what is the next step?
Becoming an incorporated business comes with many new responsibilities, but it also comes with advantages. For example, if you are driving your car or picking up items at the grocery store for business purposes, you are entitled to write those purchases off on your taxes. This may seem like a mere technicality until you see how the savings add up. Over time, savviness like this will more than pay for the fees associated with owning a business as well as the costs of incorporation.
However, the complexity of business has a dangerous side as well. If someone you know asks for you to invest in their business, how do you know it is safe to invest in? How can you be sure that the business is a legitimately incorporated, that it has real revenues, or that the business actually owns the building that it claims is its brick-and-mortar headquarters? Finding answers to these questions is called doing business due-diligence, and it is a common service provided by lawyers. More than that, however, it is a safety precaution which many people who are unexperienced investors will overlook, and which could cause great harm if it is.
A few hours of business due-diligence can be worth thousands or hundreds of thousands of dollars, depending on how much you are investing in a business. Getting your business incorporated and making it legally legitimate can be worth just as much for savvy business-owners, considering that incorporating your business protects you from liability as well grants you access to tax breaks and other benefits that will add up in the long run.