So... You Want to Turn Your Hobby Into a Business?

At some point, every creative has the same thought:

"People keep telling me I should charge for this."

Maybe you're a photographer, make custom tumblers, bake incredible cookies, beautify people,  build furniture, or create artwork. Whatever your hobby is, turning it into a business is exciting! But before you open a studio, start taking orders or booking clients, there are a few important things you should do first.

It might not be the most exciting part, but getting these things sorted now can save you a lot of stress later.

Get a Business Licence

This is the very first thing thing you should be worried about.

Every city or town has different rules about running a business, but most require ALL operating business to carry a business licence.

It usually doesn't take long, is inexpensive and it makes your business official from day one.

Make Sure You're Allowed to Run a Business From Home!

A lot of businesses start at home, and that's awesome for your overhead costs! But before you set up your workspace or invite clients over, make sure your property is actually allowed to operate your business.

For example, here in Kamloops, the city does not allow businesses to run out of rental suites or secondary suites and have some restrictions on customers coming to your home.

A quick phone call or visit to your city's website to research regulations can save you from finding out the hard way (ie. fines, or forced closure of your business)

Once you've applied for your license, an Inspector will make a personal visit to your residence to make sure you are in compliance with all regulations before making their recommendation to the city. 

Talk With Your Home Insurance Provider

This is one step that catches a lot of new business owners off guard. Please do not assume your home insurance is enough.

Your regular home insurance probably doesn't cover your business.

If you have expensive equipment, inventory, or clients coming to your house, it's worth calling your insurance company and letting them know you've started a business.

They'll tell you if you need to add extra coverage such as increased liability protection, or equipment coverage. 

It's a simple step that could save you thousands if something unexpected happens!

Get Business Insurance

Think of business insurance as a safety net.

If someone gets hurt while visiting your workspace, you accidentally damage someone's property, or something else goes wrong, business insurance can help protect you.

Nobody starts a business expecting something bad to happen—but it's always better to be prepared than caught off guard. Accidents are rare—but they do happen. Insurance provides peace of mind so you can focus on growing your business instead of worrying about worst-case scenarios.

Separate Your Business Finances

It might feel easy to just use your personal bank account when you're first starting out, but keeping your finances separate makes bookkeeping, taxes, and budgeting far easier.

Consider opening a business bank account dedicated to business related purchases and expenses only, a separate savings account to keep taxes you'll need to pay separate, and a bookkeeping system / Accountant. 

Even if your business starts small, good financial habits will save countless hours later.

Understand Your Tax Responsibilities

This is probably one of the biggest myths I hear :

"I don't have to claim my income until I make $30,000."

NOT TRUE. AT ALL. 

The $30,000 threshold only applies to GST/HST registration. Once your business earns more than $30,000 in gross revenue over the required period, you'll generally need to register for a GST/HST account, start charging GST/HST (where applicable), and remit it to the CRA.

But your business income is taxable from your very first dollar earned.

Whether you make $500 or $50,000, you're required to report your business income and expenses when you file your personal tax return. As a sole proprietor, this is typically done using a T2125 (Statement of Business or Professional Activities) alongside your personal tax return.

My biggest piece of advice? Keep every receipt and track every dollar that comes in and goes out. It'll make tax season so much easier.

And one more thing—don't assume the CRA won't know about your side business. Payment processors, online marketplaces, and financial records can all provide information. Failing to report business income isn't just a mistake—it can be considered tax fraud and may lead to penalties, interest, or an audit.

If taxes make your head spin, there's absolutely no shame in talking to an accountant early on. A little professional advice can save you a lot of stress (and money) later.

Use Contracts (Even With Friends)

When you're first starting out, your first customers are usually family and friends.

Even then, it's a good idea to have a simple contract or agreement.

It helps everyone know exactly what's included, when payments are due, and what to expect.

It's not about not trusting people—it's about keeping everyone on the same page.

Don't Feel Like You Need Everything Figured Out

Starting a business can feel overwhelming because there are so many things people tell you that you "have" to do.

The truth is you don't need the fanciest logo, the perfect website, or thousands of followers to get started.

You just need a solid foundation.

Take care of the legal stuff first, protect yourself with the right insurance, and make sure you're following your local rules.

Once that's done, you can focus on what you actually love doing.

Final Thoughts

Turning your hobby into a profitable business is an exciting milestone, but success isn't just about talent—it's about building a business that can grow safely and sustainably.

Before your first client walks through the door or your first order ships out, make sure you've checked the legal boxes, protected yourself with the right insurance, and confirmed you're operating within your local regulations.

Your future self will thank you.

After all, the best businesses aren't just built on passion—they're built on preparation.