Mindset is everything, friends. Around here, I chat a lot about running a hobby vs. a business. You can read my article on the IRS’ opinion on this matter here for some official guidance and legal definitions and such.

If you’re here on my site, you are most likely running a business! Whether you know it or not…whether you want to admit it or not. (Psst… if you aren’t sure whether you’re really a hobby or a business, make sure to check out my free workshop on this topic here!)

Today, I want to shift focus from a legal discussion of hobby vs. business to discussing the mental, emotional, and financial benefits of treating your creative endeavor like a legitimate business.

five reasons to get legit

What exactly do I mean by “treating your creative activity like a legitimate business”? To me, this means:

1) thinking about it in a business-like way,

2) legitimizing it with your city/state/local/federal entities,

3) doing your business books on a consistent basis,

…and all those other business-y things.

I 100% believe that treating your activity like a business is actually hugely beneficial to you (and your pocket book too).

Now I could make some of my reasons to treat your shop like a biz be based on scare tactics (Don’t piss off the IRS! Fines! Penalities! Auditors! Oh my!), but I think it’s important to give you some purely positive, not-here-to-scare-you-into-it reasons. There are plenty of reasons OTHER than getting in trouble with the government to get legit!

The IRS boogeyman should not be the #1 reason you take your business seriously. That’s like trying to lose weight or get fit because you don’t want your partner to leave you (doing it out of FEAR). You want to get fit because YOU want to feel better and YOU deserve to live a healthy life. Let’s make this a meaningful, empowering process, rather than a fearful one.

Let me share my best 5 reasons why I encourage you to treat your creative activity like a bona fide business.

Five Reasons Why You Should Treat Your Creative Activity Like a Business ASAP

1. It makes you take your shop more seriously.

If you’re simply “playing shop”, you really aren’t going to take that shop very seriously. That blasé attitude means I list things when I feel like doing it. I create new items on a whim without thought of how they fit in with my brand and without my audience in mind. I post on social media willy nilly. I go on a Netflix binge for a week and neglect things.

When you treat it like a business, you’re going to take your duties as CEO a bit more seriously. You have a commitment to yourself and to your customers, and even to the government.

You’re way more likely to think through your actions. To make decisions based on goals. To plan out your time so that you use it more effectively.

Your business is a real job. It can help pay the bills. Those business registrations and that business bank account encourage you to run your business more seriously and make smarter decisions.

2. You improve the things you actually monitor.

Part of running a legit business means keeping up with your books & your numbers. As a responsible business owner, you likely pay more attention to your finances. Paying attention to things usually means taking more active steps to improve them.

You aren’t going to strategize on how to improve your profit margins or increase your conversion rates if you aren’t even paying attention to that data to begin with.

If you aren’t monitoring your money, your sales, your expenses, etc., how can you expect to grow them? Simply being aware of them (like a real business owner) is the first step towards improving them and growing your business.

3. You will make more money and be more profitable.

Running from points number 1 and 2, I can give you a 98% guarantee that once you make your hobby a legit business, you will make more in profit.

Sometimes you have to put skin in the game to make money.

Getting your business set up correctly and keeping up with your books means investing both time & money in your business. You’re on the line now. You won’t be running things willy nilly. Once you’ve made this commitment (and put “skin in the game” as they say!), you’re more likely to take active steps towards improving your bottom line.

4. You’ll save yourself a lot of stress

I know I promised not to use scare tactics here and this is the closest I’ll get, but getting legit means saving yourself a lot of headaches down the road.

Running your business in a legit manner means no more procrastinating, no more playing catch up on 12 months’ worth of transactions, and a lot less anxiety when it comes to all things finance-related.

It means having a feeling of calm + confidence when doing those sales tax forms each month or quarter. It means an internal thought process that looks like, “Oh, that payment or form is due next month. Let me gather the info I need to pay or file that right here. Ok, great. Done.” Or wanting to invest in an amazing new piece of equipment or technology and knowing immediately whether it’s something you can afford right now.

How amazing does that feel? Which leads me to #5…

5. It helps you feel like an empowered & capable boss.

First, you’re gonna feel GREAT after finally getting your financial ducks in a row. It may initially feel like a huge obstacle to jump – but that makes the victory all the sweeter once you get there (and I promise you, you can get there!). Get all those boxes checked and you will feel super proud.

And if you continue to take your business seriously, you’ll have a wealth of bookkeeping & financial data at your fingertips to allow you to make smarter decisions for your business. You will no longer be waiting til year end to figure out how much money you made. You’ll be able to make decisions and pivot on the fly based on your knowledge.

You’ll know exactly what to expect from your business. You can pay yourself consistently. You will have built something you can rely on from your own two hands!


NOW is the best time to get your business legit.

Figure out your tax responsibilities at the state & federal level. Set up that bookkeeping system and start updating it each month. Get that business bank account. Download the free get legit checklist here.

The longer you wait to get legit, the longer you will just be “playing” shop. And that’s not really fair to yourself because it generally means you’re not working right now to build a profitable, sustainable business for yourself. It’s time to get serious about doing business the RIGHT way so you can get serious about making money and using your time effectively.

Interested in learning more about your financial responsibilities as a maker? Check out my free workshop below and get your learning on!

when to worry about taxes for your handmade shop