Step one:
The first thing that you are going to need to do is to determine if your hobby or pastime has commercial viability, which is a way of asking if it will sell in the market place. Your family and friends might say what you do is great and that you should turn your hobby into a small business, but the question is will they actually pay you for what you are doing.

Step two:
The key to finding out if your hobby or pastime can be turned into a selling product is to do some market research. You are going to have to figure out if there is a market for your products, how you can actually reach that market and what you will need so you can mass produce your product.

Step three:
After you have figured out if there is a market for your product you are going to have to do some more market research to determine if there is enough long-term demand to make your business profitable. One thing you have to keep in mind is that if you are making or creating things to sell you are going to have to come up with new ideas to keep bringing your customers back because if you only have one item to offer your customers you are going to go out of business fast.

Step four:
The next thing that you are going to have to do is to start acting like a business. Some people who try to turn their hobbies or pastimes into a profitable business end up failing because they have not completed this step and don't treat their business like a regular business, they are still stuck in the mood of it being a hobby.

Step five:
The first thing that you need to do is to open a separate checking account for your business. This is the only way to get a clear picture of how your business is doing, as well as making you appear more professional to suppliers.

Step six:
The next thing you need to do is to get a credit card for the business. Even if you can't get one in the businesses name right away take a personal credit card and only use it for business purchases.

Step seven:
You are also going to want to maintain complete and accurate records. You should set up a record-keeping system and use it from day one to track income and expenses. You can purchase bookkeeping or accounting software to help with your record keeping as well.

Step eight:
You will also need to document your equipment purchases. This is important because if you can prove that you bought the equipment for your hobby and are now using it for your business you can most likely use it as a deduction on your company's first tax return.

Step nine:
And probably the most important thing that you are going to need to do is to change your mind frame. You can no longer think of your hobby or pastime as just a hobby or a pastime, something that you could do when you felt like it. You now have to think of it in terms of a business and are going to have to work at it on a regular basis.