[chiph]

No, until that point you're not sure if you have a business service that people are willing to pay for.

And that dollar amount - you'd just pay ordinary income on it -- because it's not worth the hassle of setting up a business structure. So set aside some money from your sales to pay the taxman.

[ygjb]

This is terrible advice. What if he invests $28,000 then earns $2,000, then talks to his accountant and finds out that if he had filled in some paper work that $28,000 could be a tax deduction?

Talk to an accountant, or at least find the local equivalent of a small business service center in your area. Small businesses are the backbone of the economy and most major cities and states or provinces (depending on country) have folks you can contact to get basic guidance in this area.