When you start making more money than you have now, you are going to want to protect it. Otherwise, the government will take a large chunk of your new income.

Forming a business allows you to deduct business expenses such as  rent, utilities, vehicle expenses, computer costs, and home insurance and repairs.  Forming a business can also provide protection against liability. 

Even if you are the sole business owner, you can form a Limited Liability Company (LLC).  It is not as hard as you would imagine, and in many cases you do not need to hire an expensive lawyer or tax accountant. 

Creating an LLC can be perfect for a home-based business.  There are a few great companies on the Internet to help you through the process with online tools as well as books.  You should at least read up on them and the many tax benefits you can receive.