Conclusion: Going to small claims court may be worth it for $500, but it will determine how you weigh your costs versus benefits. At a minimum, it is worth it to send a demand letter.
Small claims basics Generally, you can only sue for up to $12,500 in small claims court (or up to $6,250 if you're a business). You can ask a lawyer for advice before you go to court, but you can't have one with you in court. Starting November 1, 2021, you can sue or be sued for COVID-19 rental debt in small claims.
The basic principle that each side pays their own legal fees is literally called the "American Rule". There are quite a few situations where that can be flipped, for attorneys fees, court costs, and other expenses.
As an individual you can use Small Claims Court if your claim is for $12,500 or less. If you are an individual who owns a business (i.e. sole proprietor) and do business under a fictitious business name, you are considered to be an "individual" in Small Claims Court.