A pilot reported they were on short final to a non towered airport when they initiated a go around and side step to avoid another aircraft which entered the runway and departed.

Narrative

I was PF with an instructor. Instructor was making position reports over ZZZ CTAF (upwind/downwind/final). We had come from ZZZ1 to ZZZ pattern and done 3 touch and goes and remained in the pattern. There was 3 other planes in the pattern when this event happened. We were approx 1/2 mile final when the aircraft in the pattern prior to us landed and exited the runway. My instructor had made a radio call that we were on final for runway XX for a touch and go. A plane announced they were entering runway XX 'to line up and wait'. My instructor announced we were short final but the airplane continued onto the runway. I executed a go around and side stepped to the right. The other plane started their takeoff roll and continued while I kept them in sight just below and to my left. On the upwind they kept straight. To prevent a collision and prevent entering the class B I turned right and left the pattern while my instructor made radio calls announcing our intentions. We decided to return to ZZZ1 as the pattern at ZZZ at that point had 5 aircraft.