In an unpredictable and capricious economy, in an era where most of us are butting our heads on a ceiling of wage repression, it’s only sensible that many of us turn to side hustle to grow our money. We all like to make a little extra money in our spare time and while selling a few items on eBay every few months or using mobile apps to make money off our old receipts are relatively new ways of making a little extra on the side, these do not necessarily represent a side hustle. If, however, you make money walking neighborhood dogs, offer DIY or building services for money, sell your artwork regularly on Etsy or monetize your blog, podcast or YouTube channel these are classed as side hustles. If you make money from these you are trading. And if you’re trading, you run a business. You may or may not see it as a business. You may well hope that one day you’ll be able to quit your day job to dedicate all of your time to this endeavor. Or, on the other hand it may just be a fun creative outlet for you.
In either case, you need to be aware of your legal and financial obligations to your side business, whether it’s your main source of income or not.
You gotta pay tax!
The money from your side hustle is taxable income. If you don’t declare it to the IRS you may get found out (and if you’re advertising your services online under your own name, there’s a good chance you will be). If this happens the consequences could be dire. Best to declare it all to be on the safe side. If you’re at all unsure, it’s a good idea to incur the services of a tax specialist. You can check out a good example of one here. These experts will help you to ascertain what you need to pay in tax as well as helping you to ascertain which of your expenses carried out in running your side hustle are tax deductible. Generally a tax expert can save you more than they cost. Plus, their own services are tax deductible, too!
Don’t use work time or resources
It’s called a side hustle for a reason. If you dedicate your workplace’s resources like computers, telephones or office space to assist in the running of your side hustle or even if you work on your side hustle on company property, this could prove a problem for you. Not only is dedicating your day job’s time and resources to your side hustle poor form, it may be a breach of contract that could get you fired or at least severely reprimanded. Make sure you work on your side hustle on your own time, using your own resources.
Incorporate your business
This may not strictly be a legal requirement in your early days, but it’s still a good idea. Incorporating your business will allow you to separate your business and personal finances more easily to stay on the right side of compliance, it will likely have tax advantages worth considering and it can even help to protect you from intellectual property theft. If someone steals your idea it can be incredibly difficult to prove in a court of law.
When you know you’re compliant, your side hustle has nowhere to go but up!