A side hustle can be a great way to supplement your income and generate revenue by doing something you enjoy. If you’re thinking of launching your own business, a side hustle can also be an effective way to test the waters and get a glimpse of what it would be like to be your own boss.
Before you get started, however, you’ll want to ensure you’ve got everything covered. When you’re operating in a competitive marketplace, the right preparation can significantly increase your chances of success. With this in mind, take a look at these four things you need to consider when setting up a side hustle:
1. Tax Liability
You might not think of your side hustle as a fully-fledged business, but the income you make will certainly be subject to tax. If you’re operating as a freelancer, you’ll usually be taxed on these earnings as a self-employed worker or sole proprietor, which means you’ll pay personal income tax on what you earn.
Alternatively, if you set up a company and operate your side hustle as a registered business, the organization will be liable to pay corporation income tax. Additionally, you may need to pay personal income tax on any salary you receive from the company.
Remember – your tax liability depends on your overall income, not just your profits from your side hustle, so bear this in mind when you decide which type of business formation is right for you.
Before you start trading, it’s essential to make sure you have the right legal protection in place. Taking out the right type of insurance can protect you financially if you’re faced with a claim due to the work you undertake as part of your side hustle.
If you offer business advice or consultancy services, professional indemnity insurance could be an important way of protecting your liability. Alternatively, if your side hustle involves delivering goods or transporting passengers, then commercial auto insurance is essential. Similarly, public liability insurance or product liability insurance can protect you from claims if someone gets injured as a result of your work or the products you make.
Fortunately, all types of business insurance can be obtained relatively cheaply, so this needn’t dissuade you from launching a side hustle. When you work with a reputable insurer you can create bespoke insurance packages that provide the exact level of cover you need, including commercial auto insurance. What’s more – you can benefit from budget-friendly prices and a swift, online policy purchases.
3. Training and Certifications
Depending on the type of side hustle you want to start, it may be necessary to undertake training or obtain certifications first. If you want to drive a large van or truck to deliver goods, for example, you’ll need to ensure you have the appropriate license to do so.
Even when certifications are optional, it can be advantageous to obtain them before you launch your side hustle. When it comes to acquiring clients or customers, certifications and membership of professional bodies can impressive prospective leads and enable you to grow your side hustle more quickly.
4. Time and Availability
Before you start a side hustle, think carefully about the amount of time you have available. It’s easy to underestimate how much time a particular task will take, which means you could end up underpricing your work or spending more time than you intended to on your side hustle.
By using time management techniques to optimize your schedule, however, you can increase your productivity to maximize revenue. Similarly, undertaking trial projects or dummy tasks will give you an opportunity to gauge exactly how long commissioned work will take. Using this information, you can create a viable pricing structure that reflects the amount of time, effort and expertise you’re putting into your side hustle.
Finding the Right Side Hustle
No matter what side hustle you choose to launch, it’s vital to ensure there is a market for your products or services. By conducting market research and learning more about your target audience, you can ensure that there is sufficient demand to make your enterprise viable. Then, you’ll be set to launch your side hustle and enjoy the revenue and opportunities it brings.