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These days it is easier than ever to start a small business. The proliferation of virtual markets has made it simple for entrepreneurs to sell online. For instance, there are numerous websites and mobile applications to find freelance work in any industry. The possibilities are endless. Plus, you can start your business without quitting your day job.
A recent study on side hustles has shown that approximately 37% of US workers have a side gig. These people are making an average of $686 per month. The side hustles are a great way of making extra cash and hone your entrepreneurial skills. They are also a perfect way to assess your business idea before quitting your day job.
Not filing taxes from your side hustle, no matter the venture, is a bad idea. You are not being honest about what you’re making from it. Side hustle income is still income to the IRS. Failure to declare your side hustle taxes may amount to tax evasion or fraud. To ensure that you don’t get locked up, here is how to handle taxes for your side hustle.
The first step is to keep track of your income. For online businesses, you can take advantage of invoicing through online payment systems. Through these payment systems, you can keep track of your payments. If you receive payment through checks and wire transfers, it is essential also to record them to track your hustle income. You may want to consider using spreadsheets.
Secondly, keep track of your expenses. You should record expenses such as driving your car for business use or to meetings with customers. Other expenses may include buying a new laptop for work, the cost of working from home or renting an office. A credit card is a good way of tracking your expenses. You can add your transactions into your financial tracking software. Once satisfied, you can start paying your estimated quarterly taxes.
If you’re passionate, committed, and dedicated to your side hustle, you may want to build an empire. Whatever your reason, don’t forget to protect your side hustle.If you don’t have the proper insurance to protect your small business or side gig, you may suddenly find yourself in a hefty lawsuit that may kill your business. Anything you do on the side, you should consider a small business and that needs insurance. The insurance will differ based on the business.
For a small business, you need a business owner’s policy (BOP), which is a coverage that is a packaged policy that covers the business owner. This coverage includes liability, vehicle, property, interruption, and crime insurance. Some states have different rules for establishing fault in a car accident. So make sure that your insurance covers all of your needs. Professional liability insurance protects you against lawsuits such as negligence, mistakes and failure to perform.
Establishing an LLC
Incorporating a business has benefits that vary depending on the type of legal form of the hustle. Before incorporating your business, you should identify particular distinctions, such as whether you are doing the hustle as a business or as a hobby. Incorporating your business is an excellent way of protecting your assets, where a limited liability company separates you from your legal entity, protecting your private property.
In a limited liability company, you can transfer your ownership anytime. For instance, when your business takes off, you can sell and hand it over without a problem. You can make more use of your tax deductions. Incorporating your side hustle will make it more open to funding.
Although you love your job, you may have some big ideas for a new project that you’re passionate about. First, you have to establish if side hustles are allowed in your company. Secondly, you have to establish that there is no conflict of interest to avoid the mess associated with such scenarios. To avoid the occurrence of a conflict of interest is setting up a meeting between your corporate legal rep with the human resource at your company.
Don’t Use Your Day Job Time and Resources
In the contemporary business world, the mention of an entrepreneur conjures the image of someone who has risked all to pursue their passion in business pressure does not necessarily breed efficiency and ingenuity.
The reality is, don’t quit your day job as you will have time to make a profit and approach your business thoughtfully. Always make sure to take advantage of the day job, especially when you are bootstrapping your business. You should take care not to use the time and resources allocated to your day job in building your business.
Know the Laws That Are Specific to You
If you are ready to turn your idea into a business, then you should be aware of the businesses that will affect your business. For instance, you should be aware of the licensing laws revolving around your business. Other laws that will be valuable include tax laws, employment laws, financial laws, and marketing laws.
Statistical data show that most side hustles have low chances of achieving success; however, this should not discourage you from pursuing a meaningful side hustle. The best thing is to build a business while having your full-time job and ensuring that you abide by the laws governing businesses and protecting them as well.
Make sure you are protecting your assets! Click here to learn how!