There are lots of reasons to start a side hustle. Perhaps, you’ve been working in the same industry, or even the same job, for years now and you’re beginning to crave a new adventure. Perhaps, you need some extra funds and you’re wondering if a longtime passion could be profitable.
Of course, it can seem too good to be true—can you really do what you love and make money off it too? The answer is yes. Starting a new business venture can be fun and lucrative, but also requires planning. If you’re about to make your dream a reality, it’s essential to have all the pieces in place to ensure your side hustle has the chance to flourish.
Benefits of a Side Hustle
Monetizing something you love, so that you can enjoy it and reap the benefits, is an increasingly popular choice. Life can’t grow monotonous if you’re too busy spreading your wings in a new venture. Crucially, it can also provide extra income that doesn’t even feel like work.
To make a side hustle viable and reap the benefits, you need to plan it out. Start by making sure that there is a market for your service or product. Look at current sales in that sector and determine if there is a growth opportunity in areas that haven’t been explored yet.
Understanding the Tax Consequences
If you’ve never been self-employed or done freelance work before, it’s crucial to understand how it can affect you regarding taxes. No matter the size or stage they are in, all businesses have to pay taxes. If you decide to make your hustle official (which is advisable), consider the structure you want your business to take (LLC, Sole Proprietorship, Corporation, and so on). This will also affect your filing status.
Any tax audit begins with your records. You must keep and document any and all records regarding your side hustle. It is easier to start this habit early rather than to scramble to collect necessary documents in hindsight. Consider using a separate bank account; that way, you’ll be able to produce straightforward statements documenting all business activity, without other personal transactions.
Your side hustle may also qualify you for tax deductions, so your business expenses can reduce your tax bill. You can request deductions based on:
- Car mileage from business-related trips
- Dues and subscriptions you pay to business-related organizations
- Tools and equipment necessary for your business (anything from specialized equipment to your computer and desk chair)
- Tuition for work-related education and training costs
- Home office tax deduction
Work Out the Technical Stuff
As you launch your side hustle, you may need to find new professional services that you don’t require in your regular job. You don’t have support staff or a large company’s resources to fall back on—with a side hustle, it’s all on you.
You might need suppliers for office products, branding, web design, and any other specialty supplies related to your endeavor. Your business will likely depend on your computer for records, marketing, and other operations, so it’s critical to know where you’ll go for professional computer help.
Find Your Market Niche
Larger, established corporations dominate most markets. To differentiate yourself and create space in these markets, you will need to provide a unique or niche edge.
To find a niche, consider the skills, resources, and opportunities available to you. What is your product or service and who might want or need it? Figure out if there’s a market for what you’re doing already or if you’ll be creating one. All of this knowledge will help you make advertising decisions.
Going after a niche market can be tricky. Sometimes, you will have to build it from scratch and that can take time and resources. If it already exists, you may find it too small to be viable. Niche markets can also be profitable, especially if they are too small or specific for larger businesses to enter. Serving a niche market will also add an exclusive edge to your brand.
Grow Your Brand
Your brand is an important asset that should attract new customers and draw loyalty from old ones. You’ll need to build a solid, accessible, functional website that will help customers find you through web searches. An SEO-friendly website will raise your standings in Google’s search results, which can help drive more customers your way.
Most of the world is on social media, connecting over various interests, topics, activities, and interactions. You can find your market via social media by being active on different platforms and creating engaging content to share there. The content will funnel social media users to your website, where you can convert them to sales. You can also connect with others in your industry on social media and gain insights into industry trends, supply networks, and best practices.
Turn Your Side Hustle into a Viable Income
Your passion can do more than feed your soul—it can help feed your family. You can turn your occasional freelance work or hobby into a real supplementary income if you approach it with a professional mindset. Leverage your skills, opportunities, and networks to build your second income.