Side hustles are all the rage these days. Millions of people try to supplement their income with work on the side and some end up very successful. However, not every self-starter results in profiting from their side hustle.
If you’re thinking about finding a second source of income, here are some major problems you can avoid down the line. A few minutes of work before you dive into your side hustle can save you hours, or hundreds of bucks, down the line.
1. Not Enough Research
Whatever field you intend to break into, you need to do a lot of research beforehand. If you’re thinking of starting your own business, that means market research on the space and competitors. If you want to join an existing firm, make sure to check if the company is legit and do your homework there. Sites like Glassdoor can help you learn more about companies, and you should evaluate what the demand for your hustle looks like too.
This is going to be arguably the most important step in the process. Doing enough research sets you up for success down the road, and can help you avoid any fatal errors early on. It’s a surefire way to make sure things go smoothly as you start a side hustle.
2. Factoring In Costs
If you’re starting a side hustle to earn extra income, you probably don’t want to sink tons of cash into that side gig. That’s why before you make any moves, you need to consider all the costs associated with your side gig, explicit and implicit.
Let’s say, for instance, you pick up a part-time customer service job. While the job itself technically won’t cost you anything to get started, there are certain essentials you’ll need to buy if you don’t have. You may need a computer, high-speed internet, and a headset. You might have all of these already, but different side hustles assume you have different equipment before you start.
Consider the cost of your time against the money you expect to earn as well. If you want to make jewelry on Etsy, for instance, the materials are probably cheap enough, but you also need to mail everything you make to buyers. That commute and process is an additional layer of work on the designing you’re doing.
3. Losing Time At Your Job
The point of a side hustle is, as the name implies, that it’s on the side. Some people eventually manage to turn their side gig into their careers, but that’s nearly impossible to do when you’re just getting started. If it gets in the way of your full-time job, that’s a sign it’s not working perfectly.
It’s not easy to fit a job, a side gig, and whatever else you’re responsible for into a schedule. While starting a side hustle is ambitious, it could end up hurting you by taking away time from your job. Unless you can strike that balance, it may not be a good idea to divide your time.
4. Not Having a Business Credit Card
A business credit card isn’t a must, but it will make your life a lot easier. Using a business card will effortlessly track your work spending and help keep it separate from your personal bank account. Plus, you can rack up rewards points or cash back that you can put right back into your side hustle.
If your side hustle comes with lots of costs, a business credit card is a great investment.
5. Tax Issues
Income is income, and the IRS is going to want a piece of the pie no matter how you earn it. Money from your side hustle is taxable just like money from your job. The difference is your company will usually handle tax deductions on paychecks, but depending on the side hustle you may need to handle it yourself. That means you’ll need to make estimated payments on any income that hasn’t already been withheld.
However, the tax side of things isn’t all bad. Business-related purchases can be deducted from your taxes, for instance, and you can save money through those write-offs.