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Starting a side hustle: What you need to know

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People struggling to make ends meet or just wanting a little extra cash in their pockets are turning to side hustles. Side hustles, as the name implies, are legitimate money-making activities done outside of your day job and not, as the “hustle” part of the definition may imply, methods of swindling or cheating.

Side hustles are more like “one-offs” outside of your regular job and can range from a couple hours a day to a couple hours a month. The idea behind side hustles is that they are more flexible and customizable to your lifestyle than, say, your typical 9 to 5, which means you can more easily integrate it into your life based on your schedule.

Questions to Ask Before Starting Side Hustles

With more and more people looking for ways to earn some extra cash, it’s becoming somewhat of a gig economy, and there are endless possibilities when it comes to side hustles. To help narrow down your options, there are a few questions you should ask yourself to find the one that’s right for you.

Does it fit with my schedule?

As mentioned above, a side hustle is a job performed outside of your main source of employment, meaning it will have to work around those hours. If your full-time job is on weekdays, you might want to pick something up in the evenings or on weekends, like babysitting or food delivery. If you work nights, something you could do during the day – like grocery delivery – would be more applicable. If your schedule is erratic, find something you can do when it’s convenient for you, even if it’s just a few hours at a time, such as being an Uber driver or writing a blog.

Do I understand the tax laws?

Even though it’s a side job, it’s still a business, and there will most likely be tax implications. Therefore, you’ll need to keep track of your business finances. The vast majority of side gigs aren’t going to account for taxes up front, meaning you have to keep track and plan on setting some of that income aside to pay Uncle Sam when the time comes. If your net earnings from your side hustle for the year exceed $400, you are required to file a tax return for that income, even if you have a full-time job as well. It’s imperative that you keep records of not only your income, but your business-related expenses as well, which may be tax-deductible, and how much you make, whether that’s on paper, in an Excel spreadsheet or by using software such as Quickbooks. If you’ve picked up a side gig, the type of business entity you’ll probably identify with is a sole proprietorship, and there are specific tax forms you’ll need to fill out and file.

In addition, if you expect to owe more than $1,000 in taxes in one year, you’ll have to estimate and pay quarterly taxes to the IRS (unless you’ve filled out a W-2 for your side gig). Check out the IRS website for information on managing taxes for your side hustle.

Is it something I’ll enjoy?

This may seem like a silly question, but if you’re going to be using your free time for a side hustle, it should be something you actually like doing. If you’re afraid of animals, walking dogs may not be a good idea. If you don’t enjoy being around children, babysitting probably isn’t your thing. If you’re always running late, working with a delivery service may only frustrate you. Especially if you’re starting a side hustle for extra income, you’re more likely to achieve success if it’s something you look forward to, versus dread, outside of your day job.

Extra money: what will I do with it?

The most common motive for starting a side hustle is to make more money; however, it’s easy to squander it, especially if it’s something like cash tips. Before you start your side hustle, decide how you’re going to use the extra money, whether in full or in part. You might want to set up a separate account for your side hustle money, which will give you a better visual of how much you’re making, especially if you’re saving up for something in particular. Or get a business credit card that you use only for your side hustle-related expenses. And you’ll want to make sure to set money aside from each paycheck for the taxes mentioned above.

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Side Hustle Ideas

So you’ve decided that you want a side hustle; now you need some ideas! There are endless ways to make extra money on the side, but here are a few of the most popular side hustle ideas to consider.

Be a Driver

In many cities, you’d be hard-pressed to find a taxi these days. Driving for companies such as Uber and Lyft allow you to literally make your own schedule by the hour, since you can simply turn on or off your availability with a click. While you’ll make more money during prime driving hours, such as during the rush hour or on weekend nights, since pricing is higher during those times, you can literally be available to drive any time, day or night.

Teach an Online Course

Now more than ever, people are turning to the internet to connect and learn. The best part is, you don’t have to be a certified teacher to teach an online course and share your knowledge with the world. Platforms like Udemy or Teachable enable you to create courses on anything and everything, from academics to arts to health to cooking and more. You can even link to your own web domain, include quizzes and discussion forums, and track your analytics.

Become a Personal Shopper

While shopping online continues to increase in popularity, it saw a boom during the COVID-19 pandemic, and with it came the rise of the role of a personal shopper.

While the most common types of personal shopping involve groceries and other necessary items (think Instacart, Postmates and Grubhub), personal shopping can also extend to items such as clothing, accessories and even gifts. In these cases, personal shoppers may interview their clients to get an idea of their style and what they’re looking for and “virtually shop” with their clients in store using their cellphone camera and video.

Virtually Assist

While sometimes less flexible than a lot of other side hustle ideas, a virtual assistant work requires only a laptop, an internet connection and some attention to detail. Many companies as well as individuals are turning to virtual assistants to help out with everyday tasks. Duties of a virtual assistant can range from checking and sending emails and setting appointments to booking travel reservations and completing bookkeeping tasks. Virtual assistants can find clients through freelance platforms like Upwork, Fiverr or TaskRabbit.

Manage Social Media

If you’re fluent in Facebook, interested in Instagram, linked up with LinkedIn or timely with Twitter, another side hustle idea is to promote your services as a social media manager. Both big companies and small businesses hire individuals on a freelance basis to do what they don’t have time to do – post and advertise on social media to help promote their brand identity and increase sales of their product or service.

While this side gig may be time intensive, in some cases you can create a calendar of posts and schedule them ahead of time. While you can contact any business to find out if they need social media assistance, you may have more success reaching out to local businesses since you’re more likely to know about the area in which they’re located.

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Work with Animals

There are plenty of animal-related side hustle ideas out there. From pet sitting to dog walking – even having your own mobile pet grooming service – helping out with furry friends is a great way to feed your animal fix while making money at the same time.

Potential customers can be found through word of mouth, social media or sites like Rover and FosterFurKids. Other animal-related side hustle ideas include:

  • Pet photographer
  • Pet trainer
  • Pet transporter
  • Pet washer
  • Pet treat baker
  • Pet party planner
  • Pet pooper scooper

Take Online Surveys

Taking online surveys is one of the easiest ways to make some fast cash on your own time. How much you earn from filling out surveys depends on the project. In general, the payment ranges from less than $1 to more than $20. Some surveys may pay you with gift cards. While you probably won’t make enough money to have to file taxes, it’s a side gig that doesn’t take a lot of time or effort. Check out sites like Swagbucks or Survey Junkie.

Sell Online

Whether it’s your wares or someone else’s, there’s money to potentially be made selling on an eCommerce store site. This is a nice option for many because you don’t have to necessarily have and maintain your own website. Options include selling:

  • Items locally through sites like Facebook Marketplace
  • Clothing via Poshmark
  • Handmade arts and crafts or collectibles on Etsy
  • Your photographs on stock image sites like Unsplash
  • Auctioning or reselling items you’ve purchased via sites like eBay

Side hustles can be a great way to make a little extra income in your spare time. For some, it’s a way of making money that can help them pay bills, get out of debt, make a down payment on a house or just find some financial independence.

While not considered a traditional job, some see starting a side hustle as a way to test the waters toward becoming small business owners, without having to commit to some of the operating expenses and start-up costs. Regardless of why you start a side hustle, it can be a great way to make some extra cash in your spare time.

Whether you’re starting a side hustle or managing a small business, Higginbotham can provide you with the personalized insurance coverage you need. Talk with a specialist today.

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