Start a Side Business That Lasts in 7 Steps
by Susannah Hornback
You got this—all you have to do is start!
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How to Start a Side Business That Lasts
Inflation tightening up your grocery budget? Just want a bit more financial flexibility this summer? Whatever your reasons, starting a side job or second income stream is a great idea.
Maybe this isn’t the first time you’ve daydreamed about a few extra Benjamins each month, though; the idea of a side job may pop up more than it sticks.
Let’s look at some ways to start another stream of income that you can keep up long-term.
Make a list of your responsibilities and commitments
If you’re anything like me, fantastic ideas for the next big thing pop into your mind all the time. Problem is, you’re just one person—there’s only so much you can do in a day.
Before you commit to a new activity, take the time to note the things that take up your time right now. Look for ways you could rearrange your week for a side job. Take note of where you physically spend time (Home? Work? The gym?).
The better you know what you’re already committed to, the more likely you’ll be to make a side job last long term. It may be the difference between picking up a part-time job or a handful of hours working for a rideshare company; don’t let the smaller option get you down. Overcommitting wouldn’t help you in the long run.
Find activities you’re interested in and check the market
Have a list of activities you love? Check to see if you could monetize them, or do some digging and see if any high-demand gigs appeal to you.
My personal tip is to find something that complements your day job, rather than repeating the same thing over again. Maybe you loathe staring at a screen after a long day in the office. There are many great ways to make money that aren’t on a computer—explore a little and see what speaks to you and your wallet.
Check to see if you need a business license
Be sure not to skip this step; side jobs that require a business license might surprise you. For example, rideshare drivers in San Fransisco needed a business license a few years ago, though that rule has since been removed. Better to know the license requirements upfront to get ahead of any surprises.
Pick a platform to provide goods or services through (or fly solo)
Listen, I’d put money on there being a result for any internet search of “what’s the Uber for [insert activity here].” Companies that connect service providers with eager clients are all the rage right now. There’s even one for dog walking called Wag! (and it’s adorable).
That’s not to say that you absolutely have to use a third-party platform to get in touch with potential customers. You can strike out on your own, too, especially if the people who need your services are friends and people in your community.
Whichever you choose, you’ll want to make sure your records are in ship-shape.
Start strong with good recordkeeping
Yes, I lured you in with dog walking to talk about recordkeeping. It was a low blow, I admit—but it’s worth the talking point.
Keeping good records will make your life so much easier when you have to settle taxes next year.
At the very least, be sure to track your:
- Income: The money your side job generates
- Expenses: The cost of running your side job
Your income is taxed at the state and federal levels, but expenses can lower your taxable income through deductions. Keep receipts for expenses, track your income, and prep to easily access those amounts and records later.
Boost your refund next year by making quarterly tax payments
In a job where you’re working for an employer, that employer must send a percentage of your paychecks to cover your taxes. At the end of the year, when you file a tax return, any overpayment from those paychecks is sent back as a refund. (Yep, that’s what a refund is! Here’s a longer explanation if you’re curious.)
When you’re the boss, you don’t have to set aside money to cover taxes throughout the year unless you expect to owe $1,000 or more in taxes.
That said, just like with employer withholding, you could boost your refund by paying more throughout the year than your actual taxes owed.
For self-employed people (or anyone with a side job that doesn’t have employer withholding), quarterly tax payments are the way to go—you can get more info in our Tax Guide.
Save $55+ when you file taxes with 1040.com
Here’s something no one tells you when you start a side job: If you report it correctly on your taxes, you’ll need to add a form called Schedule C.
The downside is that most self-prep filing companies charge $80-$100 just because you need a Schedule C. No fun!
Here’s the good news: At 1040.com, our price is just $25 for everyone, even if you add a Schedule C. After all, getting a side job shouldn't break the bank when you file your taxes.
Be sure to come back at tax time to get the most bang for your buck (and hey—you can set up an account for free to get a reminder when it’s time to come back and file).
Feel good about making extra cash
We could all use a wallet boost these days, and hopefully this post will help you get that extra income soon! Be sure to subscribe for more tips like this below, and let us know on social media what topics you’d like to see in the future.
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