Financial Tips When Starting a Side Hustle

Financial Tips When Starting a Side Hustle

Having a side hustle can be a great way to make some extra money on the side. You’ll want to understand a few key financial tips though, as you can easily get into financial trouble if you don’t run your side hustle correctly. Consider these financial tips when starting your side hustle.

Equipment Whether you’re looking to work for a rideshare service or start your own lawn care company, you’ll have to think about the equipment you’re using. The reason you’ll want to think about this is that you can have certain costs that can affect how profitable your side hustle is. First, think about your initial equipment.

With your initial equipment, you should be able to make hundreds or even thousands without having to invest a lot more money. As your equipment breaks down, think about making other choices so that you have equipment that will save you money and time in the future. Ensure that you pick the right equipment for your side hustle when looking to save money.

Taxes When you receive your traditional job paycheck, you’re probably used to having all of your money taken out already. This can be nice as you won’t have to worry about paying those taxes during a certain time of the year. If you’re working a side hustle though, you’re going to have to think much harder about taxes.

With side hustles, you’ll want to put money aside each paycheck. Depending on the state you live in, this percentage could be anywhere from 25-30% if you’re working out of the United States and are making under 100k. If you’re looking to start your own business, you might want to think about creating a business entity so you have a few tax advantages at the end of the year. Make sure that you always pay attention to your taxes when you start a side hustle.

Business Transactions During tax time, you’ll notice that you can make various write-offs so you aren’t having to send so much money to the IRS. However, you can easily lose track of what business transactions you made, losing you money on potential write-offs. For this reason, you should be recording all of your business transactions.

For cash, you should take your paper receipts and put them in a specific binder so it’s easy to make write-offs when it’s time. On the other hand, you should think about getting a separate credit card for business transactions as you might just be able to look up all of your transactions at the end of the year this way. To be in good financial standing, make sure you record all of your business transactions having to do with your side hustle.