Side hustles can be a great way to make extra money. But before you start diving into a bunch of different side hustles, make sure you know what you are getting into. That way you can make the extra money and still enjoy life.
Before you dive head first into the side hustle world, take the time to evaluate if it is the right hustle for you.
What kind of time commitment does it require and how much will you actually make. Decide how much your time is worth, remember that you are still taxed on side hustle income so $10 will only net you $6-7 per hour. How much per hour do you make at your day job? Personally, I only take on a Side Hustle if it can get me at a minimum what I’m making per hour at my day job. My goal is to make even more per hour with my side hustle.
How much per hour do you make at your day job? Personally, I only take on a Side Hustle if it can get me at a minimum what I’m making per hour at my day job. My goal is to make even more per hour with my side hustle.
Sign up to join the community and receive my daily tips via email. Community members get access to exclusive discounts and freebies like my list of the Best Tools for Blogging & Running a Business (based on your budget)!
Similar to time is the amount you make a good return on the time you spent. Or if you are putting in some money to take a course on Freelance Writing, how much can you expect to make in that endeavor and is the cost of the course worth it considering that anticipated income.
How flexible is the hustle, do you have control over your when you work or are you ok with being assigned shifts? Decide how much flexibility you want your hustle to have.
What kind of work is it, is it labor intensive? If so will you need to invest in any new equipment in order to do the work? How much will the equipment cost and will it provide a good return on the investment?
Are you already an expert in the area or do you have to spend some time learning new information? If so will you be paid to get up to speed or will you have to freely give your time to do so? Are you ok with taking the time to learn something new? Is learning that topic going to worth it in the long run or not?
Action Step: Decide what kind of Hustle suits your needs
Once you know the kind of side hustle you'd like to work in, you have to actually find the work.
Freelance is great for having control over the outcome. You can see a direct link from how much effort you put in and how much money you make. However, to get anywhere you have to make the effort.
You have to go out and get the clients, negotiate the rate, produce the work, and communicate progress and respond to any changes and requests. It is all on you, but that means you get to reap all the rewards too.
Ahh the second job, likely the most well-known of side hustles, it is where you have a boss and don't get to pick your schedule. Some of these jobs are more flexible than others.
Whether you are looking for just a weekend job, or maybe a few shifts throughout the week, outside of the 9-5, there are jobs available for every season.
Remote second jobs are possible. You could be a telemarketer or online customer support. These types of jobs typically require you have a certain technology available, such as the ability to access high-speed internet. Most companies will provide any necessary equipment such as a laptop and or phone.
They let you know your shifts and you jump onto the systems to get the job done. You can find these jobs on various job boards as well as company sites, I see these types of jobs coming from web-based companies most. Some examples include Buffer and YNAB.
If you're creative and don't want to go down the freelance road, you can create your own side hustle. It might be blogging or creating a course or some other product or service. Just make sure you do your due diligence.
Before you go spending a ton of time on a Hustle project, make sure it is viable. Don’t just ask your friends and family what they think, see if one of them will actually pay you for whatever idea you have, or if they have a friend that will pay you. Once you know of at least one person that will pay you, then you can start pouring yourself into the project to develop it as a regular side hustle.
Once you have successfully completed your first sale, ask for a referral, testimonials, and word of mouth advertising go a long way. You are of course going to tell people how great what you're selling is, but other people telling them that what you are saying is true is priceless.
Get a quote from them and add it to your marketing materials (ads, sales page, etc. Just make sure you get the ok to use their feedback that way.
Pat Flynn, whose podcast Smart Passive Income I listen to all the time just came out with a book, Will it Fly designed to help you test your business idea. I have yet to read it myself, but Pat is so awesome I felt it was worth sharing with you guys in case you are unsure about your hustle/business idea.
Just by letting people know that you are looking to make some extra money, you’ll see opportunities come your way. My friend knew I was always looking to make extra money, so when her boss needed someone on a temporary basis to get caught up on a backlog, she recommended me. That job went a long way in paying off some credit card debt I had.
The more you start looking the more opportunities you’ll come across. Even if it isn’t a direct opportunity, it could be you see a problem that you are able to solve.
One of the easiest ways to launch a side hustle is to provide a solution to a problem people are having. If you can solve a problem in a cost effective manner and provide it to customers at a profit to you, you are in business.
Another easy side hustle is to provide a service that others don’t like to do themselves. For example, cleaning up their yard, doing an oil change, shoveling snow, walking their dog would all work as side hustles.
It’s not that people can’t easily do these things themselves, but they either don’t like to do them or it is more cost effective for them to pay someone else to do them.
If they can make an extra $50 working on something instead of washing their own car and it cost someone $15 to wash their car, it makes more sense for them to pay for the car wash than to do it themselves. These kinds of services make for a great base service that you can easily upsell.
An upsell is an add-on to the service purchased. Sticking with our car wash example, they can pay extra for wax or get a discount on multiple car washes, ensuring you have more work down the road.
Or maybe you’ll wash a second car the same day at half price. These types of things can easily bring you extra money (you are already there anyway) and they typically (read shouldn’t) cost you much extra, it should always be profitable for you in the long run.
Hustle money is income just like the money from your day job, except your day job does the work of taking taxes out for you. With your hustle money, you are responsible for setting aside money for taxes.
As exciting as it is to get paid for your side hustle, remember that you still have to pay Uncle Sam. Unlike your day job when the taxes are taken out for you before you get paid, you are now responsible for setting aside some of that income for taxes.
Right off the bat, I’m going to say that setting aside 30% for taxes is a good estimate given the current tax brackets. While what you owe might be higher or lower than 30% total, if it is lower, good for you, you just earned a bonus. If it is higher, remember that you are going to have expenses and deductions that can effect that amount of taxes that you will owe.
Even if you do not receive a 1099 form, you do still need to report all extra income made from your side hustle. If you have a side hustle that you are operating as a sole proprietorship (which just means you are the sole worker, it doesn’t necessarily mean you are incorporated) then the income from your hustle is considered personal income that you have to pay income taxes on.
The tax brackets vary but you won’t hit more than 30% until you start making more than $75k. If you estimate that you will be making more, then you’ll want to set aside more than 30% of your income to pay taxes.
This helps to make clear distinctions between your hustle money and your personal money. You can then transfer the remainder of your profits after setting aside money for taxes and any expenses or deductions you have (we’ll cover these next) you may also want to look at getting a bookkeeping service, like Quickbooks Self Employed.
While there are some really nice bookkeeping platforms and services out there, they can get expensive. So until you are rolling in the dough consider using a free service such as Wave or Quickbooks Self Employed which only costs $5 a month for the first six months(when you use my link).
They are not only great come tax time but also let you create and send out invoices, track bills, reports and pay others. There is also an app that lets you snap pictures of receipts on the go to help keep track of all those business expenses to get those deductions.
Ok, so you’ve set aside money for taxes and to cover any hustle expenses. Now it is time to pay yourself with what is left over. Remember that as tempting as it is to just spend all your hard earned dough you can't. You need to set aside money for taxes as well as past and future expenses will make your life so much easier.
So your income from your side hustle should look like this:
Income = Side Hustle Income - 30% taxes - expenses
Business expenses, or rather hustle expenses are the things you pay for related to running your hustle. You can deduct them against your net income (the money you make).
For example, if you were to start a blog to make money, you could deduct the cost of hosting your site. Other common deductions might include a portion of your internet bill or cell phone bill. Equipment you needed to buy or marketing materials.
There is a lot that could fall into the category of business. But there are also things you have to be careful about. For example, you can’t expense your couch as a home office.
A home office per the IRS rules is a space used exclusively for work. Similarly, you have to be able to prove that you used your computer more than 50% of the time for work, before being able to count it as a business expense.
You also can’t expense that coffee from the time you went to Starbucks to get some work done. The coffee you had with a client you probably can expense. It is all a fine line and you want to make sure you follow the rules. I’m pretty sure no one wants to get into trouble with Uncle Sam.
Deductions of those expenses from your income lowers your tax liability. For example, if you made $10,000 and had $3,000 in expenses that you could deduct, you would be taxed on making $7,000. Keep in mind that sometimes there are limits on how much you can deduct.
If you are serious about your side hustle and you start making a decent amount of money you may want to consider hiring a CPA just to make sure you are following all the rules and doing everything that needs to be done regarding taxes. Depending on how much you make, you may be expected to make quarterly estimated tax payments.
Alphabetical list of hustles I've done and any others I can think of off the top of my head.
Become a Coach
Cook for a fee
Drive for Uber or Lyft
Movie theater worker
Remote customer support
Sell home baked goods
Teach a craft at a local hobby store
Work at a stadium or arena
Create a course online
Now that you know what you're getting yourself into with a side hustle and how to make the most of it, you can go forward and make that extra money. Make sure it's work you'll enjoy. That you keep track of your money and set aside enough for taxes. And never be afraid to start another hustle when you feel ready.
Elizabeth Stapleton is the founder and voice behind Less Debt More Wine and ElizabethStapleton.com. She is a Pinterest marketer, online entrepreneur, and recovering attorney whose writing has been featured on Entrepreneur.com, The Huffington Post, The Penny Hoarder, Budgets Are Sexy, Credit Sesame, and Magnify Money. Additionally, she has been quoted in articles on Business Insider, Student Loan Hero, and Nerd Wallet.