Side Hustle Tips: A Beginner’s Guide to Becoming Successful

As per Gusto's 2024 New Business Formation Report, 44% of those who launched a business in 2023 did so while employed, a rise from 27% in 2022.

Creating a new source of income might boost your earnings, but there can be some unexpected costs involved. Before beginning a side business, consider these seven points.

There Are Choices for Your Business Structure

Every company has an underlying business structure that controls taxes on both the company and its owners, as well as whether or not owners are held personally liable for debts incurred by the company.

Businesses are by default classified as sole proprietorships, which implies that you and the company are one and the same. If you choose this course, you bear complete liability for all debts incurred by your company. In addition, a Schedule C must be filed with your personal income taxes.

As an alternative, you can establish a different kind of structure, like a general partnership, limited liability corporation, C-corp, or S-corp, by following the necessary procedures. Your personal responsibility is limited by corporations and LLCs, and the ways in which each structure handles taxes varies.

There Will Be a Rise in Tax Complexity

Your taxes are probably not too complicated if you are currently employed. Your income is probably routinely withdrawn during the year to meet the remaining amount, plus income taxes, since your employers pay half of your Medicare and Social Security taxes.

But things get trickier when you launch a side business. A third of your income should be set aside for taxes, according to several experts, however this might vary depending on the firm. To make sure you cover all the bases, you may speak with a tax professional.

A Side Project Is a Legit Business That Needs Advance Planning

Though it seems informal, the phrase "side gig" alludes to a legitimate business needing preparation. Spend some time learning about the clients or consumers you'll be serving and the market you're entering. Think about your marketing strategy, desired income, projected costs, and the requirements for profitability.

The content provided on MoneyTimes.com is for informational purposes only and is not intended as financial advice. Please consult with a professional financial advisor before making any investment decisions.