Isabel has been making money through her passion: producing and selling art. But after all this time running an art shop on Etsy and teaching art classes, she still hasn’t formalized her business. In other words, she is yet to make it totally legitimate.
As Isabel is entering a new phase where she’s aiming to save up money and start paying off her student debt, she’s trying to take the step of making her side hustle a lot more legitimate.
But why?
What is a Side Hustle
A side hustle is any work you are doing that is not your major source of income. There are lots of different side hustles you could choose from to make extra money, and 64% of millennials say they are already using them. Popular side hustles include ecommerce businesses, a YouTube channel or starting your own yoga studio. But, as the name implies, a side hustle is something that isn’t your main source of income.
Why you should make it official
There are lots of great reasons to make your side hustle a more serious, official business. But here are a few big ones:
It’ll make your taxes easier.
You can protect your personal assets.
It will help you better understand where your money is coming from.
There’s also the mental aspect: if your side hustle is a legit business, you’ll take it more seriously, do it better, and probably make more money. Just be sure to consider some of these questions before you jump in.
How to Incorporate
If you’re going to incorporate your business, you need to decide from a few different kinds of structures. You could be a sole proprietorship, a partnership, a corporation, an S Corporation or a Limited Liability Company (LLC).
Each one has its own advantages and disadvantages. For instance, a sole proprietorship is good if you want no separation between yourself and your business, and all of your assets. An LLC is better if you want to minimize risk when you start a business, and also have less complex tax filings. Check this blog post from Incfile for more information about how to formalize your business. And one thing is for sure: You’ll need a name!
Thriving as an LLC
If you decide to make your side hustle a more legitimate business, there are a few things you can do to increase your odds of success: have a user friendly website, build a network of other people who are hustling too, leverage social media, never stop doing research, and make sure it’s easy for customers to get help.
The Good News
Starting a business is easier than ever right now. There are so many resources online to help you, and so much opportunity across the business world. You need to think about your business structure, if you need to hire anyone to help, and how you can boost your productivity. But if you are already doing the side hustle, making it official — getting organized and covering all your legal bases — is the easy part.
