Whether you’re a drummer, copywriter, personal trainer, or have discovered an invention to stop your glasses from sliding down your nose, having a side hustle is a great way to earn some extra money, whilst still working full-time. But what happens when that side hustle starts making more than you expected and it’s time to bring it into the spotlight?
It can be tricky to know how much tax you should be paying on your part-time earner, as well as how to record your accounts properly. But turning your side hustle into your main gig shouldn’t be difficult, especially if you treat your side hustle as a legitimate business from the beginning.
It doesn’t matter whether you have huge plans to create an enterprise, or just want some extra money for the weekends, you should treat both your side hustle and main gig as legitimate businesses – and here’s why.
What exactly is a side hustle?
If you’re not familiar with the term ‘side hustle’, I don’t blame you. It basically refers to earning money that’s separate from your full time employment. Popular jobs in the UK include:
- Social media management for small businesses
- Private tutoring
- Blogging / social media influencer
- Delivery driver
- Mystery shopping
How does it differ from a main gig?
You might describe your day job as your ‘main gig’, but often, people who’ve managed to turn their side hustle into a full time earner will refer to it as this. The difference between the two isn’t much in terms of what they do – it’s just how much they bring in and the time they take up.
Knowing when your side hustle might be becoming your main gig is all down to when it feels right for you – I can’t be the one to tell you that. Give yourself a deadline, don’t drag your feet, and look at the numbers. Now that I can do for you.
Benefits of a side hustle
You’ll be using different skills in your side hustle. Whether you’re creating handmade wreaths or delivering pizzas three nights a week, each role uses a different part of your brain – and even helps you learn new skills that you might be able to apply to your day job. And that doesn’t just include eating pizza at your desk.
It’s also reassuring to have something additional to your full-time role, especially if we think about current events. I’m talking about coronavirus, potential recession, furlough etc. I could go on. Job security isn’t always a guarantee in the current climate – and with employees in the UK spending, on average, just four and a half years in a job, things can move fast.
Side hustles also give you the chance to work on your hobbies – whilst earning money and being productive. You’ll also be able to make mistakes (and learn from them), without causing too much detriment to your business. Because that’s what it is, at the end of the day. Although you may find it fun or easy work, you’re still running a legitimate business – one that needs to be nurtured and cared for – as well as properly accounted.
How to turn it into your main gig
There are plenty of mistakes freelancers and self-employed individuals make when it comes to bookkeeping. And I understand – you’re focused on your hobby or passion, not tax and records. But if you want to turn that side hustle into your main gig, then you need to pay some attention to your accounts. This will help make the transition as smooth as possible – and believe me, you’ll thank yourself later.
Give yourself some backing too. Whatever you’re earning from your extra work – keep it and don’t touch it. One of the major benefits of having additional money to your full-time job is that usually you can pay the bills and live off that wage alone – your side hustle earnings are just a bonus. Try and save around three months’ worth of your outgoings.
Tax and your side hustle
If you’re earning under £1,000 per year from your side hustle, you don’t need to register with HMRC as a sole trader or pay tax on your business profit – even if you have a full-time or part-time job elsewhere. This is because you’re already paying the right amount of tax on your other earnings and you’re not yet earning over £1,000.
When your side hustle starts to grow, I’m sure you’ll be hoping to earn slightly more than £1,000 per year. When this happens, you have a couple of options – but you do need to register with HMRC. You can either choose to use the trading allowance of £1,000, or work out your business expenses and profit against how much you earn – you can’t choose to do both though.
Why you should treat your side hustle as if it were your main gig
Setting up an extra income stream in 2020 isn’t difficult, especially if you have regular access to the internet or access to a vehicle. However, you need to make sure you’re recording your accounts properly and treating your side hustle as if it were your main gig.
This is often the tricky part – oh, as well as finding the time to fit everything in. But get it right now, and it won’t just feel like pocket money, but you’ll be giving it the chance to help you shine.
So make sure you only take on work you really want to do, don’t be afraid to ask for help, and keep burning the midnight oil.
Talk to us today about starting your side hustle or turning it into your main gig.