So what is it not?
Working for someone else on a weekend as well as working a full-time job during the week Working overtime for your current employer Diversifying your current business to add a different offering
Starting a side business can often mean the difference between surviving from one payday to the next and having enough money to change your life for the better.
What Are Some Examples of Side Businesses?
If you decide to start a side hustle, what kind of role or business might you find yourself operating in? Just a few of the wide range of side business ideas you might consider are:
Affiliate marketer Renting out a spare room to a lodger or as a bed and breakfast Baker/confectioner/cake-making and decorating Photography Car cleaning and valeting Providing designs for customizable goods Computer repairs Cosmetic sales DJ Floral arrangements Gardener Handy-person Cleaner Laundry and ironing Film and TV extra/advertisement actor Make and sell jewelry Online trader Virtual assistant (VA) Website designer
For more on self-employment, read Essential Steps to Starting Your Own Business.
What Are the Benefits of Having a Side Business?
Whether starting a side business is a passion project or simply an extra earner, it is worth considering all of the benefits that it could provide.
Extra Income
This is the most obvious reason to start a side business – earning extra money on top of your regular employed salary. The income from your side hustle could fund family holidays, go into your pension pot, or just make life a lot more comfortable.
Taxable Perks
Depending on the type of side business and which country you live in, you may be able to write off certain business costs and purchases, such as office supplies, travel expenses, or the costs of running an office space. The value of those business costs is removed from your income, reducing your taxable earnings.
More Control
Relying on your salaried income means that your employer decides how much you are paid, your bonuses and pay raises, and ultimately whether you have a job. Running a successful side business allows you to take back control of your finances. You are not totally reliant on your employer for an income.
Valuable Experience
Running a successful side business offers valuable experience and often builds on your existing skills. For instance, you begin a side hustle as a car cleaner/valet. Beyond the service you offer, you also:
Publicize your business on social media and in the local press Handle your own financial accounting, including your tax return Set up a trade account for cleaning materials
These are all valuable skills that, beyond running your own successful side business, will add value to your CV.
Earn Money From Your Passion
Starting a side hustle can provide the opportunity to do something you enjoy for a living. Maybe you love that particular activity or industry but you:
Lack the confidence to make it your main career Lack the qualifications to follow the standard, employed route Want to try it for size before you make a commitment
For instance, you have always seen yourself as a writer but kept it as a hobby. You start a side business writing blog articles and social media posts for local small businesses.
What to Consider Before Starting a Side Business?
Starting your own side business can be a great way to earn extra income and add work experience to your CV. However, there are several factors to consider before you begin.
What Are the Tax Implications?
When you work for an employer, your tax calculation and payment are handled by them. However, when you work for yourself, the responsibility for working out the amount of tax payable on your total income – both your salary and your self-employed earnings – rests with you. The extra income you receive from your side business will generally make a difference to the amount of tax you must pay.
UK Tax Example
In the UK from April 2021, each qualifying individual has a personal tax allowance of £12,750. They may earn this amount of money tax-free before they are liable to pay tax on any income over that amount. An employee earns £12,700 from their employment and therefore has no tax liability. However, should they begin a side business and earn more than £51 that year, their total income will be above their personal allowance. They will become liable to pay 20% tax on income over the personal allowance threshold. With no side business: Earnings as an employee = £12,700 Tax liability = 0 Total income after tax = £12,700 With a side business: Earnings as an employee = £12,700 Earnings from side business = £4,500 Total income = £17,200 Amount above personal threshold = £4,450 Tax liability at 20% = £890 Total income after tax = £16,310 It may be that the additional income from your side business pushes you into a higher tax bracket. For instance, in the 2021/2022 tax year, if you earn £49,500, you will pay the basic rate of 20% on your taxable income. However, if your earnings from your side business push you over the top limit of that band, £50,270, you will incur a higher tax band liability of 40% on any income over the top limit of the lower band.
US Tax Example
The income tax calculation in the US takes into account not only your income but also your marital status, with different bands depending on whether you file as a:
Single person Head of household Married person, either jointly or separately Widow or widower
For instance, in 2021 if you are a single person earning $40,000 from your salaried job, your tax rate is 12%. However, if you start a side business and earn an additional $5,000 per year, then your tax rate rises to 22%.
Does Your Employment Contract Allow You to Run a Side Business?
Check whether your employment contract prevents you from starting a side business. Some employers will make it clear in their contracts whether you can work on a self-employed basis or even for another employer in addition to working for them. There are generally two reasons for them not allowing you to do so. First, your employer wants your complete commitment to the role they pay you for. They do not want your attention or energies to be split between employment with them and your side opportunity. Where there is no restriction in your contract, it is your choice whether you tell your employer that you have started a side business. Even where your employment contract does not stop you from running a side business, your employer may still disapprove.
Do You Have the Time for a Side Hustle?
Be honest. Do you have the time to work on a side business? Only you know the answer to this, but consider:
How tiring is your current job? How long do you need to recover each week? Do you have other responsibilities, such as childcare, that take up your time outside work? What would you have to drop to run a side business?
There are only so many hours in a day, week or month. How many do you have to spare?
Do You Need to Upskill Before Starting a Side Business?
You may well have the enthusiasm and drive to start a side business, but do you have the exact skill set? Be realistic. You may want to set up as a wedding photographer, a jewelry maker or a VA, but do you currently have the skills needed for that role? Lacking those skills does not mean that starting a side business is out of the question. You may simply need to develop those skills, through training or experience, before you set up your side hustle. Interested in self-employment but think you don’t have the skills or knowledge? Read How to Become an Entrepreneur with No Experience.
How to Start and Run a Side Business From Home
Once you have decided that a side hustle is for you, there are three steps to take:
How to Choose Your Side Business
Even if your choice of side business seems obvious to you, it is worth doing your research before you make a final decision. You might like to consider:
What interests and skill sets do you have? – In the same way that you would fit your experience, education and key skills to an employment search, consider what side business you would be a good match for. What problem can you solve? – Or rather, what problem can your side business solve? Perhaps you are happy to work as a VA and take on a particular office task that most small business owners would rather delegate, such as setting up spreadsheets or making appointments. Do your market research – Find out whether there is a need for your side business. For instance, is there a lack of local handy-persons and what tasks are in demand? Knowing that a new annual festival will be taking place near you, is there sufficient accommodation for all the festival-goers? How feasible is your side business idea? – Can you fit it into your spare hours or run it passively? How will you cover childcare while you are working in your business? Can you afford the starting materials? How much would you need to make from your business for it to be worthwhile? In essence, is running a side business realistic? What is your competitive advantage? – What sets you apart from other similar businesses? Are you not only a VA who loves creating complex spreadsheets and making appointments but also bilingual? Are you a copywriter with a background in web design who specializes in web copy? What makes you and your business stand out? What will you call your business? – Will it simply be your name, or will your business name signify what it does? Is that name already taken?
How to Set Up Your Side Business
Once you know what side business you want to start and have carried out all the necessary market research and feasibility tests, the next step is to get your business started. Here is our five-step plan for setting up your side business.
How to Run Your Side Business
Once your side business is launched, success will come down to:
Managing your time with care to avoid burn-out Outsourcing the tasks that you can’t fit into your schedule or don’t have the skills to do, such as your financial accounts Listening to your customer base to ensure your service or products are what they want Working towards your goals and deadlines Assessing your business on a regular basis
Top Tips for Starting a Successful Side Business
Now that you know what is involved and the questions to ask, here are our top tips for starting a successful side business.
Commit to Your Side Business
However exciting it may feel to start your side business, you must commit to it. That means committing to:
The extra time it will take to run the business over and above the time you spend at your day job The times when things might not go so well – perhaps you lose a customer or a piece of equipment breaks The extra responsibility of running your own business over working for someone else
As with any other aspect of life, running a side business will undoubtedly have its ups and downs.
Embrace Self-Promotion
If you want your business to succeed, you will generally have to publicize it. As the face behind the business, that means publicizing yourself too. Find a form of self and business promotion that you are comfortable with but that is also suitable for your audience. If your prospective customers are on YouTube or Instagram but you lack the confidence to speak directly to the camera or show your face, find other ways to use video and visuals. One way of doing this is to show photos of your floral arrangements or screenshot videos voiced by you.
Keep the Day Job (For Now)
If it is your dream to give up your job and become a full-time business owner, hold off doing that until you know you can support yourself through your business income alone. Build your customer base, develop your range of services and products, and build up a financial buffer that is equivalent to at least three months’ pay. Beyond supporting yourself with your self-employed income when you have customers and the money is coming in, you should also be able to put money away to cover periods when you have no customers, are too ill to work or want to take a holiday. Until these factors are in place, keep the day job.
Final Thoughts
Starting your own side business while working a day job can be a challenge. However, with the right research, preparation and commitment, it can provide a rewarding financial boost. If you plan to eventually work on your side business full time and give up your salaried income, wait until you know you can at least match your current salary, and have built up a customer base. When you feel ready, working full time on your own business can be liberating and rewarding, both financially and in terms of building your skills and experience.
