How to Turn a Side Hustle into a Full-Time Business
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Three things to consider before making a side gig your full-time work.
Every year, thousands of people turn their side gigs into full-time businesses. If you’re considering this move, here are three things that could help set you up for success.
Get your personal finances in order
Running a business can be challenging. Running a business and lacking the ability to pay your bills is even tougher. Before transitioning a side gig into full time work, make sure you have a budget in place and enough savings to cover basic living expenses for at least six months. Ideally, have enough savings for a year’s worth of expenses.
A solid budget and savings cushion will help you manage financially if sales are down or clients are slow to pay.
Establish a system for billing, collections and paying bills
Unless all of your business income comes from sales paid for at the time of purchase, you need a system for billing and collecting. If you have few clients, a manual system may be sufficient. However, if you have more than a handful of invoices each week or month you may want to invest in a service or app to manage billing.
Timely billing is only half of maintaining your income. Collecting payments is the other half. While most people pay their bills on-time, you may have to nudge others. Don’t let unpaid invoices go unaddressed. Discover these tips for dealing with a non-paying client.
Additionally, it’s important have a plan to keep your business expenses separate from personal expenses, such as a specific Consumers business checking account and a Consumers business credit card. This will help you track spending and organize expenses for tax accounting.
Understand your tax liability
One thing that trips up many new business owners and freelancers is failing to plan for taxes. A good rule of thumb would be to set aside at least 30% of your income in a Consumers business savings account for potential tax obligations. Because tax obligations differ from business to business, it’s best to consult with a knowledgeable tax advisor about your individual situation.
Next, mark your calendar with the four due dates for quarterly estimated taxes: April 15, June 15, September 15 and January 15. Then make sure you pay your estimated taxes each quarter.