What is a side hustle?
A side hustle is additional work outside of your 9-to-5 routine either to make extra money or to pursue a passion. Be it a freelance design project, selling things online, or dog walking, the jobs really vary, but the premise is always that you do it on the side of a regular full-time job.
The reason people go into side hustles also varies. In some cases it might be to earn some straight up cash, maybe doing stints in the gig economy to save for a trip, or it could be to work on a project with a friend where your real passion lies.
The benefit of a side hustle is that you can explore other options while keeping the safety net of a full-time job. For those who are unsure about what’s next, whether you’ve recently graduated from uni or you’re just looking for something new, a side hustle allows you to get a sense of what the work might be like, and in most cases you can be your own boss, managing your time to fit your routine. And if it’s not for you, you haven’t lost anything.
How do I know which side hustle is right for me?
If you feel like you’re at a bit of a cross-roads or you need something new from your current work then a side hustle is a good starting point. But knowing what’s right for you can be hard.
Some things to consider are:
- Does the work align with your passions and interests?
- If it’s project based work or it’s time consuming, you’ll feel more inspired when you’re doing something close to your interests or hobbies. You’ll know if it’s a passion if you work on it when you’re bored.
- Is there something that you’re the go-to for in your work or friendship circle?
- If so that means you’re good at it, could you offer it as a service?
- Is the work financially viable?
- Side hustles aren’t necessarily about making money, but if it’s going to be a sustained project then you’ll want some financial reward. It’s important to remember that some hustles won’t see an immediate return if you need to build a portfolio or rapport with clients. But the end goal should be that your work sees a gradual inflow of cash.
- How can the work fit with your current routine?
- If you want to work a side hustle you want to get the most out of it. So see how it can fit around your current work, are you able to pick it up at different times in the week? Can you do a stint on a Sunday that covers you for a few days later in the week? It’s also important to value down-time and avoid burnout in both your day to day job and in your extra work. So make sure your side hustle can fit into your obligations where it can - flexibility is key.
How do I start a side hustle?
If you’ve answered all those questions and you’re still keen, then there’s a few things you need to set up before you start out in the side hustle game.
- Find your niche - not just what you do, but who you are. What’s your business called, what’s your landing page like?
- Update your legal role - are you a sole trader, a partnership or a limited business? These each come with different taxation rules.
- Understand your taxes - If you earn less than £1,000 you don’t need to do anything, go over that though and you’ll need to file a self-assessment tax return. Earnr can take you through the process in 17 minutes.
- Set a rate - It’s important to know from the off how much you’ll charge for your goods and services, before you talk to clients.
- Set up a business bank account - It’s good to separate your side hustle income from the rest, especially if you need to put 25-35% aside for your tax return.
- Start thinking about your previous experience and how you can build a portfolio - how can you sell this to future employers?
Do I need to pay tax on my side hustle?
Just like freelance work or self-employment you need to do your own self-assessment tax return for your side income. This is because those paying you for your second income won’t be paying you through PAYE like your main employer.
Things to consider:
- Your side income might push you into a new tax bracket.
- There might be a conflict of interest in the work that you do if it’s similar to your main job.
- You’ll need to do your own self-assessment tax returns. You can read more about these here.
That said Earnr can automate your side income tax returns for you. You just need to set up an account with us and we’ll pass on the details that you put in to HMRC, which saves you the trouble of going through more admin.
Earnr is here to remove the manual bookkeeping side so that you can focus on growing your business and doing the interesting work. Download Earnr here.