Growing a Side Hustle? 4 Questions to Answer First.

Many business owners start from zero with a good idea, but just as many have a side-hustle that they grow into their main gig. Crafty people could start by selling hand-knit sweaters on Etsy, and then end up with a whole business. 

Let’s go over the questions about protecting your side hustle, no matter your growth plan. 

Do I Need A Business Bank Account? 

Imagine you start organizing friends’ homes on the weekends. It’s an easy gig for a Type A personality, and you also might genuinely enjoy it. Even if it doesn’t feel like work, you should treat it like work. That means setting up a dedicated business bank account. 

Even if your initial clients are paying you through digital platforms like Zelle or Venmo, a totally separate account where you can track and total up your payments and expenses. 

Here are expenses to track through your business account: 

• Cost of materials 
• Subscriptions for technology and website related to your side hustle

With all these costs in one place, you’ll be able to understand how much money your venture costs, compared to how much money you’re bringing in. This means you can make a decision about if the side hustle is worth your time, and in the future worth investing in the future. 

Tip: Try with Velo about margins, even if you don’t want to share exact numbers. You can get advice about what goals to set for yourself about profits, and how to measure success. 

Should I Create A Website?

Taking control of your digital footprint is important. First and foremost, you should buy the website domain for your name. 

A personal website doesn’t have to be very elaborate. A landing page with your name and a description of the kind of work you do. If you create resin crafts and sell them on Etsy, it’s still useful to get a domain that could say “[Your Name] + Resin Crafts” to make sure no one makes a dupe to trick customers. Online scammers can be very tricky. 

Parking a domain and making a website devoted to your side hustle structure is also useful to make the brand distinct from your day job. For example, if you work as an insurance claims adjuster during the day, but provide personal training to clients on the side, you want to make sure you have an online presence that reflects what potential clients are looking for. 

Tip: If you create a website with Squarespace, you can set your pages to private or keep them password-protected while you work on them. 

Will I Need A Business Structure?

In the early days of side hustle, you can still easily file taxes as a sole proprietor. A sole proprietorship isn’t a business structure you have to create: it literally means that it’s just you providing services. 

As a sole proprietor working with a business, you’ll have to fill out a W9 form for them. If you’re working with individuals who pay you directly, you’ll want to track those payments and report them as income on your taxes (hence why a business bank account is useful for tracking). 

The next step after becoming an income-generating sole proprietor is to form an LLC (limited liability company). Single-member LLCs are the structure for independent businesses, like people who are turning their side hustles into more formal structures. 

As an LLC owner, you are still functionally self-employed. If you’re looking to move into a different category, an S corporation might be the right move. It’s a tax designation status that allows your company’s profits to pass through your personal tax returns. 

As an LLC or an S Corp, you do have to pay fees to keep your business status. While that feels onerous for a side hustle, it’s useful for limiting your tax burden and staying compliant with local laws (as some states have restrictions on services, even provided as a side hustle). 

Tip: Consider starting to pay estimated quarterly taxes so you’re not hit with a big tax bill in April, even as a sole proprietor. If you have any more specific questions, we recommend consulting an accountant. 

Can I Get Help? 

Even a singular owner of a side hustle needs a bit of support. Our services at ZenBusiness are built to help people from building a business from zero to one, and finding the structure and processes that work for you. 

Here are a few support services to consider: 

• Start an LLC
• Registered Agent Service
• Worry-free compliance  
• Tax filing & advice 
• Business website builder

You can rest easy with the support of a trusted partner, even as an individual owner. Side hustles with structure give you the peace of mind to pursue a passion project.