In a recent survey conducted by www.Bankrate.com , 4 in 10 Americans (37%) have a side hustle. With an average earning of $8k annually, that is some serious dough coming into these households.
My interest in side hustles started in around late 2014 after I read a few blogs about making extra cash. Since then I have gotten to a point now (2019) that I have registered my side hustle as a single member LLC. How and why did I do it? That’s the story here.
My consulting gig story
Year 2014 was around the time when stock market was beginning to rebound after the big crash in 2008. At that time, I was working as an engineer in a full time role. It was a reasonably stable 9-5 (or 8-5 to be precise) job, which gave me few hours in the evening to spend with my wife and kids. With an attention span of not more than 30 minutes on a particular topic, I spent most of the time reading blogs rather than books. On one such blog, I was exposed to side hustles, which interested me. I started checking websites where I could get some leads. The first one that I registered was called Elance.com (which has since then become Upwork.com after a few mergers).
While looking for short term projects, I had two criteria to meet. One being, I should be able to do it remote such as at my house on a computer and the second being flexible hours. With a regular full time job, I could not spend any hours on the side hustle during normal business hours. With these limitations, I had expected that it would filter out a significant number of opportunities but interestingly that was not the case. Keep in mind that there were no Ubers or Lyfts at the time
The second and probably the most important factor was what kind of projects would I be doing. I was an engineer but not a very creative person. I could do 3D modelling using few Computer Aided Design (CAD) software but it was not something I’d expect a regular person to need. Again, I was proved wrong. There were tons of people looking for engineers and drafters to design and develop 3D models of some of their ideas.
As you can imagine, getting the first gig is the biggest hurdle. After about 3-4 weeks of soliciting, I finally had a potential client reach out to me. The payment was $35 of which I would spend $20 to setup a Google Play account. The whole gig sounded weird but I still went with it and made my first $15. Apart from the $15 for 15 minutes of work, my interest was also to get the 5-star review which would help me get future projects.
Upwork.com (or Elance at that time) had a client-freelancer review system. Better the reviews, the more, opportunities came your way. After the first gig, I took a few odds and ends jobs making $10 per hour and they helped me build my profile. Since then, my rates have go up to $50 an hour. Last year my revenue from just the side hustle was $30,000 with about 10 to 15 hours of work every week. I had expanded to other clients beyond Upwork.com which boosted my revenue as it eliminated the 20% commission that Upwork would charge.
Looking back 5 years, there are few things that I did and few that I learnt along the way.
This is a very generic term but what I mean by discipline is not mixing the hours between my full time position and my side hustle. I would ensure that my full time position always got the first priority as it was the one paying my bills and providing health insurance. On the same note, when working on my side hustle, I focused only on the work and would not allow any distractions to interfere in the quality of work
During my early years, I had my personal and side hustle finances co-mingled. Since the income was less with fewer transactions, I could track it in Excel and could manage it easily on my tax returns. However as the business grew bigger, it was getting tedious to track manually. I switched to a free online accounting software called Wave Apps. Although I was tracking the incoming and outgoing on Wave Apps, I still had the money come in and out of my personal account. It was not until I registered an LLC did I actually separate it completely with a business checking account. I feel it is a personal decision on how to manage it as long as you can justify everything when IRS comes knocking on your door.
During my initial years, I was using my personal email account for communication. As the business grew, I felt I needed to give the business an identity. Long before I registered an LLC, I had bought a domain from Godaddy.com. Using Google business apps, which I will cover in a different post, I created email address with the domain name (something like firstname.lastname@example.org). This created an impression to new clients of a legit and professional business. I also created a placeholder website using the free option on www.000webhost.com.
Taxes Filing & Deductions
I am not a Tax expert but one thing I knew was never to mess with the IRS. Even when my revenue was low, I made sure that it appeared on my Tax Returns. On the same note, I also made sure to take advantage of all tax deductions that I am eligible for with the side hustle. To name a few were home office deductions, utilities, home internet, computer, phones, etc. There are a number of blogs that will explain how to claim these deductions.
With these simple principles I have been able to simplify the side hustle and let it not interfere with my full time employment and my life.
I would love to hear if you have anything to share. Please do so by leaving comments below.