An increasing number of full-time workers seek to increase their income through working a side hustle, which is employment in addition to a full-time job. In this article, we'll delve into the benefits of this trend, essential tips for juggling, and the thin line between considering it as a hobby or business income.
The benefits of a side hustle
Although a side hustle offers the potential for more income, its benefits extend far beyond. Side hustles enable individuals to explore their interests or passions outside their full-time jobs. Side hustles often amplify a sense of freedom and self-reliance, reducing job-related stress and burnout. A side hustle can be an excellent way to strengthen or add to a skill set, which could lead to promotions or improved job performance in a full-time career. Depending on the side hustle, it may become a viable, exciting career option or help establish a safety net for layoffs or job loss.
Ways to reduce side hustle challenges
Combining full-time work with a side hustle may be challenging, and the key to independence largely depends on mastering the art of balancing multiple jobs. Here are a few tips to make it smoother:
Manage your time - Prioritize your tasks and delegate time for relaxation. Your health is your wealth, so take care of yourself first so that you can continue to work.
Align your side hustle with your passion - Aligning your side hustle with something you enjoy makes having two jobs less tedious and gives you something to look forward to.
Embrace digital tools - Use scheduling and money management tools for efficient time management.
Remember, your full-time job should not suffer at the cost of your side hustle, so balance is essential.
Manage your money - You must follow a budget closely to avoid overspending on equipment or supplies you may need. Also, ensure you make payments and due dates and avoid late fees.
Navigating between a side hustle and a business
Navigating the difference between hobby and business income is another critical facet of working full-time with a side hustle. The IRS has specific guidelines distinguishing between them, which are essential for tax implications. Generally, hobbies are activities done for pleasure, not profit, while a business is to make a profit. A side hustle can start as a hobby but transition into a business once it starts making consistent profit. Financial and tax professionals can help determine if your side hustle should be a business per IRS guidelines.
Keep accurate records of your expenses and income to help determine when it is appropriate for you to form a business. Once you decide that your side hustle is a business, it's vital to have separate bank accounts for business and personal use. Co-mingling income and expenses in one account can make record keeping difficult and may cause you to miss deductions that could save money at tax time.
The decision to start a side hustle is an exciting journey toward financial confidence, but it requires careful planning and decision-making. Weighing it as a hobby or business income doesn't change the value you get from it, but it may help in terms of tax and legal considerations.
In conclusion, working full-time with a side hustle is a beneficial strategy that may enhance financial confidence while fostering personal growth. You may balance a full-time job with a side hustle by identifying your passion, managing your time, leveraging available tools, and working with financial and tax professionals. Happy hustling!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This article was prepared by Fresh Finance.
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