Did you know that over half of all millennials, 22% of Gen Xers, and 34% of boomers have a side gig, hustle, or hobby that brings in additional income over their regular job? Many of them report that their side hustle brings in half of their yearly income. How can you know when it’s the right time to get legal?
- You Have Funding – It does cost a little money to pay for licenses, permits, make an initial deposit into a business bank account, and to pay professional fees to lawyers, bookkeepers, CPAs, and the like.
- Your Side Hustle is Growing – If your side hustle is growing month after month and your income is steadily going up, and you can use the information you’ve collected to predict more growth; you need to make it legal.
- You Owe $1000 or More in Taxes – If you did your taxes as a hobby or contractor without forming a business entity, you might have lost out on some deductions or even ended up paying the penalty. You can avoid that by paying quarterly taxes. Since 2017, people running a hobby and earning money cannot deduct any hobby expenses against the income earned.
- You’re Disciplined to Keep Going – Once you legitimize your business, are you going to keep working as hard as you do now?
- You’re Willing to Become a Lifelong Learner – Rules change with politics, and that is just part of the life of an entrepreneur. Sometimes an administration is favorable to small business, sometimes not, but you will need to keep learning about tax laws, business rules, and other regulations. Forever.
- You’re Ready to Market & Promote Yourself – You cannot have a business that is successful without being willing to promote the business. That means spending money on marketing and getting the word out there about your offers.
- You’re Turning Away Customers – If you are still working your full-time job or trying to keep your hobby side hustle small by turning away customers, maybe it’s time to go full time and also legitimize your business and make it legal?
- You’re Working Almost Full Time – If you are working twenty or more hours in your business, or you are producing a full-time income even working part-time, you’ll want to get everything legal so that you can take advantage of the benefits of having a small business.
Turning your side hustle into a legitimate business will allow you to take advantage of tax laws and become a respected member of your local small business community. You may even be able to save money on health insurance and other needs that you have. It really is a win-win for most people with a profitable side hustle or income-producing hobby.
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