How To Make A Side Hustle Official
The Short Version
- Pick a name, and check it is free to use where you live.
- Register the way your state, county and city require.
- Open a separate account just for business money.
- Set part of every payment aside for taxes the day it arrives.
What Should You Name It?
Your own name works. If you use a different name, your state or county may ask you to register it, often called a DBA, short for doing business as.
Do You Need To Register?
It depends on your state, county and city, and on the work. Your state's business filing office and your city or county clerk can tell you what applies. Some work, like selling food made at home or caring for children, has its own license.
Why A Separate Account For Business Money?
So every dollar in and out of the side hustle is in 1 place. It makes taxes simpler, and it shows you what the side hustle really earns.
How Much Should You Set Aside For Taxes?
When you earn on your own, no one takes taxes out for you. In the United States that income can owe income tax and self-employment tax, and payments may be due during the year.
Move part of every payment to its own savings the day it arrives. How much depends on your income and your state, so ask a tax professional what share fits you.
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Next Steps
- Track every dollar the side hustle earns in 1 place, starting today.
- Take the 1 minute quiz: Which Stage Are You In?
- See The 5-Day Business Bootcamp, where I walk you through each step.
Questions People Ask
Do I need an LLC?
A limited liability company (LLC) is 1 way to set up a business. Working under your own name or a registered name is another. Which fits depends on your state and your situation; this guide does not choose for you.
When should I make it official?
Once it earns money regularly. The Money Fix puts this at Stage 3, after the debt that costs you interest is under control.