This year has seen many people turn their passion into an out-of-hours project as we’ve all had more time at home than ever before. Here’s how you could manage the money side of your side hustle.
The benefits of a side-hustle
Not only can a side hustle generate some extra income, it can also provide you with the flexibility to work when you want – and the opportunity to develop your skills. Starting a job on the side of your main employment allows you to follow your passion project without the pressure of it being your only source of cash. Once the business is big enough it could become your principle employment and from there, the possibilities are endless.
How should I set up my side hustle?
Your first step should be getting an ABN through the Australian Business Register. Come up with a catchy brand name (if you need one), define what services you offer and decide on a pricing structure. Once you’re clear on your proposition you can set up a simple website or social media channels and use your first clients to help win new business.
How does a side hustle affect your tax?
Any cash you earn will need to be declared for tax purposes as long as your total income is over $18,200. Remember that since there’s no PAYG on freelance money, you won’t be taxed until the end of the year – so depending on how much you’re earning it’s a good idea to keep a percentage aside for when the end of the year comes around. It’s common for people to have a totally separate account to put this tax money in so you’re never dipping into savings when it comes to tax time. If you earn over a certain amount with your ABN, you’ll need to organise GST.
Remember that you may also be able to claim expenses that are related to your side hustle, including equipment, office space and insurance.
Should I insure my side hustle?
There are certain types of insurance that work well if you have your own small business. Professional indemnity, business liability and small business insurance are all options to consider if you’re delivering services to clients, and some clients will require you to have these in place before you’re able to work for them. Think about other relevant cover that might suit your specific business, including insuring your vehicle, premises or tools.
How will my side hustle affect my insurance premiums and income protection?
It’s worth checking with your insurer whether your additional income will be covered by your existing income protection insurance. If you are relying on your side hustle for essential expenses, then insuring your income could be a good idea, particularly if your entire business relies solely on you working to turn a profit.
If you have a side hustle that you’d like to discuss the finances of with us, please reach out by contacting our Oran Park office.