What to know before you start a side hustle
2020 has seen a rise in the concept of side hustles as more people look for creative ways to make a bit of extra money.
Whether it’s masks, chilli oil or art, a quick scroll through Instagram will not leave you short of inspiration if you want to kickstart a side hustle.
But there’s a few things you should know before you start trying to make a profit off your creative skills.
Good things take time… and money
It’s common knowledge it can take more than two years for a business to become profitable, with overheads, establishment costs and building an audience a costly exercise.
Depending on what your side hustle is, you’re likely to need to spend a reasonable sum of money in setting up to be ready to sell. This could include buying materials, paying a photographer to take high-quality pictures, paid advertisements on social media to promote your brand, shipping and packaging.
Consider what savings you currently have and for how long you’re willing to continue investing in your hustle before it makes a profit.
It’s not as easy as a bank transfer
While social media will have you believe it’s as easy as setting up a new profile to kickstart a business, the reality involves a lot more time and paperwork.
In Australia, it’s compulsory for any business which has a turn over of more than $75,000 to have an Australian Business Number (ABN) and register for GST.
You’re also required to declare any income on your annual tax return, so it’s important to keep track of every expense and income made from your side hustle. You’re also only able to offset your business expenses if your side hustle is a registered business.
You might also be subject to health and safety legislation if you’re selling goods such as food or drink, and your property may not be approved for use as a business.
It’s important to work out all the details and seek independent advice before starting your side hustle. Visit the Australian Tax Office website for more information.
Consider your end game
Why do you want to have a side hustle? Are you looking to change careers or simply have a bit of extra cash on the side? It’s important to think about what you would do with your side hustle if your circumstances changed or the business grew too much.
Consider how you would exit the market if needed, or when the point would be that you would make your side hustle your main income stream.
At the end of the day, if you’ve got a passion you want to explore it could be worth taking a chance!
The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.