Whether you're cutting hair, teaching piano or selling homemade jewelry, starting a side gig can inject creativity in your life and earn you a little money on the side. But, running a side gig is not always glamorous. Working for yourself is still work, especially when you have to be all parts of a small business. Here are a few tips to treat yourself fairly.
1. Ask yourself "why" and be honest about the investment a side gig will take.
Before you begin, ask yourself why you're starting a side gig. Maybe you want to pay off your student loans faster. Perhaps you want to make more time for a hobby so it doesn't fall by the wayside. Or, you want to make a skill part of your professional portfolio. There's no right or wrong answer, but determining why you're going into business for yourself will help you decide how much time, money and effort you put into it. Because the truth is, it will likely take all three!
"The hours [in a day] don't suddenly appear," says Ty Johnson, a lawyer by day, toymaker by night. "You have to steal them from comfort."
2. Research the market.
Whether you're selling a product or a service, be aware of what options already exist in your field. Get a sense for how your peers market themselves and fulfill customer expectations.
3. Take yourself and your work seriously.
Impostor syndrome can pop up at all stages of business development. But the better you get at addressing feelings of inadequacy, the more confidence you'll be able to project publicly. Customers won't be able to take yourself seriously until you do.
4. Think strategically about money.
Pricing your time or your products can be awkward at first.
If you're selling a product, take stock of how much your materials cost and research what similar products are selling for.
If you're pricing your time, start off with what you think is a fair annual salary for what you do, if you were working on it full-time. Divide that number by 2080, the number hours you'd work if you had 40 hour work weeks, to get an hourly rate.
And remember: just because you enjoy what you do doesn't mean you can't also make money off of it. Don't undersell yourself!
"Price in a way that you can take yourself and your time seriously," says freelance fine artist Lindsay Adams. "That way others will as well."
5. Pay your taxes.
If you treat your hobby like a business, so will the IRS, says personal finance coach Phil Zelnar. So, you need to report any income you make on a Schedule C, a form you attach onto your 1040, your individual income tax return.
If you make $400 or more in profit per year, you'll likely be subject to both income tax and self-employment tax. And, there's a good chance you will need to pay that tax in estimated payments four times a year. Don't put it off! If you wait to pay these taxes in April, you may owe a penalty and interest.
6. Find a community of peers and a mentor.
Working for yourself can be lonely business. Instead of toiling alone, find a community of people doing similar work by attending events and reaching out to people on social media. Better yet, find a mentor.
A lot of independent business owners are more collaborative than competitive. You may be surprised at how generous your fellow side-giggers can be with advice, and how much you can learn from others.
The podcast version of this story was produced by Clare Marie Schneider. It was engineered by Joshua Newell, and the digital version was produced by Clare Lombardo.
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