How to Start a Side Hustle

Who it suits

People who want to test an idea with limited risk, can protect a few hours each week and are willing to track money carefully from the first sale.

How people get started

Most side hustles start small, on nights and weekends, to test an idea before it becomes a full business.

Step-by-step plan

1. Write down two or three ideas and pick the one you can test fastest with skills you already have.
2. Read your employment agreement and handbook for rules on outside work, conflicts of interest and use of company equipment.
3. Check local licensing and any home-occupation rules for your idea.
4. Set a weekly time budget you can keep without hurting your job, health or family.
5. Open a separate account or at least a separate tracker, and record every dollar in and out from day one.
6. Set aside a share of each payment for taxes; ask a tax professional what share fits you.
7. Make one simple offer, tell your network and get your first paying customer.
8. After 30 days, review your time, money and enjoyment and decide whether to continue, change or stop.

Skills to learn first

Time budgeting, tracking side income and setting aside money for taxes from the first sale.

• Time budgeting and protecting your energy
• Tracking income, expenses and mileage
• Self-employment tax and estimated tax basics (IRS Self-Employed Tax Center)
• Writing a simple, honest offer
• Asking for referrals and reviews

Licensing pointers

Side income is generally taxable. See the IRS Self-Employed Tax Center and check local licensing for your service.

Find it at irs.gov/businesses/small-businesses-self-employed, along with IRS pages on estimated taxes and self-employment tax.

Rules vary by state, county and city. Confirm with your state board or agency before you start. This isn't legal advice.

Insurance to ask about

• Ask whether your homeowner or renter policy covers business activity at home
• Ask about general liability if you work in clients' homes
• Ask about commercial auto if you drive for the side business
• Ask about product liability if you sell physical products

Equipment and tools to research

• A tracker spreadsheet for income, expenses and mileage
• A separate bank account
• A simple calendar to block side-hustle hours
• Any tools your specific idea needs

Week-by-week getting-started plan

Week 1

• □Pick one idea
• □Check your employment agreement
• □Check local licensing

Week 2

• □Set your time budget
• □Set up your tracker and account
• □Plan your tax set-aside

Week 3

• □Write your offer
• □Tell your network

Week 4

• □Serve your first customers
• □Ask for feedback
• □Review the 30 days

How people find their first customers

• Friends, family and coworkers (if your employer allows it)
• Neighborhood and community groups where promotion is allowed
• Online marketplaces suited to your idea
• Referral requests after each happy customer

Common beginner mistakes

• Trying several ideas at once
• Not tracking money from the first sale
• Forgetting to set aside money for taxes
• Breaking an employer's outside-work policy
• Saying yes to more hours than you can keep

Quality red flags

• Burnout or missed sleep
• Your main job performance slipping
• Customers waiting on slow replies
• Not knowing whether you're making or losing money

Questions to ask yourself before you commit

• □How many hours can I give each week without strain?
• □What would make this test a success after 30 days?
• □What will I do if it doesn't work?
• □Does my employer allow this?

Questions to ask a licensing board

• Which license or registration do I need for exactly the work I plan to offer?
• What education, hours or exams are required, and in what order?
• What can I legally do while my application is pending?

Questions for an insurer

• Which coverages are required by law for my work in this state, and which are just recommended?
• What isn't covered by the policy you're quoting?
• Do I need different coverage when I hire my first employee or subcontractor?

Questions for a mentor

• What do you wish you'd known in your first year?
• What mistakes cost beginners the most time or customers?
• How did you find your first customers?

My worksheet

Use only your own numbers and research.

• My idea: ________
• Hours I'll give each week: ________
• Employer policy notes: ________
• Licensing I need: ________
• My price inputs (time and costs): ________
• Tax set-aside plan: ________
• 30-day goal: ________
• First 10 people to tell: ________
• Review date: ________

My startup checklist

• □Structure chosen and business registered (and a DBA if needed)
• □EIN from irs.gov/ein
• □Business bank account open
• □Licenses and permits confirmed for my state and city
• □Insurance quotes in writing
• □Pricing built from my own numbers
• □Estimate and agreement templates ready
• □Bookkeeping and tax set-aside set up

Your next step

• Side Hustle Starter Tracker
• Self-Employed Income, Expense & Tax Set-Aside Tracker

Back to the free starter guide

General education only. Not legal, tax, financial or licensing advice. Rules vary by state, county and city, so confirm with the official sources named here and a qualified professional. No income, earnings or business results are promised or implied. Published by Ryan Via, doing business as The Collective.