Startup costs are growing like aphids.
- Most side hustles qualify as businesses, so they will have a lot of business startup costs. This includes bank charges, insurance, marketing costs and even taxes.
- It’s easy to underestimate how much, well, everything you’ll need for your new side hustle, and yes, that includes time.
There are two main reasons why people turn hobbies into passions.
If you’re motivated by the former, you probably don’t think too much about cost. You’re in it for the experience. However, if you’re in the latter group, how much it costs to start a side hustle can be a big factor in whether it’s worth the investment.
While specific costs will depend on what you do (and even where you do it), some costs are universal. And while many may be obvious, there are a number of additional costs that you may not think to include in your calculations. Here are a few to consider.
1. Bank/merchant charges
One of the best things to do when starting any new business is to open a bank account for the business. This keeps your expenses clean from the start, making things much easier to track (and tax) down the road.
As with consumer checking accounts, however, business accounts may include monthly maintenance fees. However, there are plenty of free business bank accounts out there, so keep an eye out.
A bank account is also necessary if you intend to make customer payments. And if you want to accept credit cards, be prepared to pay extra fees for that too.
Many popular side hustles also come with insurance costs, although whether you need insurance and how much if you do will depend on your industry.
For example, driving for a stock company means having excellent auto insurance. If you want to start a home improvement business, you may need some liability insurance. This is also when you start that pet sitting side hustle you’ve been thinking about.
Be sure to research whether you need insurance for your new venture and factor those costs into your startup budget.
The key to any successful business is marketing. (If no one knows about you, they can’t give you their money.) Yes, ideally you will get word of mouth marketing once you start building a reputation. But you can’t rely on it alone, and you certainly can’t rely on it when you’re just starting out.
Getting your name out there will incur a number of fees. For starters, you’ll need a website no matter what you plan to do. If you’re dealing with customers, a phone line can also be useful (you certainly don’t want to give them your personal phone number.) Stickers, web ads, flyers. value.
It’s probably already crossed your mind that you’ll need some basic tools and supplies for your side hustle. But you might underestimate what you’ll need.
Let’s get back to driving for a rideshare service. On the surface, all you need is a car and a phone, right? But that’s not all. Many riders now expect extras like water bottles and charging cables.
And the same can be true for almost any kind of hustle you might start. Selling clothes on eBay? Don’t underestimate all the packing you need. Walking dogs on weekends? Be sure to buy supplies from a poo-baggie manufacturer.
While not necessarily a typical thing to start a side hustle, it is still an expense you need to keep in mind throughout the year. If you earn at least $400 during the year, you need to pay taxes on it. And if you don’t prepay those taxes by making estimated tax payments throughout the year, you could end up underpaying when you finally file.
Surely you knew that starting a side hustle requires some time investment. But it is very likely the time when you to think it will take significantly less than that time actually takes
However, the great thing about side running is that you can spend as much time on it as you want. If you just want some pocket money, a few hours a week is perfectly fine. If you’re looking to potentially change careers, you need to spend more time turning your side hustle into a profitable business.
Either way, make sure you know what you want from it before you start. As we have shown, time costs are only part of it. financial investment may also increase.
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