Startups breed like aphids.
- Most side hustles will qualify as a business, so they will come with many of the startup costs of a business. This includes bank fees, insurance, marketing costs, and even taxes.
- It’s easy to underestimate how much of, 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 hustles:
If you’re motivated by the former, then you probably don’t care too much about cost. You are in it for the experience. However, if you’re in the latter group, then how much it costs to start a side hustle can be a big factor in whether it’s worth the investment.
While the specific costs will depend on what you’re doing (and even where you’re doing it), some of the costs are universal. And while many may be obvious, there are a number of additional costs that you might not consider factoring into your calculations. Here are a few to consider.
1. Bank/commercial fees
One of the best things you can do when starting a new business is to open a bank account for that business. This keeps your expenses clean from the start, which will make it much easier to track (and tax) everything along the way.
However, as with consumer checking accounts, business accounts may have added monthly maintenance fees. However, there are a fair number of free business bank accounts out there, so keep an eye out.
A bank account is also necessary if you intend to accept payments from customers. And if you want to accept credit cards, be prepared to pay extra fees for that, too.
Many popular side hustles also come with associated insurance costs, though whether you need insurance, and how much if so, will depend on your industry.
Driving for a ride-sharing company, for example, means having great auto insurance. If you want to start a home repair business, you may need some form of liability insurance. This is also the case for kicking off that pet-sitting side hustle you’ve been considering.
Be sure to research whether you need insurance for your new business, and include that cost in your initial estimate.
The key to any successful business is marketing. (If no one knows about you, they can’t give you your money!) Yes, ideally you’ll get some word of mouth marketing once you start building a reputation. But you can’t rely on that alone, and you certainly can’t rely on it when you’re just starting out.
Getting your name out there will come with a variety of fees. For starters, you’ll need a website no matter what you plan to do. If you’re dealing with clients, a phone line can also be helpful (you certainly don’t want to give them your personal phone number). Stickers, web banners, flyers – both digital and analog marketing materials will come with a bonus. cost.
It’s probably already crossed your mind that you’ll need some basic tools and supplies for your side job. But you may be underestimating what you’ll need.
Let’s get back to driving for a shared ride service. On the surface, you just need a vehicle and a phone, right? But that is not all. Many cyclists now expect extras like water bottles and charging cables.
And the same can be applied to almost any type of hustle you can start. Selling clothes on eBay? Don’t underestimate all the packaging you’ll need. Walking dogs on the weekend? Be sure to buy shares in the poo-baggie maker.
While it’s not necessarily something inherent in starting a side hustle, it is nonetheless an expense to keep in mind throughout the year. If you earn at least $400 during the year, you must pay tax on it. And if you don’t prepay those taxes by making estimated tax payments throughout the year, you could receive an underpayment fee when you finally file.
Sure, you knew that starting a side job was going to require an investment of time. But it is very likely that the time think it will take will be significantly less than the time Really you accept.
The nice thing about a side hustle, though, is that you can spend exactly 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 want to potentially change careers, you’ll need to spend a little more time turning your side job into a profitable business.
Either way, make sure you know what you want before you start. As we’ve shown, the cost of time is only one part: the financial investment can add up too.
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