Whether you’re cutting hair, teaching the piano, or selling homemade jewelry, starting a side gig can add creativity to your life and make you a little cash on the side. But conducting a side concert isn’t always glamorous. Working for yourself is still work, especially when you all have to be parts of a small business. Here are some tips on how to treat yourself fairly.
1. Ask yourself “why” and be honest about the investment a sideline will mean.
Before you start, ask yourself why you are doing a side gig. You may want to repay your student loan faster. You may want to spend more time on a hobby so it doesn’t fall by the wayside. Or you might want to make a skill part of your professional portfolio. There is no right or wrong answer, but once you determine why you are doing business, you can decide how much time, money, and effort you invest. Because the truth is, it will probably take all three!
“The hours [in a day] Don’t show up suddenly, “says Ty Johnson, a lawyer by day, toy maker by night.” You have to conveniently steal them. “
2. Research the market.
Regardless of whether you are selling a product or service, you should be clear about the options that already exist in your field. Get an idea of how your coworkers market themselves and meet customer expectations.
3. Take yourself and your work seriously.
Impostor syndrome can occur at any stage of business development. But the better you can deal with feelings of inadequacy, the more trust you can publicly project. Customers won’t be able to take you seriously until you do this.
4. Think strategically about money.
Pricing your time or your products can be cumbersome at first.
When you sell a product, take an inventory of the cost of materials and investigate what similar products are being sold for.
When you plan your time, start with what you think is a fair annual salary for what you do after you’ve worked on it full-time. Divide that number by 2080, the number of hours you would work if you had 40 hours of work weeks to get an hourly rate.
And remember, just because you enjoy what you do doesn’t mean you can’t make money from it either. Don’t under-sell yourself!
“Price so that you can take yourself and your time seriously,” says freelance visual artist Lindsay Adams. “That is how others will do the same.”
5. Pay your taxes.
If you treat your hobby like business, the IRS will, says personal finance coach Phil Zelnar. So you need to report all the income you make on a Schedule C, a form that you attach to your 1040, your individual income tax return.
If you are making a profit of $ 400 or more per year, you are likely subject to both income tax and self-employment tax. And there’s a good chance you’ll have to pay this tax in estimated payments four times a year. Don’t postpone it! If you wait to pay these taxes in April, you could owe a penalty and interest.
6. Find a community of coworkers and a mentor.
Working for yourself can be a lonely business. Instead of working 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.
Many independent business owners are more cooperative than competitive. You will be surprised how generous your peers 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 developed by Joshua Newell and the digital version was produced by Clare Lombardo.
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