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Want to Side Hustle successfully? Read this first

This story is part Power money movesCNET’s coverage of smart financial decisions for today’s changing world.

As inflation remains high in the United States, largely due to rising food prices and skyrocketing rents, many are looking for ways to increase their income streams. Side hustles can net you more money each month, providing extra cash through occasional chores or regular freelance work.

About 31% of Americans have a side hustle in 2022 — and 41% of those with a side hustle rely on that income to pay for day-to-day expenses, according to a June Bankrate survey. (Bankrate is owned by the same parent company as CNET.)

A side hustle can make life a little more comfortable, bring you closer to achieving a particular financial goal, or help you pay the bills while inflation persists. But before you start, it’s important to consider the impact of that extra work on your time, job security, overall goals, and taxes.

Here are some tips for getting the most out of your side gig. For more ways to stretch your dollar a little further, check out these six options for extra money each month. Plus, learn how a woman turned her side hustle into a six-figure business.

Be realistic about the time you have

A secondary agitation can be a heavy responsibility. Even if the gig only requires a modest time commitment, it’s in addition to your full-time job, as well as other commitments and relationships that require your time.

This means that your side job can extend into nights and weekends, or times when you might otherwise be recharging, connecting with friends and family, or pursuing your hobbies.

It’s important to prioritize your mental health and full-time work over any side endeavors, and set clear time and effort limits before embarking on your side adventure.

Forest McCall, a marketing manager who runs a personal finance blog, doesn’t stick to a number of hours per week, but rather bases his workload on how he feels. “Some weeks I can feel more rested than others, so my hustle hours vary from week to week, averaging 15 hours a week.”

Set clear boundaries and hours before committing to any new business, especially one where customers are involved. If your extra work is keeping you from balancing your time and obligations, don’t be afraid to take a break and give yourself some time off. Just be sure to communicate your hiatus to your second boss or clientele.

Find work through your network and side apps

No matter what industry you work in, finding and growing your customer base is paramount. If you work in an industry you know well, leverage your existing connections by sending an introductory email or a LinkedIn InMail (as long as you follow the rules of your primary job, of course). This can help you find business opportunities and browse available freelance job listings.

Also, don’t be afraid to let your family or friends know about your side gig. Even if they are unable to hire you, they may offer valuable advice at the start or be willing to lend you useful documents. And don’t underestimate the power of word of mouth.

Finally, be sure to exhaust the apps. So many side businesses, from tutoring to photography and food delivery, have corresponding apps designed to simplify the process and connect vendors to customers. Well-known side-stirring applications include DoorDash, Uber and Vagabond, but search around to find something that suits you. For instance, FlexJobs is a great app for creative freelancers. Remember, this is an investment of time and effort – and sometimes tools and supplies – and you owe it to yourself to make full use of the connections and resources you already have.

Give your money a mission

Having a purpose will generate energy for your side business. “Secondary hustle can be extremely useful in helping you achieve your financial and personal goals,” McCall said. A concrete savings goal, which could be a monthly entertainment budget or a home down paymentwill help you stay engaged.

A scramble can give you more financial flexibility to pay off debt, plan for retirement, and explore other ways to invest and grow your money – but it can also help you explore roles in different industries and even lead to a new passion.

Sometimes a side hustle can evolve into a lucrative main hustle. “My side hustle has completely changed my life and I’m so glad I started it.” McCall said. “I was able to use the skills from my education and career to start my side business just over two years ago, and it’s been great.”

Beware of non-competition clauses

If there is a significant overlap or correlation between the industry of your secondary job and your main job, make sure there is no conflict with your current employment contract. Some jobs may require you to sign non-compete clauses, which prohibit you from working in an industry that could be considered competition with your primary employer. In this case, it may be better to look for additional work in another sector, for example part-time tutoring if you work as a full-time sales representative.

For more guidance, talk to your manager or the human resources department about your side job. Some companies may require approval of all side gigs you take, while others may be more lax. A few simple searches and transparent communication can save you a lot of complications and difficulties.

Important: Secondary agitation will impact your taxes

One crucial thing to consider is that any extra income you get could earn you your taxes more complicated. “There are many life changes that can impact your tax return – but none are more important than a part-time or side job. This is your biggest tax return change” , said Mark Steber, director of tax information at Jackson Hewitt.

One of these changes is to make estimated state and federal tax payments throughout the year to avoid being hit with a huge tax bill all at once – and to avoid paying penalties for not paying taxes throughout the year. You will usually receive 1099-NEC or 1099-MISC forms from the companies you rush for, but even if you don’t, you’ll need to report your income when filing your taxes on Schedule C from the IRS. , Profit or Loss of the company.

That said, your secondary activity can also make you eligible for Tax deductions this could possibly reduce your tax bill. Work with a qualified CPA or use tax software designed for the self-employed could help maximize your deductions. “The IRS isn’t in the business of making sure you get all the business deductions and credits you’re entitled to. If you miss one, you’ll likely pay more,” Steber said.

For more tips, see the best ways to save money on food, gas and travel. To make your money work as interest rates start to rise, find out I bonds are the best way to boost your savings.

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