How To Protect Your Side Hustle Financially

One of the best things people are doing to combat the effects of the cost of living crisis in 2023 is starting a side hustle. When people don’t make enough money to make ends meet through work, they look into side hustles. Side hustles are a great way to make money alongside your work obligations, and are a great way for people to secure their financial security.

What Is A Side Hustle?

A side hustle, sometimes referred to as a side gig, is another job or venture you take on alongside your 9-5 in order to secure another stream of income.

Many people take on a side hustle related to skills they’ve learned at their job, or related to a hobby they enjoy in their free time.

Many people like to sell their art online, create their own small online businesses, offer their skills and services via freelancing websites or earn income through their social media profiles. Setting up a great side hustle is one of the best ways to diversify your financial portfolio.

Tips For Protecting Your Side Hustle

While setting up a side hustle is a very financially beneficial move, you need to also take steps to protect your personal finances and the future of your side hustle. Here are some tips for protecting the finances of both your side hustle and yourself.

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Keep Personal And Business Finances Separate

One of the major mistakes people make when they set up a side hustle is to combine both their personal and business finances.

Investing too much of your own money into your side hustle can actually complicate your finances, and make financial failure more likely. When you set up a side hustle, it’s important that you keep your personal and business finances separate, to ensure that lines aren’t getting crossed.

It will also help you when it comes to budgeting for your small business, as the money will be separate. Don’t put your personal wealth on the line for your side hustle.

Plan Your Extra Income And Taxes

As well as making sure your business finances and personal wealth are separate, you should make sure that you are well prepared for what you will do when you receive your extra income – and how much tax you will now be required to pay.

Normally, when your income is higher, you will need to pay more tax. You should talk to a financial advisor about whether you should pay these taxes personally, or through the business (if you have set up a business.)

You should also think about how you can sensibly spend your extra income – whether that’s through investing or saving. This is one of the best ways you can protect your finances and secure a better financial future.

Check With Your Employer

One of the most important parts of setting up your side hustle is making sure that it won’t interfere with your main source of income.

Theoretically, having a side hustle shouldn’t interfere with your 9-5 job. However, many companies have contractual rules that state that you are not allowed any other form of full-time employment.

Furthermore, if you’re going into freelancing, you should ensure that you’re not stealing your company clients, customers or intellectual property. This is vital for ensuring the longevity of your side hustle and the validity of your business and also secures the future of your main income stream.

You shouldn’t risk your personal finances because of your side hustle or risk losing your main source of income – so ensure that you’re working within the legal parameters of your full-time work contract.

Have A Rainy-Day Fund

When your side hustle starts to make good money, you shouldn’t immediately start spending all of your extra income recklessly.

You should put some into your investments and savings, but you should also set aside a business fund that is designed to protect the company finances in case of a rainy day.

By using a portion of your income stream to set money aside to protect the business, you can lower your risk of financial disaster, which is imperative when it comes to setting up a side hustle that will last a long while.

Protect Your Business Online

For most side hustles, people end up either advertising their services or selling things through a website.

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If you choose to do this, you need to ensure that your business is protected as much as possible from online hackers and viruses. If your side hustle’s website is not protected, it could cost you a lot of money to get it back working again.

Ensure that you look into the fundamentals of business cyber security, so you can protect your side hustle as much as you possibly can. This will ensure you keep your side hustle operating online, and save you a lot of money in the future.

Wrapping Up

Many people find that starting a side hustle is one of the best things they could’ve ever done to secure their financial future – make sure you protect your side gig with all of these tips. This way, you’ll be able to set your side hustle up for further success.

About The Author

Amy Jones is a freelance writer specialising in investment tips and current financial market affairs. She enjoys documenting her experiences and relevant changes in the economic and digital word that will benefit her readers in their own lives.