The following is a guest post.
One of the best ways to grow your finances and to have a nice nest egg is to make more money. Sure, many argue that cutting expenses is the way to go, and while it’s true, the more you save the more you can invest, nothing beats making extra money. Saving for retirement and other important goals like the kids’ college funds is much, much easier if you have extra money coming in.
One great way to earn more is to find a side gig, especially as more and more employers are becoming stingier with raises. Even if you do get a raise, you may find that you don’t take home more than you did before because likely each year your health insurance premiums increase.
What Kind of Side Gig Is Right for You?
In this age of the Internet, starting a profitable side gig is easier than ever. You can often do the work from home, in your spare time. Some ideas for a side job include being a freelance writer, a tutor, a virtual assistant, and even a blogger (though don’t expect to get rich from that side gig!). Another option is to moonlight. If you’re an accountant by day, you could very easily find accounting work you can do at night, from home. Really, what you decide to do depends on your interests and skills.
What Should You Do When Your Side Gig Grows?
If you’re lucky, your side gig could become so profitable that if you wanted, you could quit your day job and turn your side gig into your full-time job. But before you get to that point, there are some steps that you need to take:
1. Open up a business checking account. If your side gig started as a small venture that you weren’t even sure would be profitable, you likely paid any expenses out of your own pocket and your personal checking account. However, if you’re still doing that, stop the practice now and open a business checking account. Doing so will not only help you keep accurate financial records, but also, in the event that you’re audited, will make the audit smoother because you have a separate paper trail for the business.
2. Determine if you want to be an LLC. Some small business owners simply operate their business as a sole proprietorship, and there’s nothing wrong with that. However, you may find it advantageous to register as an LLC for tax purposes. In addition, depending on the nature of your work, an LLC may also provide you more legal protection and help protect your personal finances in the event that you are sued.
A side gig can pad your finances and make saving for your goals easier. If you’re lucky, the side gig could eventually evolve into a full-time job or a job you’d like to continue into retirement, making your retirement savings last longer. Just make sure to take the proper legal steps to protect yourself and the business for years to come.
photo credit: flickr Sarah Braun