Time to read : 4 Minutes
Making Your Side Hustle Work
Side hustles are all the rage. After all, with cost of living increases and rising interest rates, is ANYONE able to survive on just one wage?
But before you turn your hobby or passion into a side hustle money-spinner, you need to set things up the right way.
The Australian Taxation Office (ATO) has some strict rules about making money from a side hustle. The main one? Declare the income accurately and pay the right amount of tax.
In recent years, they’ve made it clear that investigating income made from side hustles is firmly on their radar, so if you’re not documenting things in a way that’s above board and compliant, be warned.
If you’ve got something going on the side that is starting to make some serious money, here are some things to consider:
What’s your goal?
There are a bunch of potential reasons to set up a side hustle.
These are the most common motivations to get a side hustle happening:
make extra money
become self-employed
learn new skills (or hone existing ones)
explore a new passion
Being realistic about your goal is key. Why? Because approaching a side hustle to make money requires a very different strategy than dipping into a hobby you love and hoping to make the odd dollar.
Is it a good idea?
Well, is it? Don’t get stuck on the notion it has to be completely unique. Plenty of businesses thrive and make a fortune delivering something that already existed. It’s just that they found a better/different way of doing it.
To help you home in on the best possible idea for your side hustle, think about these points:
what do you love doing that other people spend money on?
what do other people notice you’re really good at?
how can you create a better version of something already out there?
Google research is helpful - especially if you apply the SWOT framework (identifying and analysing strengths, weaknesses, opportunities, and threats).
Strengths – what do you bring to the table that is different?
Weaknesses – where do your abilities end (and what resources do you have to bring in the help you need in specific areas of the business)?
Opportunities – is there a gap you can fill?
Threats – Could technology make your idea redundant? Are there already multiple established competitors that would make it harder for your launch into the market to get noticed?
Do you have a marketing plan?
It doesn’t have to be too complicated but unless you know who your market is and what they will buy from you, you won’t get off to a great start. Think about how what you do solves a problem for your potential customers – and how you plan to get that message across to reach them. It could via an online store, a market stall, or leveraging off an existing business that already has the type of customers who will want what you offer.
Be realistic about the resources you have to get your product/service on display.
Have you set it up properly?
Remember how this started with a warning that the ATO is looking at side hustles and tax compliance seriously? That means you need to talk to an accountant to make sure you get the business behind your side hustle set up properly. That means registering a business name, getting an ABN and whatever else you need to do to tick all those legal boxes about running a business (even if it is ‘just’ a side hustle).
The bottom line
Side hustles can become mind-blowingly successful. They can also forever just be side hustles – but maybe that’s all you ever wanted. Whatever your plans are, give them the best possible start by doing some basic due diligence and research and, if you’re dealing with customers, look after them!
As long as you meet all your tax and legal obligations, every extra dollar counts and if the money from your side hustle helps cover your expenses when times are tough, or becomes a savings strategy that helps you reach specific financial goals, it’s got to be a good thing.
Go deeper:
Can the Family Tax Benefit help you out of a debt hole?
Private health insurance & tax
Financial disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
