So you’ve thought of a brilliant business venture but aren’t willing to give up your day job just yet? Or maybe you’d like to find a way to earn a little more spending money? Whatever the reason, side businesses are becoming more and more common in today’s hustle. RESCU’s finance expert, Anthony Bell, gives us his essential checklist for setting up your own side hustle.
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Do I have time to manage to a side hustle?
One of the first questions to ask yourself is how committed will you be to this business. Even side businesses take up time in our already busy lives so be prepared to sacrifice some leisure time if you want the business to succeed. Give some consideration to whether the business will impact your job. Does it compete with your employer? Review your employment contract or seek professional advice to make sure you’re allowed to run this side business.
To go big, or to go small?
Given yourself the go ahead? Now ponder how big the business will be. Think about how much income it will earn, will there be high setup or ongoing running costs, will there be employees, and what business risks are involved? Your answer to this question will dictate how you setup this business. A fairly small and simple business with limited risk, may be best setup in your personal name as a “sole trader”. But a larger, more complicated or risky business might require other structures such as companies, trusts or mixtures of both.
In either case, there will be registrations and applications to be made with government agencies like the ATO or the ASIC. And in the more complicated scenarios there may be additional items required like company constitutions, trust deeds, shareholders agreements etc.
As such, it’s vital that you engage with a qualified accountant and solicitor from the outset to help you get these things right.
Once the skeleton of the business is ready, get your record keeping process in place. The ATO have plenty of information about the requirements for small businesses. There are also many cloud-based accounting packages available for monthly subscription costs to simplify these requirements. The best ones can connect with your bank account to save you data entry time whilst tracking money coming in and out of the business. Two of the most popular packages aimed at small businesses are Xero and MYOB Essentials.
Connected with record keeping will be your business tax lodgement obligations. Depending on your business’ size and setup, business income tax returns, business activity statements and various payroll related docs could be required. There can be many hidden expenses when starting a business, and a good accountant can help you identify your obligations and put together a plan to make sure you don’t fall behind with your lodgements and payments.
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Insurance is a must
You need to ensure that you and your business are protected and one of the simplest means of achieving this is insurance. There are hundreds of different types of policies but some of the insurance staples would be public liability, professional indemnity, sickness and accident / workers compensation and product liability. An independent insurance broker can help match you with suitable policies that provide strong coverage for the best price.
Plan to succeed
Although only a side business, the cliché of “failing to plan is planning to fail” still rings true, therefore you should plan to boost your chances of side hustle success. The Government have business plan templates available to help you create a roadmap for your business now and into the future. Put together a budget so you know how much income you need and your spending limits to be profitable. These budgets can also often be entered into those accounting packages to make it easier to track your actual performance against the budget.
The decision to start a side business is not one to be taken lightly. But if you do it right it can be thoroughly rewarding both financially and personally.
For more information about starting your own business or to make an appointment with a specialist from Bell Partners, click here.
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