Ever thought about making some extra cash outside your day job? Try a side hustle – here are five things you need to know to get started.
While moonlighting is more about taking on a second job, a 'side hustle' involves turning entrepreneur and making your hobbies and passions into a money-spinner away from your day job.
It's a rapidly growing trend: one in five of us in the UK are expected to be doing so within the next two years, according to the web hosting company GoDaddy, while 44 million people in the US already are, which perhaps explains how we ended up with such an American sounding term.
Aside from a way to indulge your passions, a side hustle can be a way to boost your bank balance, with people in the UK earning from £500 up to around £5,000 extra a year.
And rather than jacking in your job and jumping in at the deep end, taking a chance on a side hustle can be a less risky way to test out a new business idea with the security of a regular income to cover the bills.
So, what are the tricks to getting it right and not upsetting your boss?
Check your contract
Some companies may have strict rules about doing any other work outside the office, so check your contract first as you don’t want to be given your P45 prematurely.
And even if taking on other work is all above board, is it a good idea to share your entrepreneurial ideas with your boss?
A substantial 54% of workers don’t tell their boss as they fear a lack of support yet some forward-thinking companies take the view that keeping their employees happy can have a positive effect all round.
Stefano Maruzzi from GoDaddy says: “Creating a workplace culture where employees feel they can be supported in their side hustle ambitions is the first step to creating a career that nurtures both personal and professional development”.
Personally speaking, I’d be tempted to keep any business ventures to myself, as if your boss thinks your heart’s no longer in your day job, you could run the risk of missing out on future opportunities.
Make the most of work perks
If you do come clean and whatever you’re doing won’t prove a conflict of interests, why not ask about flexible working?
All employees have the right to ask for this, providing you’ve been with the company for six months or more, and while there’s no rule to say your boss must agree to your proposal, they do have to take any request seriously – if they’re turning it down then they have to explain why.
So you could suggest working from home one day a week or putting in longer hours some days so you can leave early one day each week.
If your boss is on board they may be happy for you to utilise some work resources, like asking advice from IT colleagues, providing you do it outside work time.
Start small
You may be hugely enthusiastic about your new venture but shelling out big bucks on a new business is not usually a great move especially when the hard truth is that around six in ten new small businesses don’t make it to five years according to smallbusiness.co.uk.
“People want the security of a salary coming in,” says Emma Jones, founder of the small business network Enterprise Nation.
“The side hustle is where we’re going to keep the entrepreneurial gene alive”.
Check your insurance
If you’re setting up your new venture from home, you might want to add business cover to your household insurance for equipment or stock at home.
Giving advice or providing services? Then you might want to consider professional indemnity insurance and it’s also worth considering public liability if you’ve got potential clients coming round.
Cover starts from under £5 a month with companies who have specialised insurance for businesses.
Tell the tax office
You can earn up to £11,500 a year tax-free, but beyond that, you’ll be liable for Income Tax.
If you’re employed in your day job, then it’s down to your boss to sort out your tax and National Insurance, but if you’re making extra money, (beyond flogging the contents of your loft on eBay), it’s up to you to tell the tax office.
Don’t make the mistake of thinking you can just pocket the cash, as pleading ignorance won’t wash with HMRC.
Find which tax office handles your affairs by checking your P60 or asking your boss. Then get in touch to tell them you’re earning some extra income.
You’ll probably have to fill in a self-assessment form after the end of the current tax year and worth putting away around 20% of your extra earnings to cover your potential tax bill.
There's no need for a business account for this, but opening a separate savings account make sense so you don’t spend everything and end up scrabbling round when it’s tax bill time.
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