Over the past few years there has been a noticeable increase in the number of people choosing to take up second jobs or side hustles to get an extra source of income. These roles are often freelance or occur on a casual basis.
These jobs don’t necessarily need to be just money-making ventures, they may also allow you to earn some extra cash from a hobby or passion. Forbes reports that 39% of working millennials are earning extra cash in addition to their regular income. Nearly one in five workers are making more than $75k a year, and 12% are making more than $100k.
Whilst having a side hustle is not illegal, there are some necessary issues you need to consider so that you stay in line with legal regulations.
A side hustle can be a hobby or occasional work that takes up a relatively small amount of your time. The IRS considers this type of job ‘other income’ for tax reporting purposes. However, if you devote a substantial amount of time to this other work, the IRS may treat you as self-employed.
Depending on whether you are self-employed or have started your own business, the way you structure your venture impacts how much tax you are required to pay. If you are a freelancer or contractor and you received more than $600 from your side hustle during the tax year, then the individual or company that paid you must supply you with a 1099-NEC tax form. They will also have to send this to the IRS to report your income.
Filling in these forms can be time consuming, but essential. You can find online, IRS approved, downloadable tax forms which can make this process super easy. Not only does this save time, but the automated process available means there are far fewer chances for human error! Having this sorted will ensure you are complying with the legal requirements for having a second stream of income.
Clarify your intentions with your boss.
Before you embark on your side hustle, it is important that you make your intentions clear with your employer. Although you may think you are able to take part in anything outside of your normal working hours this is not necessarily the case and there may be contractual requirements and restrictions.
You may be required to obtain written permission from your employer before you take part in any other type of paid or unpaid work outside of your normal working hours. As with any type of contract, employment contracts can be complex and difficult to understand. If you have any questions regarding the terms of your employment contract, then it may be worth clarifying these with your employer or a lawyer.
For all the extra work you undertake, you must consider how much time and effort you will need to put in. Work-life balance is still as important as ever and you wouldn’t want to cause yourself too much stress and burn out.
According to a U.S. Census Bureau report men and women with only one job were more likely to work a full-time schedule than those with multiple jobs. For example, 83.2% of men with one job worked full time while only 66.5% of men with at least two jobs worked full time at their main job. Whilst there isn’t a limit to how many hours you can work, consider the implications on your personal life as these could be significant.