Do you spend your free time earning the extra money you need to meet your financial goals? You’re not alone. Recent studies suggest that as many as 44 million Americans have a side hustle of some kind, and millennials are the most likely to participate in this new economy. It’s obvious to see why.
Flip on the news, and you’re likely to hear the pundits bemoaning the plight of the middle class. Although the nation’s gross domestic product has been increasing steadily since the recession of 2008, real wages for employees have stagnated over the last few decades. Unable to rely on employers for promotions and raises, workers are taking matters into their own hands.
A side hustle is any activity that generates income outside of your regular job. It could be something you do related to your career or an endeavor reliant on an entirely different skill set. You might take a part-time job in your off-hours or accept the occasional freelance assignment. Some even buy and sell collectibles or recondition antiques for profit.
Technology has made this form of earning straightforward and accessible. Ridesharing apps like Uber and Lyft put extra income within reach of anyone with a vehicle. Social networking sites connect businesses with contractors, and market sites like eBay and Amazon facilitate routine transactions.
Many earn as much as $500 in additional income every month. This money adds up over time, and it often pays off student loans, supplements household incomes, or shores up savings.
An entrepreneurial spirit is essential for success. You must also have a marketable skill or product, and be proficient with the technology that enables this economy. For these reasons, those in the 18 to 26 age group are the most likely to benefit from a side gig.
Despite the gripes of older generations, millennials are often highly motivated and hardworking. They grew up with social media and are willing to take the initiative to solve problems. Early success at this stage feels good, and many consider taking it to the next level. Getting started with a side hustle is easy, but inexperience causes many to struggle with the transition to a formal business model.
The Small Business Administration classifies a small business as an independently owned organization in the United States operating for profit and without becoming dominant in its field. The business structure can be a sole proprietorship, an LLC, or a corporation. If you are engaged in economic activity to generate income, you are already technically in business by default.
You are responsible for your business. Legal liabilities and taxes eat up your profits, and you must provide for your retirement and insurance. You need a plan. You also need to structure your business to protect your assets from risk. A sole proprietorship is easy and cheap. It gets you started, but a formal LLC is more stable.
You aren’t the first person to think of launching a business based on a side hustle, and plenty of help is available. This infographic outlines some things to keep in mind if you are looking to build your side hustle into a bigger business. Seek expert advice in your field, and consult with a mentor. When you’re ready, ask for assistance forming your LLC business structure.