These days, everyone seems to have a side hustle.
So what’s stopping you?
Sure, you’ve got an idea for your side hustle—and maybe even a few clients lined up—but now what? Don’t lose momentum by getting stuck on the details!
From registering your business name to processing that first payment, here’s everything you need to do to get your side hustle up and running.
1. Choose your business structure and make it IRS official.
First up: paperwork. This part sounds complicated but actually isn’t.
Let’s break it down.
How are you accepting payments?
Learn all the ways to accept online payments
Click here to access the FREE [Cheat-Sheet]
First you need to decide whether you’ll do business as a sole proprietor or a limited liability company (LLC).
What’s the difference between an LLC and a sole proprietor? Well, you don’t need to do a single thing to be classified as a sole proprietor—you already are, just by setting up shop! As a sole proprietor, you cash checks and pay taxes under your own name. You don’t need to file any special paperwork*, unless you plan to do business under a different name, in which case you’d register your DBA (see the next step).
But as a sole proprietor, you’re also on the hook for your business’s assets and obligations—so if you fail to repay a loan or get into a legal dispute, your personal property can be seized.
*Here’s where the “but” comes in. Although you can start doing business right away as a sole proprietor without any special paperwork, in order to collect payments with a merchant account, such as the one provided by PaySimple, you must register your business as a sole proprietorship. The process varies by state so visit your local chamber of commerce website and check out the business filings sections. In most cases, you can become a registered business in less than 48 hours.
If liability is a concern or you’ll be dealing with large sums of money or expensive equipment, an LLC, or “limited liability company” structure, might be right for you. It gives you an added layer of protection. As an LLC, the only things vulnerable to a potential dispute or lawsuit would be your business assets, not your personal assets. (However, you’d still report your profits or losses on your personal federal tax returns, just as you would with a sole proprietorship.)
The rules for setting up an LLC vary by state, but in general you must:
- Check with your Secretary of State office for exact forms, fees, and guidelines. You can get a full list of state offices at Findlaw.com.
- Choose a name that no other LLC in your state uses and that contains “Limited Liability Company” or “LLC” as the last words. There’s usually a filing fee for registering this name.
- File “Articles of Organization” with the Secretary of State’s office. This is simple and can typically be done without the help of a lawyer. You’ll pay a filing fee, which can be up to a few hundred dollars.
Still not sure whether an LLC or sole proprietorship is the right choice? Don’t worry: just choose one, and you can always switch later.
2. Register your “doing business as” name (optional).
There are two main reasons you’d want to register a DBA, or “doing business as” name:
- You’re a sole proprietor but want your business name to be something other than your real name. (When you start a business, your real name is the business’s name by default.)
- You have registered as an LLC, but want to do business under a name different from that LLC’s name. This is useful if you plan to have a number of related businesses all operating under different names—they’d still fall under the same LLC, but look and feel like distinctly branded entities.
Most states require that you register a DBA, although there are exceptions, so be sure to check.
Here’s what you should do next:
- Make sure the name isn’t already trademarked with the U.S. Patent and Trademark Office’s trademark search system.
- Do a quick check to see if a domain name is available for the name. You can search on Hover.com to see if it’s available.
- Register your name at the county clerk’s office and pay the fee, which typically runs around $100. For an extra fee, you can apply for trademark protection.
3. Get your EIN.
Even if you don’t have employees, you’ll need an EIN (employee identification number) to open up your business banking account. An EIN also gives you an added layer of security: for example, if you’re working with clients who request a W-9 form from you, it’s safer to provide your EIN rather than your social security number.
Take Your Small Business From Scrappy to Successful
Lessons on growing up a business from entrepreneurs like you.
Click here to access the FREE [eBook]
An EIN is simple to apply for and is generated on the spot. Spend a couple minutes filling in this IRS form, and you’ll be set!
4. Open a business bank account.
Now we’re getting to the fun part, because you’ll need someplace to stash all that extra side hustle cash! Your next stop is the bank, where you’ll open a business checking account.
But wait—don’t just stroll into your regular bank. The bank you use as a consumer may not meet the needs you have as a business. Investigate the banks in your area to determine which one has the best terms for your business needs, from the minimum balance requirements to the fees you’ll be charged over time.
Consider opening up separate accounts so you can easily organize your money into different “buckets.” For example, you might have a separate account for collected taxes, another for estimated income taxes, and another for general business expenses.
5. Create your website.
Don’t overcomplicate things when you build a website. The important thing is to have something that greets potential clients when they search for you and gives them the impression that you’re a trustworthy professional.
To begin, include a photo, brief blurb about what you do, and contact details so people can get in touch with you. That’s it! You can add other elements as your business grows.
With that in mind, here are the next steps for setting up your website:
- Register your domain name. Head on over to Hover.com to find out whether it’s available and snag it in just a couple of clicks. We recommend this option because it keeps your website name separate from your website host—which is handy when you want to move your site from one host to another, or when you have a few different site names you want to keep track of in one spot.
- Create your website. There’s a solution for every level of expertise—whether you know nothing about websites and just want to get started, or whether you’re already pretty web savvy and need something more sophisticated. Here are our suggestions, from ultra-simple on up:
- Ultra-simple: Services like About.me let you plug your info into one of their beautiful one-page templates, and you’re good to go. Or you can outsource the job to someone else entirely! You can find talented freelancers with LinkedIn ProFinder or Upwork.
- Simple: Weebly and SquareSpace are some of the best-known website builders out there, and offer a variety of attractive templates. You could play around with either one and have a website ready to go by the end of the day.
- Simple Plus: If you have a little more technical expertise, consider building a WordPress site (or hiring someone to build it for you). For this you’ll need two things: a reliable host like WP Engine, and a WordPress template you’d like to use (psst—there are plenty of free ones here!)
6. Set up a way to be paid.
OK, you’ve set everything up, so now how do you get the cash to flow from point A (your client) to point B (your bank account)? There are numerous ways to accept payments—from the very basic to the complex.
Your choice will depend on the nature of your business. If you’re just issuing a few invoices a year, then maybe paper checks will work just fine. But if you want to be able to do recurring billing, accept ACH or credit card payments, you will need to establish a merchant account. In this case, you might want a bit more power behind your payment processing system.