Wondering how to manage your money as a side hustler? Check out these practical tips to help you manage your small business finances wisely.
I’ve always had some sort of side hustle. From working multiple jobs in high school and college, to teaching fitness classes and nutrition courses while holding down a corporate job, I’ve always juggled a lot of things at once. As a small business owner who operates a side hustle, I’ve learned a lot about managing my small business finances wisely and today, in collaboration with member-owned credit union BECU, I want to share those tips with you!
Form a Legal Business
Depending on the state you live in and the nature of
Create Separate Business Bank Accounts
For proper management, it is imperative you keep your business and personal finances separate. When I formed my business in 2016, I knew I wanted to set up business bank accounts with an institution I could trust. So that year, I opened up a business checking and savings account with BECU. As a small business owner, I appreciated that BECU’s business checking didn’t require a minimum balance and I was able to easily open an account at my local BECU neighborhood financial center. Once my account was open, I received a business debit card to use for all of my business expenses, where I could manage my business spending separate from my personal spending.
Track Your Expenses Closely
As a business owner/side hustler, it’s really important to track your expenses all year round to help tax season go as smoothly as possible. I like using the Money Manager tool within the BECU mobile app to categorize and track all of my business
The first year I started managing the finances around my business, I didn’t track my expenses very closely and found myself over-spending on services I didn’t truly need and had to navigate some surprise expenses I hadn’t accounted for. When I started keeping track of the monthly, quarterly, and annual expenses my business needed, I was able to minimize costs that weren’t truly necessary for the success of my business and was able to be better prepared for the larger expenses that pop up less often (i.e. business license renewals and annual services).
Save for Taxes Throughout the Year
Speaking of taxes, if you do any sort of freelance work or are receiving money directly from vendors or clients, make sure you’re saving throughout the year to account for taxes. Personally, I allocate a certain amount of money for tax savings from all of the revenue from my business by transferring set amounts from my BECU business checking account to my business savings account, and making quarterly tax payments as needed to help offset a large tax bill all at once. I definitely recommend working with an accountant to determine the right strategy for your business, but as a business
Don’t Forget to Pay Yourself
As a business owner, it can be tempting to want to invest everything you make back into your business. And this is something I have struggled with first-hand. When it comes to creating content, or running your own business, creating value for others is essential. However, reciprocity, and feeling compensated and appreciated for your hard work, are incredibly important for your personal financial well-being, and to prevent feelings of burnout or frustration. For the first few years running my business, I reinvested everything I made into my business. While it was great to be able to cover all of my business expenses, I felt burned out and like I was putting all of my energy into giving and not nearly enough into receiving.
Investing money into your business is an amazing thing, but also make sure you are personally being compensated for all of your hard work and effort running your own business or side hustle. I set up transfers within my business account using BECU online banking to act as “payroll” for myself every two weeks to ensure I’m being compensated for the work that I do.
- Are you juggling a side hustle?
- What are your tips for managing your side hustle finances?