5 smart moves to make your side hustle really work for you

The pandemic isn’t crushing the entrepreneurial spirit. It’s fueling it.

People normally tied to a desk or working double shifts used lockdown to launch side hustles. And some have turned those side gigs into full-fledged businesses.

The U.S. Census Bureau reported 427,842 new business applications were filed in August, up from 288,026 in August 2019.

While a side gig can be spontaneous, growing a legitimate business requires research and planning.

These basic but essential steps can help give your new venture some staying power.

Choose a business structure

There are six common types of business entities: sole proprietorship, general partnership, limited partnership, C corporation, S corporation and limited liability company. The option you choose determines how your business is taxed and who is financially responsible if your business is sued.

Entrepreneurs often default to sole proprietorship because it’s the easiest, but it’s also the riskiest, says Nellie Akalp, CEO and co-founder of corpnet.com, a document filing service for entrepreneurs.

“There is no registration required nor are there corporate requirements,” Akalp says. But “there is no legal separation from the company, so the sole proprietor is personally responsible for any debts or liabilities.”

Registering as an LLC or corporation is more expensive but shields your personal assets from lawsuits.

Open a business bank account

Mixing business and personal finances can get messy, especially when it comes to filing taxes or securing a business loan. Open a business checking account to keep business income and expenses organized and easily accessible.

Look for a business account with low fees that fits your business needs in terms of transaction and deposit limits.

A business credit card can also help you track expenses and identify tax deductions. Plus, you can earn rewards.

Upgrade your bookkeeping

No more shoe boxes full of receipts: Scale up to accounting software that can do some of the heavy lifting for you, like tracking cash flow, managing invoices and generating reports.

The right accounting software also gives you deeper insights into your business and helps identify opportunities to save money.

“As a business owner, learning how to manage your company’s finances, read profit and loss statements, and understanding cash flows will make you a better entrepreneur,” says Danetha Doe, founder of Money and Mimosas, a financial education platform.

Spell out your business plan

Sketch out short- and long-term goals for your business, along with a sales plan, financial projections and potential roadblocks. Be realistic, set specific targets and spell out how you plan to reach them.

Building a business plan gives you a road map for growing your business and shows lenders you’ve done your homework should you need to secure a business loan.

If you need help, contact your local Small Business Development Center run by the U.S. Small Business Administration.

Invest in professional help

Outsourcing some aspects of your business frees you up to focus on other things, like customer service or product development.

Consider hiring someone to build and manage your business’ presence on platforms like Instagram and Tiktok, or invest in a certified public accountant to file for you.

“CPAS may be more expensive than doing taxes on your own, (but) they will maximize your tax deductions, which will most likely give you a higher return than the cost of a CPA,” says John Pham, founder of The Money Ninja, a personal finance website.