Business Income Five Easy Tips for the New Side Business Owner Read the Article Open Share Drawer Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)Click to print (Opens in new window) Written by TurboTaxBlogTeam Published May 13, 2014 - [Updated Oct 7, 2024] 4 min read So you’re the proud owner of a new side business? Congratulations! But the work has just begun. After all, much of your time, effort, and talent is already being spent while you’re trying to manage your career and home life. But that’s OK. If you’re creating a business on the side while continuing to work in your other job, that puts a little less pressure on you to make money right away. While having another career can cut into the time needed to launch your side business, it provides two invaluable things for your ultimate success: start-up funds and at least some financial security. Since you’ve decided to take the plunge, here are some tips to help along the way. Create a Business Entity When starting a business, a common choice is to operate as a sole proprietor. Most businesses begin this way because of the streamlined ease of setup. You can simply file your business taxes with your personal taxes. But for financial purposes, you may consider creating a separate business entity. There are a number of options, but one of the most common is a Limited Liability Company, or LLC. Forming an LLC is pretty simple and can usually be done online with your state. Fees typically range anywhere from 20 dollars to at most a couple hundred. When you create a business entity such as an LLC it helps you separate your business and personal finances, which is very important when it comes to taxes. Speaking of taxes, here is where creating an LLC can significantly benefit you down the road. If you’re the sole business owner, your LLC is taxed just as if you were a sole proprietor, which makes filing simple. The real benefit is thinking about the future of the business. As you grow, maybe you will need employees, or take on a partner. Since you already have the LLC established, this makes that transition a lot easier. Not only that, but you have the option to treat your LLC as a corporation for tax purposes. This means down the road you could elect this option and possibly save money by utilizing the corporate tax rate. An even more significant reason is financial protection. Under the umbrella of an LLC your personal assets are generally protected from company debts. This means in most cases, if your company enters into agreements, or takes on debt, as long as there is no personal guarantee attached to it, your losses are limited to the company. Security Job security in today’s world is often hard to come by. Even the most talented among us are at the mercy of major disruptions in nearly every industry. So aside from keeping the resume and skills fresh, what should we do? A side business is an excellent backup plan. While the business may take some time to reach profitability (or to even monetize at all), once you achieve liftoff it can provide a comforting nest egg to fall back on. That cash reserve can allow you to take professional chances with your full-time job or even eventually turn that side business into something full time. Taking Advantage of the Business Climate There has never been a better time to be a side business owner. Why? Because the business world is changing and technology makes it easier than ever to get started. It’s incredibly favorable to part-time, freelance and contract work. Because such work allows companies to cut costs, it offers major opportunities for small-but-hungry new businesses. With so many companies looking for a competitive edge on price, the side business owner will find a great deal of receptiveness to business pitches. So start pitching! Use the Web A lot of side businesses start off as hobbies. But they don’t have to cease being a labor-of-love once you monetize. Each new side business owner should explore the best methods for increasing profitability by harnessing new technology. For example, if you own a popular niche blog, you’d be wise to explore ad networks, banner ads and product placement. The same strategy can be applied to website owners looking for business. Maximizing ad value (and pumping up search results through savvy use of search engine optimization techniques) can help turn your new side business into a money maker. While you may not get rich creating a website, it can make a little money while proving to be a launch pad to something bigger and better down the road. Protect Your Interests After business starts rolling in, smart owners will make sure all the legal and financial bases are covered. You might not have thought about insurance when you got started, but once you’ve created something of value and begin making money, you’ll want to protect this new asset. So, start thinking about business insurance, maybe an umbrella policy, or even re-evaluate your life insurance to help protect your family. Starting a new side business isn’t easy, but it can be life-transforming if you stay informed and work hard. Previous Post Seven Tax Tips for the Self-Employed Next Post The New Sharing Economy and Your Taxes [Infographic] Written by TurboTaxBlogTeam More from TurboTaxBlogTeam 5 responses to “Five Easy Tips for the New Side Business Owner” I am currently employed full time. Last year we purchased a condo to rent out for vacation rentals. What forms do I use to file this. Is this considered a rental or do I file it as a business. I pay state, tourism, county and city taxes on this unit monthly. The state excise license says sole proprietor on it. Thanks, Reply Hi Deborah, You should file it as a rental and income and expenses from your rental are reported on Schedule E. TurboTax Premier will walk you through reporting everything regarding your rental and you don’t need to know the tax laws. You will be asked simple questions and TurboTax will do the calculations and put everything on the correct forms. Here is more info on TurboTax Premier https://turbotax.intuit.com/personal-taxes/ Thank you, Lisa Greene-Lewis Reply I started up a small business onilne and put everything under my name since I don’t have anyone working for me. what forms do I need for that since its under my name and not the business name? Reply I started an LLC this year but did not earn any profits. What form do I use to file my taxes and when is the deadline? Thank you Reply Hi Amy, You should use our business product to file your taxes for the LLC https://turbotax.intuit.com/small-business-taxes/ You will then file your personal taxes separately using TurboTax online. You can find out which product line up is right for you here https://turbotax.intuit.com/personal-taxes/. The deadline for your corporate taxes is March 17, 2015 and your personal taxes are due April 15, 2015. Thank you, Lisa Greene-Lewis Reply Leave a ReplyCancel reply Browse Related Articles Business Income 7 Tips When Starting a Side Business Business Income New Side Job: What Do You Need Before Tax Time? Self-Employed 6 Tips to Help Side Hustlers and Self-Employed Bosses S… Self-Employed I Only Received One Paycheck from My Summer Side-Gig. 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I am currently employed full time. Last year we purchased a condo to rent out for vacation rentals. What forms do I use to file this. Is this considered a rental or do I file it as a business. I pay state, tourism, county and city taxes on this unit monthly. The state excise license says sole proprietor on it. Thanks, Reply
Hi Deborah, You should file it as a rental and income and expenses from your rental are reported on Schedule E. TurboTax Premier will walk you through reporting everything regarding your rental and you don’t need to know the tax laws. You will be asked simple questions and TurboTax will do the calculations and put everything on the correct forms. Here is more info on TurboTax Premier https://turbotax.intuit.com/personal-taxes/ Thank you, Lisa Greene-Lewis Reply
I started up a small business onilne and put everything under my name since I don’t have anyone working for me. what forms do I need for that since its under my name and not the business name? Reply
I started an LLC this year but did not earn any profits. What form do I use to file my taxes and when is the deadline? Thank you Reply
Hi Amy, You should use our business product to file your taxes for the LLC https://turbotax.intuit.com/small-business-taxes/ You will then file your personal taxes separately using TurboTax online. You can find out which product line up is right for you here https://turbotax.intuit.com/personal-taxes/. The deadline for your corporate taxes is March 17, 2015 and your personal taxes are due April 15, 2015. Thank you, Lisa Greene-Lewis Reply