How to Better Track and Manage Your Side Hustle Earnings
Are you drowning in student loans or credit card debt? Or are you saving for your dream vacation or first home? Take time to set up your home office and earn some side hustle cash. However, before you start a freelance gig, make sure you know how to better track and manage your side hustle earnings.
Write Down Your Goals
Write down what you plan to do with this extra income. Recording your goals is a good way to stay on track once you start earning money. If you start your side gig to pay off student loans or other debt, spending your freelance money on a shopping spree won’t help you reach your goals. Read your goals when you’re tempted to dip into your hard-earned side hustle funds. Are those $200 shoes worth the spend?
Keep Personal and Business Money Separate
Mingling is great for parties, but it’s horrible for managing side hustle earnings. Open separate business savings and checking accounts. You need to keep your side hustle earnings separate from your day job income. With this separation, you can easily see if your side gig is profitable. If your freelance clients pay you by check or with cash, you can use preprinted deposit slips to save time at the bank.
Use Software or an App to Manage Your Money
Apps and web-based software can help make managing your side hustle earnings and expenses effortless. Once you set up your account, you can send invoices and track earnings and expenses with only a few clicks. Explore options such as QuickBooks to automate your bookkeeping and save time.
Don’t Forget About Income Taxes
When you work a full-time job in the corporate world, your employer takes care of paying your state and federal income taxes. You’ll have to handle your own taxes for your side hustle earnings. Generally, you pay quarterly self-employment taxes. You may want to have a separate savings account only for your tax money. Once you make a deposit, you know not to touch it until your taxes are due.
When you start making large sums of money, consider setting up an LLC or corporation. You’ll have to pay some fees and complete some extra paperwork and reporting. However, creating a separate business structure can make separating your side hustle income and personal finances easier. Also, your LLC or corporation will help protect your personal assets from any business-related debts.
Once you start managing and tracking your side hustle earnings, you may see some dips in your profits in different months. Don’t get discouraged: You may make up for any losses the following month. Read your goals again to re-energize your side hustle mojo and stay focused.
Managing and tracking your side hustle income is easy when you use the right tools. Explore affordable apps and software. Consider whether a sole proprietorship, LLC, or corporation is the best option to help you better track and manage your side hustle earnings. Don’t forget to budget for rewarding yourself for a job well done, too. You’ve earned it!