A side business can be the perfect way to bring in an extra income and turn a hobby into a career. If you’ve got a particular interest, you may already have a springboard into starting your business and doing something you enjoy is always advantageous. However, all business owners must adhere to regulatory requirements, so it’s essential you take steps to ensure your side business is legitimate.
Establish your business
If you’re turning a hobby into a business, you’ll need to be able to prove this. You may need to show that you’re advertising your services or marketing your products, for example. It’s not unusual for new companies to make a loss when they first start trading, and you be able to offset these losses against your other income. However, in order to do this, you’ll need to be able to show that your side hustle is a legitimate business venture and not simply an extension of your hobby.
Get the right insurance
When you launch a business, it’s crucial you have the relevant insurance in place. Without out, you could be putting yourself at serious risk of sanctions. If you have public liability insurance, for example, it covers any injuries or harm which members of the public could suffer when they’re on your premises. Similarly, product liability insurance provides coverage for any injuries which may arise following the use of your products.
Although these insurance policies can be obtained relatively cheaply, they can protect you and your business if any accidents or incidents occur. By getting the right advice and ensuring you have appropriate coverage, you can meet your legal obligations and protect your business.
Seek professional tax advice
Any earnings from your side business will be taxed by the IRS, and even if you make a loss or break-even, you’ll need to report this to the IRS. If you’ve never managed a business before, you may be unfamiliar with how to file your reports or what to include, but there is help available.
By seeking advice from an experienced taxation compliance attorney, you can ensure that your business is operating in accordance with the relevant tax legislation and that you’re meeting all of your legal obligations with regard to your tax liability. In addition to this, getting professional advice can help you to ensure you’re operating efficiently and reducing your tax liability wherever possible.
Incorporate your company
Although plenty of people operate alone, you may want to explore the possibility of incorporation. When you incorporate your company, it’s considered to be a separate entity from you personally, and this offers you additional protection. As a sole trader, any debts owed by the company could be taken from your personal assets, for example, but if you own an incorporated company, your personnel assets are separate from the company’s.
Whilst incorporation may not be necessary for every side venture, it can be a good way to protect your personal assets and establish your business.
Good luck with your new venture.
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