Below is the second post in a new series of blog posts called “Side Hustle Budgeting 101”. You can find the first post in this series here. They feature special guest contributors who specialise in budgeting and finances. If you struggle with keeping your finances organized in your blog or side hustle, bookmark this or save the pin to refer to later.
If you’re serious about growing your side hustle to the point that it will replace your full-time job, you need to set a few things in place that will help you organize, analyze, and strategize.
Treat your side hustle like a real business and it will operate like one.
Here are some things to do to make sure that your finances in ‘You, Inc.’ are prepped for growth.
#1: Use automation tools
To track your mileage, use a tool like MileIQ. It keeps up with all your travel so you never have to remember to write in your log book.
Creating automations will give you more time to work on making your side hustle become your main hustle.
For example, with IFTTT, you can create a recipe between your email program and your Evernote, Notes, or other note-taking app that will file all emailed receipts to a folder you can share with your bookkeeper or accountant. No more shoe boxes!
#2: Open and maintain a separate bank account
I’m not saying you need to open an official “business” checking account with the bank. Those accounts can be subject to higher fees and conditions than your personal account!
Open a separate personal bank account and all money coming in and going out should be done in that one account for your blog or side hustle.
This has several advantages:
- IRS will take you more seriously as a legit business and not some hobby.
- You will be able to tell more clearly whether or not you’re in the red or the black.
- You will be able to tell how much profit you are actually making, for quarterly tax calculations and IRS compliance.
- You will be able to see the highs and lows and observe yearly trends. After all, you can’t grow what you can’t measure.
#3: Invest in a cloud-based accounting system
A cloud-based accounting system operates like a ledger book you have with you everywhere.
In the last decade, software and accounting companies have made major progress in solutions for the sole proprietor or side hustler.
Gone are the days of just Quickbooks Desktop and Peachtree. Now you have systems like Xero, Freshbooks, Wave, and Quickbooks Online to keep you on top of everything.
Some of the benefits of cloud-based accounting programs include:
- Automatic backup so you never have to worry about lost data or crashed computers
- Ability to import bank and credit card info (again, keeping things automatic!)
- Security is on par with bank online security
- Ability to create customized reports and measure financial health of your business
Most are mobile friendly and work well with Android and Apple based devices and phones. They can be accessed anywhere almost.
Some integrate with your tax program to make tax preparation easier at the end of the year, as well as providing access to your accountant with their own login.
There are several choices and companies to choose from. Most are pretty similar, differing only in how they look but the accounting conditions and laws work the same.
Some of the more popular choices include:
- GoDaddy Bookkeeping - I've heard great reviews from colleagues and freelancers that use it, runs $10/mth or $8.34/mth (annual plan)
- Xero - a site that is getting more popular and is pretty easy to learn. Free 30-day trial, then $9/mth. Xero presents itself as accounting software that isn’t worded in accounting jargon, making it simpler to use and understand for the business owner who isn’t an accountant.
- Wave - completely free for unlimited invoicing and bookkeeping unless you're doing payroll. Some of my side hustler friends swear by it!
- Quickbooks Online - made by Intuit, it’s one of the most well-known, but some say not the simplest software when starting out. Starts at $13/mth. Intuit also released Quickbooks Online: Self-Employed edition. It’s approximately $8/mth and marketed as a simple solution for the side hustler or freelance entrepreneur. Intuit has started to realize that their traditional software is overkill for the increasing number of side hustle and freelance entrepreneurs so they are working on simpler alternatives that don’t confuse you to pieces.
- Freshbooks - the one I use (Lise does too). It's simple to invoice and keep track of expenses, organize by client and by specific job, and is free for up to 3 clients. If you end up having more clients, you can upgrade to one of their packages that start at about $20/mth.
These are just a few of the tools I use or recommend for the side hustler to keep their finances organized.
Keeping your finances organized improves your cash flow because you have a better handle on what your money is doing.
One of the main causes of business failure is a lack of cash flow, and many times that comes from a lack of systems or processes in place. Organized finances are the key to growing your side hustle aka You, Inc.
Tai Stewart is the founder of Saidia Financial Solutions, a full service accounting and tax firm that helps entrepreneurs organize, strategize, and analyze their business finances so that they can focus on running the business of their dreams. She writes about all things business finance at www.saidiafinancial.com Sign up for our free Entrepreneur Startup Checklist for your small business or side hustle: http://bit.ly/bizstartchecklist
Tai Stewart is the founder of Saidia Financial Solutions, a full service accounting and tax firm that helps entrepreneurs organize, strategize, and analyze their business finances so that they can focus on running the business of their dreams. She writes about all things business finance at www.saidiafinancial.com
Sign up for our free Entrepreneur Startup Checklist for your small business or side hustle: http://bit.ly/bizstartchecklist
Disclaimer: This post contains affiliate links. This doesn’t make the cost of the tool or service more expensive for you… all it does is help support this blog and keep the lights on in Lise World 🙂