Morne Patterson - Why Running Your Side Hustle in a Separate Company is a Smart Business Move
Asthepopularityofcontractorsandfreelancersgrows,manypeopleareturningtoside hustlestosupplementtheirincome.Asidehustleisawaytoearnextramoneythrougha part-timejoborbusiness.Whilesidehustlescanbelucrative,theyalsocomewithrisks, especiallyifyou’rerunningthemasasoleproprietorship.Inthisarticle,I’llexplainwhy formingaseparatecompanyforyoursidehustleisasmartmove,andtheadvantagesitcan bring.
Introduction to Side Hustles
Asidehustleisagreatwaytoearnextraincome,butitalsorequiresalotofwork.Itcan involvecreatingandsellingproducts,providingservices,orevenstartingasmallbusiness. Manypeopleusesidehustlestopayoffdebt,saveforemergencies,orfundtheirpassions. However,runningasidehustlecanberiskyifyou’redoingitasasoleproprietorship.
Risks of Running a Side Hustle as a Sole Proprietorship
Asasoleproprietor,youandyourbusinessareconsideredoneandthesamething.This meansthatyou’repersonallyliableforanydebtsorlegalissuesthatarisefromyourside hustle.Forexample,ifyou’resuedfordamagesorbreachofcontract,yourpersonalassets
couldbeatrisk.Additionally,you’reresponsibleforaccuratelyfilingyourpersonaltax returnwhichcanbechallengingwhenrunningyoursidehustleinyourpersonalcapacity.
Main Benefits of Forming a Separate Company for Your Side Hustle
Formingaseparatecompanyforyoursidehustlecanhelpmitigatetheserisksandprovide ahostofotherbenefits.Oneofthebiggestadvantagesisthatitseparatesyourpersonaland businessfinances.Thismakesiteasiertotrackyourincomeandexpenses.Additionally, havingaseparatecompanycanprovideliabilityprotectionforyourpersonalassets,and promotestaxefficiencyasyouwillbeabletoclaimexpensesintheproductionofincome whichpreviouslyweren'tdeductible.
Legal Advantages of Having a Separate Company
Anotheradvantageofformingaseparatecompanyforyoursidehustleisthelegalandtax benefits.Acompanyisaseparatelegalentity,whichmeansitcanenterintocontracts, borrowmoney,etc.Thiscanhelpprotectyourpersonalassetsincaseoflegalissues.
How a Separate Company Can Help with Branding and Marketing
Havingaseparatecompanyforyoursidehustlecanalsohelpwithbrandingandmarketing. Acompanynameandlogocanmakeyourbusinessappearmoreprofessionaland established,whichcanattractmorecustomers.Additionally,havingaseparatewebsiteand socialmediaaccountscanhelpbuildyourbrandandincreaseyouronlinepresence.
Separating Your Personal and Business Finances
Whenyouformaseparatecompanyforyoursidehustle,it’simportanttokeepyour personalandbusinessfinancesseparate.Thismeansopeningabusinessbankaccountand usingitsolelyforyourbusinessexpenses.Italsomeanskeepingtrackofyourincomeand expensesandmaintainingaccuraterecordsfortaxpurposes.Byseparatingyourfinances, youcanmakeiteasiertomanageyourbusinessandavoidanyconfusionorlegalissues.
Steps to Forming a Separate Company for Your Side Hustle
Formingaseparatecompanyforyoursidehustleisarelativelystraightforwardprocess. Herearethebasicsteps:
1. Chooseabusinessnameandcheckifit’savailable.
2. Checkiftheinternetdomainnameisavailableforyourbusiness.
3. Decideonthetypeofcompanyyouwanttoform.
4. Registeryourcompanyanddomainname.
5. RegisterforIncomeTax.
6. Openabusinessbankaccount.
Common Mistakes to Avoid When Incorporating Your Side Hustle
Whileformingaseparatecompanyforyoursidehustlecanprovidemanybenefits,thereare alsocommonmistakestoavoid.Oneofthebiggestmistakesisfailingtokeepaccurate recordsandfilingtaxesontime.Thiscanresultinpenaltiesandlegalissuesdowntheroad.
Additionally,it’simportanttochoosetherighttypeofcompanyforyourbusinessand ensurethatyoucomplywithregulations.
Conclusion
Runningasidehustlecanbeagreatwaytoearnextraincome,butitalsocomeswithrisks. Byformingaseparatecompanyforyoursidehustle,youcanlimityourpersonalliability, improvetaxefficiency,andprovidemanyotheradvantages.Soifyou’reseriousaboutyour sidehustle,considerformingaseparatecompanyandtakeadvantageofallthebenefitson offer.
Need Help?
Readytotakeyoursidehustletothenextlevel?Contactme,MornePatterson,at https://mornepatterson.co.za/contact-meandlearnmoreaboutformingaseparate companyforyourbusiness.