How To Manage The Money From Your Side Gig – Part 1
‘Side gig’ has become a popular term to describe those little extra jobs that can help you earn a few extra quid to tide you over before payday, put towards a savings goal or use as spending money if your main salary is all already accounted for.
Often made up of freelance work that can be done from the comfort of your home study or bedroom – think web design, photography or even event planning – it’s a great option if you’re struggling to make your budget add up.
Having become a popular fad lately, the internet is awash with suggestions for side options. So how should you manage that extra cash effectively?
Work out pricing logically
The first thing to do is set a price: how much will you be charging people for your wonderful talents? This can be a fun part of setting up your side project, but it’s important not to go rushing in with the first number that comes to mind.
You need to spend some time researching what other people charge for similar services – find the minimum and maximum average prices and then work out where your skills, experience and level of service fit onto that continuum.
Are you taking a quick and dirty discount approach, or will you be looking to charge higher prices for a luxury product? Knowing your market will help you set a realistic price, which you can always revise later if necessary.
Record every penny
Once you start bringing in clients, it’s important to set up a simple spreadsheet that keeps track of every penny earned and every penny spent.
It’s important to know your outgoings as well as your income, as this will help you determine your overall profit – and it will also come in handy come tax time.
Neglecting this can lead to a lot of confusion later, so it’s important to spend a few hours getting to grips with your figures, even if you’re not naturally a numbers person.
This doesn’t have to be complicated. First of all, create a method for recording income. Every time you’re paid for a good or service, you’ll record the date of the payment, what it was for, how it was paid (cash/cheque etc.) and how much you received. You can also add a notes column, or anything else you feel is important; remember, this is all about making your life easier.
Then, do the same for your expenses. If you need to buy specialist equipment or spend out on travel then this needs to be tracked. It may be tax deductible, too, so this is a very financially savvy move.
Make sure you’re registered properly
Once you’re up and running, it’s time to register with HM Revenue and Customs. The government gives some very clear guidelines to help you determine how to register and what information to give – it’s reasonably straightforward and will ensure that you’re operating legally.
Once you’ve registered, you’ll receive information about filling out your tax returns. Make sure you complete any forms you’re given on time so that you can pay the right amount of tax.
These are the very basic steps that any side-hustler needs to take. In part 2, we’ll follow up with some additional steps that you might want to take if your freelance operation starts to get more serious.
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