Wondering how to start a business on the side? From candlemaking and copywriting to selling online, you’ll be joining a growing trend.
In fact, research from across the UK shows that 35 per cent of people in the UK now run their own side hustle.
From finding your idea and writing a business plan to practical tips on tax and funding, read our quick-start guide to starting a side business in the UK.
Side hustle meaning in business
A side hustle is a job you have on the side of your main job. It can often be something that starts out as a hobby but turns into a way of earning extra cash.
Side hustle checklist: how to get started
1. Find your niche
The first thing you’re going to need is an excellent idea and a unique name. Make sure you’re passionate about your business as you’ll need to put time and energy into it – on top of your main job.
Writing a business plan is a good way to explore opportunities for your business and understand your competitors.
2. Know your legal responsibilities
When you register as self-employed, you’ll need to choose a legal structure for your business. There are three types to choose from: sole trader, partnership, or limited company.
You should also make sure you have the correct licenses and that you’re following government legislation.
Our guide to side hustle legal obligations has more information on what you should consider.
3. Understand side hustle taxes
Do you need to pay tax on your side hustle? The short answer is, it depends. Everyone has a £1,000 tax-free trading allowance, so you don’t need to tell HMRC about any income if it’s less than that in one tax year.
If you’re likely to go over that threshold, make sure you’re registered as self-employed and that you file your tax return in January.
Read our guide to second job tax to find out more about when you need to start paying tax.
4. Get funding for your side business
You might want to consider crowdfunding as a way to fund your passion project. If it’s a new product you want to sell online then crowdfunding can be a great way to get a prototype built, and test the water with your idea.
You could also look into whether you’re eligible for any small business grants.
5. Side hustle insurance: what cover do I need?
It can be difficult to know what insurance you need, particularly if it’s only for a side gig. But even if you’re only trading part-time, it’s important to make sure you’re protected.
Insurance protects you against the everyday risks of running a business such as accidents, damage, and legal fees. The type of business insurance you’ll need depends on your business.
Here are some of the key insurance covers you might need:
public liability – covers you if someone is sick or injured as a result of your business
professional indemnity – is important if you give advice or provide a professional service to clients – from cleaning to home baking
product liability – can protect you if you’re designing, selling, or supplying products and there’s a claim for personal injury or property damage as a result of your product
How do you know when to quit your 9-5?
It can be really challenging to know when to quit your main job and rely on your side business for an income. And there may not be an ideal time. But with thought and planning you can set the foundations for success.
Signs it might be time to take your side gig full time:
you can imagine spending all your time on it
it’s looking like it’ll turn a profit
you have more clients than time – and are turning down work
you’re happy working on your own without the support of a team
you’re comfortable giving up benefits of employment, like paid holiday and sick leave
you have a back-up plan if things don’t go as well as you hoped
Things to have in place before making the transition
Before you decide to take your side hustle full time, here are some key things to get in order first.
Create a budget – make sure you have a plan for your personal and business finances so you know exactly what’s going in and out. Download your free budget template to get started.
Build an emergency fund – this should be about three to six months of living and business expenses, including rent and mortgage repayments. Read these tips on financial wellbeing for more guidance.
Write a business plan – it’s always useful to write down your goals, and if you’re hoping to rely on your business full time then you’ll need a clear idea of where you want to go with it.
Line up your customers – have you got regular clients on your books? It’s a good idea to build a strong customer base before making the transition, reducing any financial risks with relying on your new venture.
Still looking for side hustle ideas?
Our side hustle survey found the top three side hustles to start in the pandemic were arts and crafts, online shops, and clothing businesses. What will you go for?
If you haven’t quite settled on your perfect idea, read our guide to 10 of the best business ideas for some inspiration. We also have a dedicated guide featuring side hustle ideas for students if you’re looking to build a business while at university.
Do you have any unanswered questions about starting a side business? Let us know in the comments.
Photograph 1: Pixel-Shot/stock.adobe.com
Photograph 2: Nina/stock.adobe.com