This transcript was generated from the episode audio and may contain minor errors.
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Hello, what's up, welcome to a brand new week. This is Chris Guillebeau, your host of "Saddestal School," bringing you today's classroom episode. At the beginning of every week, we have a classroom episode, looking specifically at a topic in which from January to December, we're actually starting a new income generating project. Now in recent classroom episodes, we have considered the three elements of every compelling offer. We promise a pitch and a price.
We have looked at some different ways to find time to work on your hustle, a common challenge for many of us, among other things, of course. And this week, I'd like to look at, just get ready, a really sexy topic or a series of topics, just thrilling, okay? So we're gonna look at business licenses, bank accounts, and record keeping. Like I said, these are the things that get people really excited when you think about, why am I making extra money? Why am I trying to create another source of income to give myself security, confidence, options, a possibility of something different in the future?
It's all because I really like bookkeeping, right? Okay, well, if for some reason you think these topics are boring, well, here's the trick. If you get a few easy things right in the beginning, if you do a few things right in the beginning, it will be much less stressful going forward. And then you don't really have to think about them again, okay, unless you really want to, you know, for everybody who's really into them. So for those who are not into them, who think that it's kind of boring, I'm gonna give you eight recommendations in this episode.
Again, the whole point is to keep things simple so that you can focus on what really matters besides of course bookkeeping. Now over here in my world, my new book, "The Money Tree" comes out in 15 days. I am very excited about this. It's a story of finding the fortune in your own backyard, a very different kind of book and one that I feel proud of. I really hope that it's going to help a lot of people.
And if you have not pre-ordered your copy yet, I'd be very grateful for that. You can pre-order "The Money Tree" from your local bookstore, from Amazon, from Apple Books, Audible, wherever you get your books. And I just mentioned this because pre-orders help out a lot. They're kind of considered a sign of strength for the book. So it's not very expensive.
If you get a chance to pre-order it, that would be awesome and I'm grateful. But either way on with the show, let's talk about you. Now, first things first here, when I think about logistics, all this kind of stuff, I think resourcefulness is your most important skill. Resourcefulness is the ability to avoid getting stuck and to find your path forward. This is the most valuable thing you can learn.
And for example, I mentioned business licenses earlier. Well, if you don't know how to get a business license where you live, you go online and you type in business license followed by your state, province or country. And you'll probably see some information there. Now I'm not saying it's always that simple. It may depend on your business model and such, but often it is.
And in some cases, you may not even need a license. The same principle applies for many other issues you'll encounter. You're not gonna be the first person to figure out how to pay taxes on the money you make, right? Many, many other people have been down this road. And also remember, it's a good problem to have if you compare it to the alternative.
The alternative is not making any extra money in which you have to pay taxes. So, like my friend Marie Forleo says, everything is figureoutable. This stuff is not that difficult, but I do wanna give you a few recommendations that just about everyone should follow. All right, so eight recommendations. We're gonna do six practical ones and two that are a bit more psychological, but still helpful nonetheless.
Number one, get a bank account that's just for your side hustle. Get a dedicated bank account. There's little to no difference between what most banks call business or personal accounts. The main thing is just to have a separate bank account. Get the option that's easiest for you and then make sure all of your income is going into that designated bank account.
Just makes life much easier later than having to try to separate things when it comes to doing your taxes or potentially turning over your books to a professional or whatever else happens next. If you expect to make income in 2020 or whenever you're listening to this episode, then you should have a bank account, not too difficult. Similarly, you want to get a separate credit card or debit card, whatever's good for you, that you use only for expenses associated with your hustle. And my little bonus tip here as a long time traveler, travel hacker, one of the people who originated that concept many years ago, make sure you're earning miles or points for them. There are a lot of small business card offers these days, especially if you're in the United States, where you can earn a lot of miles and points.
And the qualification requirements to have a business are very small, like it's very basic. It just means you could have a business license, like we said, you could have opened a bank account, you could expect to make some amount of money freelancing this year. So they really want as many people as possible to have these cards, at least as many responsible card holders as possible. So it's not that difficult to get that either. I've got some recommendations on my site, cardsfortravel.com.
Number three, be fast with invoicing. If you're doing a service business where invoicing is part of the process, if you're selling a product, you may not have to worry about that, which is great. But if you have invoicing, if you're sending people a bill, be quick with it. I would encourage you don't save your invoicing for one day at the end of the month. That's what some people do when they're starting.
They think, oh, it's just easier, I'll just wait until then. Like don't do that. When you do the work or you make the sale, send the bill. I think that's just important because it's not that people are going to rip you off, it's not that so many people out there are dishonest, it's just that they forget. And if they get the bill weeks later, they might have this internal resistance to paying it, even though of course they know you did the work.
If you're trying to figure out how do I save income for taxes and such, general rule here, set aside at least 25% of your side hustle income for that. You may want to have an additional bank account for it. If you're opening a small business checking account, it can often come with a small business savings account, in which case you just kind of move that money over, or you just understand that 25% of it is being saved for taxes. Again, your situation may vary, but unless you are exempt for some reason, don't forget to set aside money for your annual or quarterly donations to the government. Number five, legal structure.
We talked about this in a recent question, recent listener question. Operating as a sole proprietor is perfectly acceptable for many side hustles. If you need to incorporate, or if you just want to, you can often do that yourself online for much less money than it would cost to hire an attorney. Again, I can't give legal advice, your situation may vary, but I can tell you what a lot of other people have done. Now last, in terms of practical recommendations, got two more psychological ones coming up, but practical recommendations right from the beginning, set up a very simple accounting system.
This should be cheap or free. It can grow with you if the hustle takes off, but just have some means of tracking your income and expenses. Some people are spreadsheet people, they really like to do it all themselves. That's cool if that's you. Otherwise, check out FreshBooks, or QuickBooks, or Wave.
Just a few options there, and full disclosure, I think two of those three have been sponsors of the show in the past. But there are others as well, FreshBooks, QuickBooks, and Wave. By the way, Wave is not the same thing as Waze. It doesn't take you on a detour, doesn't take you all over the city under the guise of providing an optimal route. I keep waiting for the day when Waze comes out and they're like, "Actually, we were just messing "with everybody.
"You thought you were going through this fast route "by going all these random streets, "but the whole time we were laughing at you." It could happen, you never know. All right, in a moment, you'll get your assignment for the week, along with two more recommendations. First, speaking of sponsors, I'd like to thank our sponsor today for making this series completely free. So here's a shout out to them. [Music]
All right, before we sign off for the day, two recommendations that are somewhat psychological, but still very helpful.
First one, which is, I believe, number seven of our whole list is, if at all possible, set aside some kind of dedicated workspace, even if it's a small one, to work on your project. Even if it's a small one in your home or apartment, just a little bit of an area where you go to and you're like, "This is my space where I'm working "for my 20 minutes a day or my hour a day "or however much time you have." Just create some kind of ritual and modify it as you need, but the idea is to create a pattern and a routine that will just make it easier to work on your hustle. And then also, lastly, once you're making money, pay yourself first. Don't plan to reinvest all your profits in the business. That's not good.
You might wanna reinvest some, but actually you can ask yourself if I'm reinvesting the profits, are they really profits? The whole point of profits is something that you're going to take for yourself. And getting paid is empowering. All right, eight recommendations there. We'll include them all in the show notes page.
Each classroom feature will also include an assignment, this week's assignment. If you expect to produce income this year from some source apart from your job, make sure you have a dedicated bank account for that income. Part two is to track your expenses using one of those systems I mentioned. The most important thing is to find some way to do it that works for you. All right, so make sure you've got your bank account, make sure you've got some way to track your expenses.
If you are already well beyond this lesson, good for you. That's great. We're gonna keep rolling along and pretty soon we're gonna be delving into marketing all kinds of things to make money and then to make more money and then to just create a strong foundation in your business so that you can do all those things that are important to you. Like of course bookkeeping, right? Because that's what it's all about.
All right, check out our notes for every classroom episode at sidehustleschool.com/classroom. And this one specifically has been episode 1178. Thank you so much. I'm really excited to be on this journey with you. I can't wait to tell you more about the book, my tour, all that kind of stuff.
But mostly I wanna make sure that I'm bringing you something that's helpful to you every single day. So thank you for your role in that. Much more is coming up. My name is Chris Guillebeau. This is Side Hustle School.
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- From the Onward Project.
