Tips, tools for setting up a side gig to get out of debt

The more mobile your business, the easier it is to make money


Tips and tools for getting out of debt with a side gig


Tips and tools for getting out of debt with a side gig


Side gigs have become a way of life for many people. A heavy debt load from credit card spending or student loans can take years of frugal living to shed. No wonder many feel compelled to earn a little extra. 

Thanks to mobile technology, it’s easier than ever to run a side hustle, even while working a day job. “Typically, people start these gigs slowly, while working a full-time job,” says Mark Bartels, CFO of Invoice2go and former CEO of StumbleUpon. “The economy is evolving, making it easier for freelancers and 1099 contract businesses.” 

According to a recent survey by Bartels’ company, more than a quarter of salaried employees earn income on the side. Nearly all say working independently gives them greater control over their work than traditional 9-5 jobs.

Thinking of launching a business on the side? It helps to understand a few things upfront. 

Side-hustle on the fly
If you want to earn steady, reliable income in your off hours, the quickest way is with gigs that have flexible hours and the ability to use a company’s mobile apps. For example, the online marketplace Etsy has an app that lets you to respond to potential customers and online sales from wherever you happen to be.

Start by writing down everything you do – every process, every material, where those materials are in your house – everything.

— Renae Christine
Owner, Etsy business

If you own a car and smartphone, and live in an area where Uber or Lyft operate, providing ride services is an easy way to pick up quick cash. Once approved, drivers respond to alerts from riders in their vicinity via mobile app. 

Side-hustle from home
E-commerce is the ultimate source of flexible income, especially for stay-at-home parents or office workers. Freelance writing, selling handmade goods on Etsy or earning affiliate income via blogging all can be done around busy schedules. Once set up, online shops and affiliate income function on autopilot, as long as you check in periodically. Online businesses take time and planning to monetize but once established, can grow with your skills and availability.

When Renae Christine started selling stationary on Etsy in 2006, she was a stay-at-home mom with three young children. She worked madly – whenever she could find time around meals, naps and pre-school. Eventually, she figured out supply-and-demand for her products, stumbled across search-optimization strategies and began treating Etsy as a business. Now that her kids are older, she has built her business into a six-figure income. 

Set up for scalable growth
Even if you’re selling knickknacks on Etsy or eBay for pocket change, Christine advises putting some thought into creating an expandable and scalable business. At the very least, planning and organizing will help you earn more in less time. 

When she launched her Etsy shop, she didn’t know where to find help or even how to ask for it. Eventually, she was able to hand her business over to assistants and take off on vacation. That turned out to be the key to growing the business.

“There is a way to structure your business so you can accomplish scalability without burning out,” she says. “Start by writing down everything you do – every process, every material, where those materials are in your house – everything. You’ll be surprised how easy it is to tighten up your system, just knowing you’ll be able to hire it out someday.” 

Keep businesses expenses separate
Even if you plan to keep your hustling on the side, setting up a separate account and system for tracking receipts and expenses can help at tax time. The idea is to keep work-related expenses from bleeding into personal ones. Whether or not it’s an official business credit card, a credit card dedicated only to business-related expenses can help in a few ways.

If your sideline does turn into a full-time gig -- the dream of many in the new gig economy -- a dedicated card helps establish credit history for that business. “By building the credit behind a business, owners can increase its finance capacity, making it easier to acquire financing for the business based on its own creditworthiness, rather than that of the owners," says Heather Norton, spokeswoman for American Express OPEN. 

Write off startup costs
Set up a system to track every dollar you spend on your side gig, especially if you plan to turn it into a business. You may qualify for a tax deduction on business expenses before you earn a penny. Whether you’re spending time and resources developing a product, setting up promotions or a tent to work festivals, you should be documenting those expenses as you go.

“Many people starting small businesses fail to recognize that there are startup expenses,” says Joe Anthony, an enrolled agent and tax expert specializing in small business. “You can write off up to $5,000 in expenses incurred before you’re actually ready to do business. The rest of the startup expenses have to be amortized over 15 years, which is not a very good deal.” 

Track expenses
Set up a system to track every business-related dollar you spend. “I tell my small-business clients, I don’t care how you keep track of your expenses as long as you have a system,” Anthony says. “Your system can be Quicken or QuickBooks. It can be Mint. It can be Xero or Excel spreadsheets or eight-column green-lined paper. Just be consistent.”

You can now run your business from your phone, do the work and bill for it immediately. You don’t have to put off invoicing until Sunday night.

— Mark Bartels
CFO, Invoice2go

Some credit cards have apps you can sync with these systems. With business cards from American Express OPEN, for example, you can use the Connect to QuickBooks app or the ReceiptMatch app to sync with the QuickBooks app. AmEx will automatically transfer and categorize your company’s expenses to QuickBooks. “These systems are designed to help streamline your expense management process from wherever you are,” says Norton. 

Once you start filing a Schedule C – the tax form for sole proprietors -- it’s probably time to hire an accountant. “If you have a small business, you should not be doing your own returns,” Anthony says. “When you have a W-2 and a 1040, you’re fine. But if you have anything involving a 1099, it’s worth paying a professional for what is going to be mostly a tax-deductible business expense.”

“People make mistakes with startup expenses because they don’t document properly,” he says. “In general, the most common mistake is not having a system in place.” 

Set up mobile billing
Once you are selling goods or services on the side, you need a quick and easy way to bill for them. PayPal is one system that’s trusted, easy to use and professional. You can even upload your business logo into their electronic invoices and use the PayPal Here app to send invoices on the go. 

If you don’t want to be locked into PayPal and just need to collect an old-fashioned check, there are apps for that, too. Invoice2go is one. “Anything that gets you paid quicker is going help you run your business and allow you to focus on your craft or the service you’re delivering,” Bartels says. “It saves people time if they can keep track of sales and bill for them in one take, and mobile invoicing lets you do that on the go. “

“That’s another shift we see,” Bartels says. “You can now run your business from your phone, do the work and bill for it immediately. You don’t have to put off invoicing until Sunday night.” 

Partner up
Where the side gig is concerned, two is often better than one. David Carlson, author of “Hustle Away Debt,” started married life with $100,000 in combined student debt. Given the full-time job he works around, he finds partnering with others makes side-hustling easier.

In the first years of his blog, Young Adult Money, his wife contributed a weekly roundup of giveaways expiring that week. Not only did she score them giveaways in the process, the posts themselves became a source of passive income after they joined an affiliate program. 

More recently, Carlson teamed with a friend to create an audio CD to sell on Amazon. “We both contribute different skills and keep each other going,” Carlson says. “My friend had the idea for this product, but didn’t have the business skills to handle production and marketing. Working together, we can each focus on our strengths and hopefully profit from it.”

While some dream of quietly building an empire so they can quit their day jobs, most side gigs just help pay the bills. “Most people who use apps like ours are one- to two-person shops,” says Bartels. “Over time, the more they work, the more income they generate. But they’re not going to get to the age of 70 and sell a multi-million-dollar business. Most small businesses stay small businesses.”

See related: Q&A with David Carlson: How side hustles can pare debt, You did WHAT to pay off your debt?

Published: August 26, 2016

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Updated: 10-24-2016

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