How Do You Keep Track Of Side Hustle Finances?
Starting a side hustle provides you with an opportunity for fun and profit. It’s fun because you’re doing something you enjoy. It’s profitable because you’re making money doing it.
But here’s a word to the wise: don’t misunderstand that having fun means you can treat your side hustle like an extension of your personal finances. If you want to keep track of how your side hustle is doing, you’ve got to treat it as a business.
“I would keep records completely separate from my earned income with a separate bank account,” says Stephen Davis, CEO and founder of Total Wealth Academy in Houston. “This is the most clean-cut way to definitely track your side hustle income.”
In addition, having a good idea of your personal capacity constraints will help. You’ll have more fun with it (and be more successful) if you delegate some of the more mundane tasks. One of those tasks is bookkeeping. Unless your side hustle generates high levels of revenue consistently, it’s risky to hire someone to handle bookkeeping. More likely, you just need simple tasks done. Fortunately, low-cost software or online services can provide this.
“Starting out, a simple Excel or Google Sheets spreadsheet is probably sufficient,” says Nick Loper, founder of Side Hustle Nation in Sammamish, Washington. “As your business grows, a dedicated software solution like FreshBooks or QuickBooks is worth a look.”
As you can quickly see, you can use different tools depending on your situation and what you’re looking to accomplish.
“Keeping track of side hustle income can be done using a variety of tools,” says Pini Shemesh, co-founder & CEO of MyTower in Tel-Aviv, Israel. “These include:
- Spreadsheets: Simple spreadsheet software, such as Microsoft
Excel or Google Sheets, can be used to track income and expenses.
- Accounting software: More advanced accounting software such as QuickBooks or Xero can be used to manage the financials of a side hustle and provide more detailed reports.
- Personal finance software: Personal finance software such as Mint or Personal Capital can be used to track all financial transactions, including side hustle income.”
You will want to rely on comprehensive applications because the software is generally updated frequently enough to account for changing tax rules. These systems will also tend to keep track of when you need to pay the government and how much you need to pay them.
“I use the Avanquest Bookkeeper software,” says Fred Winchar, CEO, co-founder, and president of Max Cash in Reno, Nevada. “It is an accounting and budgeting software. I also keep manual records. Both are good options for tracking side business income. Making sure that all income is recorded and taxes are paid on time is crucial. I also calculate an hourly rate paid to myself to understand my profits better and see if my side hustle is worth my time.”
Credit card companies have online reports that can help you monitor your expenses. Similarly, online payment companies are offering more robust reporting. They offer another alternative to help you keep track of your side hustle income.
“Side hustle income can be kept track of easily using a clear invoice system like Stripe or Square,” says Dielle Charon, a sales and money mindset coach in Raleigh, North Carolina. “This helps to organize it in one place and makes tax purposes very simple. You do not want some paying PayPal, some in Stripe, some in Zelle, etc. You want to keep things very simple and clean.”
If this sounds greater than what you were expecting, maybe you’re not actually running a side hustle. Yes, there’s a unit of work and effort you’ll need to invest to use these tools. Is that too much for you?
“You need to decide if this side hustle is designed to be a business or is best suited as a hobby,” says Catherine Nikkel, a ghostwriter located in Toronto, Ontario. “This determination will often dictate the commitment level, passion and overall time spent inside the ‘hustle.’”
Once you get over this hurdle and start incorporating financial reports about how you evaluate your side hustle, you’ll quickly discover how more complex success metrics can help you move to the next level if that’s something you’d like to do.
“Many small businesses struggle to measure their content effectiveness,” says DeAnna Spoerl, co-owner of Bear Icebox Communications in Chicago. “But it doesn’t take a CMO or a large marketing team to measure ROI. It’s all about having the proper framework and being intentional about every piece of your company’s content.”
As your side hustle financials start looking more attractive, you may find you’ll earn more by spending more time in your side hustle than in your day job. At some point, your side hustle can become your full-time job. It doesn’t happen all the time. Many side hustlers are content with their side hustle remaining on the side. Still, having tools to take care of your financials will reveal choices you may not have believed you might have. That alone is a good reason to use them.
Nidah Barber-Raymond, mompreneur, esthetician and founder of The Peel Connection in Beverly Hills, California, recalls, “I built a successful side hustle by focusing all my time and efforts outside of my main hustle.”
Indeed, for some, this is the ultimate measure of side hustle success. “In my opinion, the most successful side hustle is one that becomes a business all on its own,” says Ali Smith, founder & multi-award-winning dog trainer at Rebarkable.com in Westminster, Maryland.
Using the tools of bigger businesses for your small side hustle helps keep you organized, focused, and, in the end, more profitable.
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