Earning

Don't forget to 'have your policies in writing,' and 4 more common side hustle mistakes to avoid

As a side hustler, "having a strong online reputation" is critical.

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Twenty/20

As U.S. workers assess life post-pandemic, many are electing to take the leap and leave to dive into passion projects, new side hustles, or simply to find work with better pay and benefits. Almost a quarter, 24%, of adults plan to start a side hustle in 2021, according to a Zapier survey.

But when you're starting a side hustle or business, the logistics of building an online presence, communicating with customers, and organizing your activities can get overwhelming. It's easy to mess up along the way, experts say.

Here are five side hustle mistakes to avoid.

Not having 'policies in writing'

If you start a service business or side hustle like dog-walking, selling crafts on Etsy, or consulting for businesses, make sure you nail down your policies and put them in writing.

A lot of new side hustlers or business owners don't put their policies in writing because they "trust too much that [their] customers, whether business customers or consumer customers, are going to behave in the way that [they] anticipate that they will," says Angelique Rewers, founder of BoldHaus, a consulting firm that helps small businesses land corporate clients. "Unfortunately, there will always be a percentage that don't. So you absolutely have to have your policies in writing."

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Customers could try to demand more work hours out of you or decide they're not happy with the service and refuse to pay. If you have your policies in writing and share them with customers to begin with, it helps set the parameters of what you're doing and what they owe you in return.

Additionally, "when you have a transaction with someone," says Rewers, go that extra step and have them "sign that they understand what the policies are."

Text messaging with customers

Decide early on what method of communication you'll use with customers. "It's really important that [you] learn professional communication, and that [you] set boundaries in the way that [you] communicate with customers," says Rewers.

"Text messaging," she adds, "is not a smart way to go about communication." It looks unprofessional and it puts you at risk as that's one more person who has your personal information.

Rewers suggests setting up a professional email account and a phone number where customers can reach you. You can set up a business phone number "through companies like Grasshopper or RingCentral where a phone number is forwarded to your cellphone" if someone calls, she says.

You absolutely have to have your policies in writing.
Angelique Rewers
Founder of BoldHaus

Not having the right insurance

Depending on what kind of hustle you're launching, you might need business-specific liability or property insurance. Your personal policies may provide no or limited coverage for business activities. "If your car insurance, for example, finds out that you were running a business in your car, your personal car insurance might not cover you," says Rewers.

Do some research about your side hustle before you dive in and talk to an insurance professional about what coverage you might need. "It's really important if you're just getting started that you understand all the insurance that you need to have and that you don't get yourself into trouble," says Rewers.

Neglecting your online reputation

Customers are not shy about sharing their opinions about your service online, so "having a strong online reputation" is critical, says Rewers.

Keep abreast of the reviews customers are leaving about your business on sites including Google, Yelp, or forums you use to publicize your work or to book jobs. Make sure if someone leaves a bad review that you respond politely and professionally to it "so that others can see that you do care," she says.

If you can, respectfully explain what led to the problem and the actions you've taken to fix it and/or prevent it from reoccurring. Apologize, and try to make up for the poor experience with a special offer. "If I'm looking at that side hustler on Google, I'm gonna be really excited that they responded," says Rewers.

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Not setting aside money for taxes

"One side hustle mistake that a lot of people make is forgetting to set aside money for taxes," says side hustle expert Kevin Ha. "This happens to a lot of people when they start side hustling ― they make some money, spend it all, and then find themselves with a big tax bill at the end of the year."

Figure out your new business tax obligations early on. To avoid underreporting your earnings, for example, keep a detailed account of how much you make throughout the year. Track necessary expenses you can deduct, such as supplies and software.

A good rule of thumb is to set aside 30% of your earnings to make sure you're prepared at tax time. Ha suggests setting up two bank accounts when you start your side hustle: one for the money you earn and one for the taxes you'll have to pay on that income.

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