The Side-Hustle Effect: Meet those running successful side gigs (and find out how to join them)

It’s never been a busier time for the UK’s side hustle economy. Whether dog walking or designing clothes, people all over the country are seeking second incomes.

Reasons for the surge are largely lifestyle-related. Working from home policies have given us more time to concentrate on our interests and side gigs. Rising inflation has also contributed, as consumers look for ways to offset more expensive energy and food bills.

Running a side hustle can be lucrative. As we reported last year, recent estimates value the market at a massive £346bn.

But there are also associated challenges to consider, such as tax implications, employer awareness, and upstart costs.

Debating whether to start your own side hustle? Below, we’ll go through the key steps involved, and get advice from experienced side hustlers on everything from balancing work commitments, to accessing funds.

What is a side hustle and why do people start one?

Side hustles are essentially freelance jobs that you launch and run alongside your full-time career. They’re a great way to make a bit of extra cash. In some cases, they can even blossom into startups or small businesses.

Many side hustlers choose to monetise a hobby or interest that they’re already passionate about, such as turning your character doodles into vendible portrait drawings.

But side hustles can also be a way to carve a new career path – a journalist wanting to build a portfolio of freelance writing, is one example.

Why have side hustles become so popular?

Necessity is the mother of invention. During the pandemic, the entire country was told to follow strict COVID-19 measures. This included following remote working policies – here to stay for many.

This has had a significant influence on the number of people starting side gigs.

High levels of unemployment during the various national and tiered lockdowns forced people to find new ways to make ends meet. Meanwhile, those who were furloughed were given access to large amounts of time for trialling new ideas.

The result? 2021 saw an explosion of new business with nearly 80 being registered per hour in the first half of the year.

George Wu, founder of Para Para and Design Director at Mother Design

How much will a side hustle cost me?

Every side hustle has different overheads. Some, like copywriting, only require an internet connection. Still, you’ll generally need to invest in a computer and phone separate from the one you use for your job.

In today’s online world building a digital presence is a must for any startup, and requires some capital. But there are many platforms where you can build a small business website for free, such as Wix.

Alternatively, you can also use social media pages to sell products if you want something with a quicker setup time.

If you’re running a product-based business, your startup costs will also include an ecommerce website, so you can sell online. Some of the most popular choices for this are Shopify.

That’s unless you want to sell items through a third-party marketplace, like setting up an Etsy shop.

What else do I need for my side hustle?

Being time-poor is a common complaint amongst those running side hustles. You’ll be conducting most of your business after work and around other commitments.

One business tool that’s popular among startups is accounting software. It’s a good way to stay on top of finances and even forecast revenue.

Such systems are also smart for those that want to turn their side hustle into a startup, by helping you firm up foundations for larger sales figures.

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Another issue with working off-peak hours means that you’ll likely be working for your main job while your customers are looking for products/services.

Small business CRM software increases time efficiency by automating a lot of basic customer management tasks, such as sending welcome emails or invoices. That means even while you’re working at your desk, your side job will still be taken care of.

SME software doesn’t have to cost a bomb – there are plenty of free CRM systems and free accounting software brands to choose from.

How should I fund my side hustle?

People running side hustles generally choose to ‘bootstrap’ (meaning self-fund) their venture using savings or wages from their primary income.

If you’re starting a side gig with the intention of scaling it into a business, you can take out a business loan or reinvest the money from any sales back into your venture.

Crowdfunding is another way to fund your passion project. It amounts to pitching a project or business through an online crowdfunding platform, which can be a valuable form of marketing and has proven to attract media attention in the past.

Small business grants are also a good option to look into, particularly if you’re a woman. Specialist women-only grants exist to help combat the gender funding gap.

Does having a second income affect my taxes?

As long as all taxable income is declared to Inland Revenue via the gov.uk online self-assessment system, there is no problem with running a business while employed.

Your income is taxable if you’ve earned over £1,000 in the tax year.

If you’re not sure how to file a tax return, don’t worry. Self-assessment returns are relatively straight-forward. But, as the saying goes: fail to prepare, prepare to fail!

Ensure you keep detailed records, such as bank statements and receipts, so you won’t be hit with any penalties for missing information or not filing before the deadline. This is another good reason to invest in accounting software, which sorts through most of the data for you.

When starting a business, you should also make sure you register with HMRC within three months of launching.

Helpful tools for freelance tax returns include the Startups-100 listed company TaxScouts. The company charges a flat fee of £119 to match you with a vetted accountant who completes and files their tax return on your behalf.

Do I need to tell my employer if I’m starting a side hustle?

The conundrum of whether to tell your boss you’ve started a business can be a tricky one to solve. Largely, the answer depends on who your employer is.

There is no legal obligation to tell the employer if you are running your own business.

However, there may well be a clause in your Contract of Employment requiring you, as the employee, to declare any other work.

Generally, this only applies to those wanting to moonlight for other companies. However, if your contract contains this clause, it’s a good idea to speak to your manager before starting any venture so you won’t be held liable in case of any fallouts.

Once you have checked your contract it is at your discretion as to who you tell, but we’d recommend keeping things as transparent as possible.

Telling your employer might even help you by showcasing a hidden talent, or growing your client base through word of mouth. Plus, if you’re looking to market your business online or through social media, your colleagues will likely find out about your side hustle anyway.

How do you balance a full-time job with a side hustle?

Managing a second income while working full-time hours can be difficult. Here are some of the top tips from freelancers:

• Being passionate about your industry will make it easier to work after hours
• Use friends and family for low-cost product or service testing
• Social media is a cheap and cheerful way to brand-build
• Join community groups, or look for specialist-freelancer platforms like Distributed
• Make sure you have time to rest!

Can I take my side hustle full-time?

Research from The Accountancy Partnership has found that despite only 19% of respondents currently having managed to turn their side hustle into a full-time career, 73% plan to make this a reality in the near future.

While it is certainly possible to turn a side hustle into a full-time career, eager entrepreneurs should note a big gap between the two.

Starting a small business is no mean feat and requires, at a bare minimum, a lot of spare capital and time to perfect.

Conclusion

If you’re looking to start a business or side hustle in 2022, you’ll be in good company.

As one of the most optimistic signals for future work-life balance, thousands of employees are already making new business ideas from their hobbies or freelance work.

That being said, burnout is a very real threat when you’re essentially working two jobs. Focussing on a passion project is a good way to minimise the risk, as is setting clear boundaries about when to prioritise your primary income.

Similarly, make sure you have the right supportive tools in place such as accounting or CRM software. These can save you lots of time and can also make the transition simpler if you’re looking to start a side hustle.