Thank you to Martin Pringle Law Firm’s Business Attorneys for sponsoring this post.
The side hustle is real. A quick scroll through Facebook and you’ll run across people selling all types of products and services straight from the comfort of their living room or while sitting at the desk of their “real job”. More and more people are looking for ways to make a little extra cash and with social media at our fingertips, it’s getting easier to do so. If you have a side hustle or thinking about starting one, consider these tips to stay on the right side of the law.
Liability Protection
Creating an LLC (limited liability company) for your side gig is almost always a good idea. If something goes wrong with the products or services you’re providing, it could expose not only your business, but also your personal assets to liability. Setting up an LLC can protect you from the latter.
The last thing you want is something going wrong with your side business that could affect your personal bank account. Let’s be honest, no matter what you are selling, the more you sell of it, the more likely something will go wrong. If that unhappy customer decides to take legal action, having an LLC in place helps limit your liability to only the assets of the business and protect your personal ones.
Employment Contracts
If you have a job and you’re thinking about picking up a side gig to supplement your income, take a look at your employment contract first. Sometimes employers will prohibit employees from selling products or services outside the scope of your employment. This could limit what your side gig looks like, or worse yet, you could have to share those proceeds with your employer.
Or, maybe you’re thinking about leaving your full-time job to do your own thing? Before you put in your 2-weeks’ notice, review your employment contract. Often times, employers will include non-compete provisions which could prohibit you from going out on your own, especially if your new business will compete with your prior employer.
Another thing to keep in mind is that your employment contract could give the employer the right to any product or idea that is developed by their employees while on the job, so it’s generally not a good idea to use company resources to work on your side gig or starting that new business.
Tax Considerations
Finally, don’t forget that your side gig needs to be reported for tax purposes. You’re probably not going to get a W-2 or 1099 that provides all of the relevant amounts for you, and depending on the volume of sales you have, you may be subject to collecting and paying sales taxes in addition to income taxes. So make sure you’re keeping proper financial records.
Navigating the legal puzzle of your side hustle can be confusing, but following these tips will increase the chance of getting that extra cash in your pocket, and keeping it there!
Martin Pringle’s Business Law Attorneys advise clients on business transactions of every kind. As general counsel and special counsel for specific transactions, our attorneys represent a wide range of individuals and small, medium and, large businesses. Martin Pringle attorneys strive to go beyond the traditional legal role of document preparation and due diligence. We advise our clients from the outset of representation on planning the mechanics of each transaction and working the legal questions side by side with the business issues.
