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Sunday, November 1, 2015

5 Reasons Why You Need A Side Business

Welcome amigos!  The struggle is real, especially for all "employees."  Anyone working for someone else is an employee, and is economically in the worst kind of financial predicament: not being the boss.  So today's financial literacy installment here at CCM is for the majority of America's workforce.  The topic: 5 reasons why everyone needs a side business.



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First, when talking about a "side business," I mean just that--a part-time business that still leaves you with time to play with the kids, walk your dog, date your significant other, or hang out with friends.  I believe this is the most misunderstood concept about a side-gig, namely, the belief that it will "take too much time."  With just a few time management adjustments, for example, like watching less of the idiot box or waking up a half-hour earlier, you can enjoy the perks listed below, which these days, are darn near indispensable!

1.  Lower your effective tax rate.  As an employee, you are subject to the highest income tax rate.  The deductions are also minimal.  A business of your own adds the ability to deduct "business" expenses, and if within the first three years of starting out you're in the red, it comes off your ordinary income.  Look at it like this, when you don't have a side business, expenses like: your child's printer ink cartridges, your cell phone bill, the use of your vehicle, the purchase of a new laptop, and so much more...are all on you!  With a side business, these expenses in most cases, and to some degree, are tax deductible!

2.  Networking and branching out.  As a freelance writer and financial blogger, I've had the opportunity to connect with at least two successful start-ups, their leaders and founders.  I've communicated with multiple investors and business owners having nothing to do with my day job of a teacher.  These are all leads that result in potential money making ventures for me.  The same can happen to you!  A whole new world of opportunities opens up to you when you look to carve out any size niche in the business world.

3.  Added financial independence.  Okay, thinking you are financially secure with a job is screwy.  As an employee, you are always at the whim of a madman: the system.  Your actions are under a microscope 24-7, whether you think so or not.  Do something "wrong" and you're out.  Having a side-hustle gives you practice and experience for a potential outcome, the need for you to provide for yourself after a layoff or firing.  Why wouldn't you want the peace of mind that comes from knowing that if you were to lose your job, there'd be a safety net of making income waiting for you on the other side?

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4.  Mental elasticity.  You know what happens to a career employee that never leaves his or her own fishbowl?  They get stale.  A side-business is the perfect way to keep your mind sharp.  Finding information and solving new problems as you build up your side-gig will improve your day job creativity and possibly even make you more skilled.

5.  Extra income!  Even if your side business makes you less than $200 a month, believe you me, it helps!  My side business income has kept me from tapping into my emergency fund a few times this year.  You may be okay and could put the extra money to work by investing, something you wouldn't ordinarily do if you're a saver.

There you have them.  I'm of the opinion that it is now time for all career employees to seriously consider starting a business on the side.  If not for you, then for your children's sake, as there is no better way to teach someone how to do something than with experience as a frame of reference.  Thanks for reading!  Until next time.   

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