Starting a side hustle has become increasingly popular in Australia as more people seek additional income streams, personal fulfilment, or a way to test business ideas while maintaining their full-time jobs.
While there are numerous benefits to having a side hustle, there are also challenges to consider. Let’s examine the pros and cons of starting a side hustle in Australia.
Pros of Starting a Side Hustle
- Additional Income
One of the most significant advantages of starting a side hustle is the extra income it can bring in. Whether saving for a house, paying off debt, or simply looking to boost your financial security, a side hustle can provide that much-needed financial buffer. In today’s gig economy, freelancing, tutoring, and ridesharing can help generate consistent earnings outside your main job. - Flexibility
A side hustle often comes with greater flexibility than a traditional job. You can choose when and how much you want to work, which allows you to balance other commitments like family, study, or your main job. This flexibility makes pursuing a passion project or building a business around your existing schedule easier. - Skill Development
Running a side hustle can help you develop new skills that may benefit your career in the long term. Whether it’s improving your marketing, sales, or time management abilities, working on a side project encourages you to wear multiple hats. These transferable skills can enhance your employability or even lead to promotions in your full-time role. - Turning Passion into Profit
For many, a side hustle is an opportunity to explore a passion outside of their regular job. Whether crafting, photography, writing, or tutoring, turning a hobby into a source of income can be incredibly rewarding. Over time, a successful side hustle might grow into a full-time business over time.
Cons of Starting a Side Hustle
- Time Commitment
A side hustle requires a significant time investment, which can affect your work-life balance. Balancing a full-time job with a side business can lead to long hours, which can result in burnout if not managed carefully. Setting boundaries is crucial to prevent your side hustle from overtaking other aspects of your life. - Tax Implications
In Australia, earning additional income through a side hustle means managing extra tax obligations. You’ll need to declare your side hustle income on your tax return, which could push you into a higher tax bracket. Additionally, you may have to register for GST if your side hustle earnings exceed $75,000 per year, increasing your tax responsibilities. - Initial Costs
Starting a side hustle may require an upfront financial investment. These expenses can add up, whether it’s purchasing equipment, setting up a website, or marketing your business. Without careful planning, you may spend more than you’re earning in the initial stages. - Risk of Failure
Not all side hustles succeed. You may find that your idea doesn’t generate as much income as expected or that competition is fiercer than anticipated. There’s always a risk that the time and effort invested won’t result in substantial rewards.
Setting Up A Side Hustle
Once you have considered the pros and cons of establishing your side hustle venture, you may decide to set yours up. To set up a side hustle in Australia, you’ll need a few key steps to get started:
- Choose a Business Idea: Identify a service or product you’re passionate about that has market demand.
- Register an ABN (Australian Business Number): If you’re earning money independently, you’ll need to register for an ABN. This helps with tax reporting and ensures your business is recognised legally.
- Understand Your Tax Obligations: Any income from your side hustle must be declared on your tax return. If your turnover exceeds $75,000, you must register for GST.
- Set Up Business Finances: It’s wise to have a separate bank account for your side hustle to track income and expenses easily.
- Marketing: Establish an online presence through a website or social media to attract customers.
You can effectively set up and manage your side hustle by following these steps.
Starting a side hustle in Australia can be a great way to earn extra income, develop new skills, and pursue personal passions.
However, weighing the time commitment, financial costs, and tax implications is essential before jumping in. With careful planning and a clear understanding of the pros and cons, a side hustle can be a fulfilling and profitable venture. Looking to set up a business, book an advice session with one of LT’s accountants and business advisors.
Disclaimer
The information contained in this publication is for general information purposes only, professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.