The Legalities of Starting a Side Hustle

The Legalities of Starting a Side Hustle
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The Legalities of Starting a Side Hustle

I talk about side hustles a lot on my Instagram and when I ask people why they don’t have one there are three common responses.

  1. I don’t have time.
  2. I’m not sure what to do as a side hustle.
  3.  I worry about tax and/or registering as a business.

It’s understandable. Thinking about being responsible for your own business can be scary when you’re used to full time employment and all that stuff being dealt with for you. But honestly? It’s not as scary as it seems and I believe anybody can do it. All you need is to understand the basics of what is required from you, by law. It’s definitely not a good enough reason to not start your side hustle.

So I thought it might be useful to discuss some of the legalities of starting a side hustle.

Please be aware that this post is meant for guidance only. It does not constitute financial or professional advice and you should always do your own research.

I’ll be keeping it very generic. There are an unlimited number of potential side hustles and it would be impossible to go through the ins and outs of every single one.

Paying Tax

If you earn more than £1,000 a tax year from your side hustle then you will need to pay tax (apart from a few tax free exceptions – this post has more information: Everything You Need to Know about Side Hustles and Tax)

I would advise keeping a spreadsheet log of the income that you make from anything other than your main employment. Yes, this also includes surveys and pocket money side hustles – though you’re unlikely to exceed the threshold solely through surveys, it’s helpful to keep a log so that you know if you’re close to or approaching that £1,000.

Registering as Self Employed

If you make any money outside of your main employment, even if it’s not a second job or not selling goods/services – you still have a business.

And if you intend to earn more than £1,000 in a tax year through your side income, then you should register as self employed at the earliest opportunity.

However, you officially need to register by 5 October after the end of the tax year in which you became self-employed.

For example, if you started your side business in May 2021, then you would need to register by 5 October 2022.

Registering is not a complicated process and it can be done easily online. Visit the Gov website for more information.

Business Insurance

No matter what your side business is, it would be sensible to look at what business insurance you might require.

The type will depend entirely on what kind of business you operate.

For example, if you offer an online service you might want to consider professional indemnity insurance in case a customer suffers a financial loss as a result of your work. If people can visit your home or premises then public liability insurance is essential in case they suffer an injury.

If you’re holding stock, you’ll need insurance to cover damage, loss or theft.

It’s probably unlikely you’ll ever need to claim on these insurances, but it’s absolutely worth looking at in case the worst should ever happen.

As always shop around for the best policy and best price and check if there are any cashback offers available to save you even more money.

Regulatory Requirements

Again, this is entirely side hustle dependent.

For example, if you set up your own cupcake business you’ll likely need a food hygiene certificate.

If you wanted to look after children you’d need to complete first aid training, have a DBS and register with Ofsted.

An easy solution to finding out what is required of you is to search ‘Setting up a x business UK’ on google and you’ll find all the information you need.

Professional Registration

For those offering professional services as a side hustle, you may need to account for the cost of professional registration.

For example, if you’re AAT qualified and wish to offer book keeping and accounting services, becoming a full member allows you to use your MAAT designatory letters which gives you formal recognition for your skills and expertise.

Summary

So there we have it! All your fears can be allayed with a bit of research and ensuring the relevant processes are in place. Don’t let the legalities put you off starting your side hustle.

 

The Legalities of Starting a Side Hustle

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