Should You Report Income From Your Side Hustle?
By Ryan Velez
The Hartford has a regular podcast called Small Biz Ahead designed to handle various business-related questions each session, many of which are relevant to small business owners trying to improve their earnings and businesses. Let’s take a minute to see one of their latest offerings, which covers two topics that may not be in the front of your mind, but can be quite important.
The first segment of the podcast revolves around a question about side hustles, something that can benefit anyone financially and in terms of their career, no matter what type of lifestyle you are living. A caller asks,
“I have recently retired and started giving piano lessons out of my home. I have a few students and I certainly don’t expect to get rich doing this. Do I need to report the income I earn giving these lessons?”
The answer? Yes, no matter how you get the income. “Yes, of course you have to report that income. It doesn’t make any difference if you are getting checks, cash, Venmo, Bitcoin, if it’s income to you, you have to report it. You have to report in on a schedule C on your personal income tax return. If you have any expenses related to your piano teaching or maybe you buy piano materials or sheet music or a piano tuner comes to your house every quarter or whatever, that is an expense to running your business. That is good,” explains host Gene Marks. So, what you’ll want to do is be clever and diligent to track every single potential expense to lower your tax bill. However, if you need to file a 1099, your options dwindle, like if you were an Uber driver.
The second segment starts with a caller asking about competitors.
“I own and operate a small hair salon and spa. I just learned that one of my competitors will be going out of business soon. How do I snatch up their customers for myself??” asks the caller. In this particular case, the hosts recommend not reaching the customer directly, but finding the stylists who they use. " Many people are connected to their stylist and are more than happy to follow them to a new place rather than search from someone else they like. Another possible approach is closer to traditional marketing.
“Hopefully, if you have a phone number or an email address of that person, you are going to invest a little bit, you are going to hire someone, a telemarketer and call them and say I hear you are leaving this salon and I would love to offer you this special discount to come try us out,” Marks explains.
Part of getting ahead in small business is using every resource possible at your disposal. If you’re not big on reading articles or happen to have a long commute with lots of time to listen, a podcast may be the fit for you, so trying giving Small Biz Ahead and other podcasts a try if you want a new addition to your educational regimen.