How to Make Your Side Hustle Your Full-Time Job | Vanessa Joy
2. SET UP HELPFUL BANK ACCOUNTS
You can make these accounts any time after you know you're getting serious, but definitely before you make the leap and quit your day job. Having your bank accounts in order will help you have a professional, functional structure from the very start! The biggest reason to have plenty of structure is that your gross income (everything your side business makes) isn't the same as your net income (what you get to spend personally after all your expenses and taxes). You need a structure that helps you pay taxes, employees, contractors, and other costs before you start thinking of the money as your “paycheck.” This helps you avoid getting a huge bill that your business isn't equipped to pay. • Get a business checking account. Ideally, this will be the place where your clients pay you. Get an account with a bank that doesn't charge fees for having a low balance or for having multiple checking accounts so that you can get organized without worrying about being charged when an account is low. • Start a payroll expenses checking account. This helps you get organized so that all of your payroll expenses from a given job are covered. • Start a tangible cost of sales checking account. These are all the expenses you know you'll have to make in order to fulfill an order. In my case, I know that every wedding photography job will involve the expense of creating a physical album, so I always put those costs right into the tangible cost of sales checking account so I have them handy when I need to pay for the album. • A taxes checking account is also a good idea. You actually pay quite a bit of taxes on your income at a day job, but it comes out without you handling it yourself, so it's easy to ignore. I recommend putting about 30% of everything that comes into your business into this checking account. You may qualify to pay less, but it's much better to be able to write your checks for quarterly income taxes from this account than to have to scramble in your personal account to find that money. • An optional fund or checking account would be a sinking fund. When you know you want a big expense in the future, this fund lets you save up for that item over time. I might save up for a new camera in the sinking fund, a little bit each time I'm paid, so that it doesn't feel as overwhelming when that expense needs to happen! I'm particularly indebted to Dave Ramsey's financial advice, where I learned much of what helped me create this structure. I also learned a lot from Jordan Page, who has suggested a variety of checking accounts as well that you want to have!
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