Essential Guide to Setting Up Your Finances for Your Side Hustle

It’s becoming more common for people to start diversifying their income outside of their day job.

There are so many different paths now to earn more money. Some are a part of the gig economy, others freelance on the weekends, and quite a few are starting a side hustle.

This extra income can be a wonderful help as it can be used to tackle goals like paying down debt, saving up for a dream (like a house downpayment), or contributing more towards retirement¹.

Staying on Top of Your Business and Finances

The tricky part with working on the side, though, is getting finances organized. For example, last week one of my friends called up to ask questions about running a store on Etsy.

She and her mom have the talent, but they were trying to make sure they had the business part down. She’s not alone. Unless you’re taught the fundamentals of business, the process can seem overwhelming.

Today I’ll walk you through some essential accounts you should set up so you can focus on growing your side hustle and not stressing over the minutia.

Why You Need Business Accounts (Even with a Side Hustle)

One of the questions my friend asked me about the Etsy project was whether or not she should have separate bank accounts for it.

Of course you have to evaluate your own business needs, but there are some solid reasons why having separate bank accounts is a smart financial move.

• It’s easier to manage money when it’s separate. Usually with a new business, one might  mix it with their personal account, but as it grows, it becomes harder to track everything. Keeping a separate account speeds things up so you can spend more time earning more. You’ll be thankful when you’re filing your tax return or paying your quarterly taxes.
• Have a layer of privacy and protection with your personal finances. While you’re not hiding who you are, it’s good to keep your day to day finances away from your business. Identity theft, fraud, and scammers are out there and should you get hit, it’s less messy if they don’t have access to more accounts.
• Business accounts can build its credibility. When you write checks, having your business name on it instead of your personal can help clients and customers have more confidence.

Essential Business Accounts

When you’re deciding on what accounts you need to have for your business, please try to keep it the minimum you need to get the job done. It’ll keep it more manageable.

• Business Checking: You need a checking account for your business. This account handles your day to day operations such as depositing income from clients and paying expenses. It’s typically your most used account.
• Business Savings: Having a savings account is a smart move as well. You can keep your estimated taxes there and make your quarterly payments from that account.

While there’s less movement in terms of transactions compared to checking (particularly withdrawals), this can be your larger account balance wise. Having a healthy cushion to ride out dry spells can be a smart move.

Depending on what stage you are with your business, you may find it easier to have a second savings account that you can use for reinvesting into your business such as conferences, courses, and perhaps a stash for any outsourcing you’re planning on doing in the future.

Setting Up Your Accounts

The good news is that if you’re already a Coastal member, setting up your business accounts is a quick and easy process. (And if you’re not, no worries - I actually first joined Coastal for their business accounts and then moved my personal accounts over later.)

Schedule Weekly Reviews

Having your separate business accounts is wonderful, having them review regularly is wise. Weekly check-ups allow you to review your transactions in manageable chunks and keep you on top of things.

If you’re looking for some help with getting started with setting up your schedule or system, I highly recommend Small Business Finance for the Busy Entrepreneur  by Sylvia Inks.

Building Your Business

As your business grows and its needs change, tapping into the experience of a financial professional can be a huge assist. Visiting a Coastal branch can let you see what options are available to you!