Congratulations on deciding to pursue your passions and finding a way to make money doing it! We Millennials love our side hustles and they are becoming more and more popular as 26 million Americans are currently working part-time gigs. And good for them! Side hustles are an excellent way to earn some cash, whether for fun nights out or for books for school. While you earn that money though, you should be aware that if you are not careful, you could lose much more. A side hustle, just like any business, should be legally protected. Here are our top 5 tips to hustle legally:
1.Form a legal entity
Yes, you do need an LLC or a Corporation, even if you are a small time shop. If you do not have a legal entity, get sued and the other side wins, you can lose your personal assets such as your home or your car. Think you won’t get sued? Think again; there are over 20 million civil cases filed every year, so yes, it can happen to you. A median contract dispute can cost about $91,000.00. There is no reason why you should be putting all of your personal assets at risk, so file for that legal entity as soon as you can.
2. If you are selling your handmade…
If you are selling your handmade, unique goods on Etsy or performing gigs on Fiverr, make sure to carefully read and understand their Terms and Conditions and Privacy Policies. Most such platforms will disclaim their liabilities and will let you battle it out with the customer if something goes wrong. It is important for you to know your liabilities and responsibilities in such cases so that you can be prepared. And this leads us into #3…
3. Have your own Terms and Conditions.
Regardless of whether you are selling goods or services online, you should always have your own T&C. These will protect you from liability in case you get sued, and will further establish you as a legitimate business. Lastly, T&C will answer frequent customer questions, such as shipping and return policies, thereby preventing a barrier to customers purchasing from you.
Obtain a business license. Even though you may be working from home or from a co-working space for now, you still need to check the requirements in your city and, if you are required to, obtain a business license. If you get caught without a business license, you will have to pay steep fines and the city may even stop you from doing business until you are in compliance.
4. Lastly, if you are providing more personalized services
such as business consulting or catering, you should have contracts with your clients. These contracts will help you mitigate your risk and avoid liability reduce the likelihood that your clients will try to take advantage of you and will ensure that you get paid.
We hope that the above has helped you understand and mitigate some of the risks that you may be facing. And, as always, happy side hustling!
Donata Kalnenaite, Esq.
Donata is the founder and CEO of Agency Attorneys (www.agencyattorneys.com), a law firm that focuses on helping startups and small businesses. She loves to share her knowledge and ensures that her clients understand everything that they sign. She can be contacted at [email protected] or (312) 391-4341.