How to start a side hustle: The ultimate guide to creating an extra income

Looking to boost your income with a side hustle, but unsure where to start?

Don’t worry, you’re not alone. Online searches for the phrase ‘make extra money’ have risen 132% since this time last year.  Whether it’s the challenge of making ends meet amid the cost of living challenges, paying off student loans, or saving for a holiday, starting a side hustle can be a great way to earn extra income fast.

In this post, we’ll explain how to start a side hustle as a freelancer or business and provide some handy tips on how to turn your fledgling venture into a budding career.

What is a side hustle?

A side hustle is a job you have in addition to, or on the side of, your main employment. It often starts as a hobby but becomes a way to earn supplemental income. Unlike a part-time job, a side hustle typically has more freedom. You have greater control, both over what you do and also how many hours you spend doing it.

The rise of the side hustle

The Covid pandemic brought about lasting changes to working habits. Flexible working has become the norm, making starting a side hustle easier than ever.

Combined with uncertainty in employment and the economy, it’s hardly surprising that more people are choosing to go solo.

Why start a side hustle?

According to Side Hustle Nation, in 2023, nearly 20% of the UK working population are running their own side hustle. This rises to 42% of Millennials (those born between 1981 and 1996) and 39% of Gen Z (those born from 1997 onwards).

Common reasons for starting a side hustle include:

  • Pay student loans off more quickly
  • Supplement full-time income
  • Increase financial and professional independence
  • Provide a creative outlet for talents
  • Make spare time pay
  • Start a business without having to stop your full-time income

How to start a side hustle as a business

A bit of preparation goes a long way. Here are some tips to help you get started if you’re looking to set up a new business for your side hustle. Small Business Toolbox also provides a helpful online guide on how to start a small business in the UK.

Create your business idea

Firstly, you need an idea for your business, and a unique name to give your new venture an identity.

Top tip: This is a good point to write a business plan to explore potential opportunities and understand your competition.

Find additional resource

As your side hustle grows, you may find you can no longer do everything yourself, but don’t yet have the budget to recruit additional staff. One way to overcome this is to hire freelancers. PeoplePerHour is a market leader in matching freelancers to nearly 1 million businesses, thanks to our smart digital platform.  Whether for individual projects or on an ongoing basis, you’ll find a host of skills and talent at your fingertips at a much cheaper rate than hiring a full-time employee.

Understand your legal responsibilities

When registering as self-employed, you’ll need to choose a legal structure for your business – whether sole trader, partnership, or limited company. Simply Business provides more helpful information with its guide to side hustle legal obligations.

Explore funding

Your venture will need financing, so you may want to explore crowdfunding or whether you’re eligible for any small business grants or business loans for start-ups.

Sort business insurance

Navigating business insurance can seem complicated. However, even if you’re only trading part-time, it’s important to protect against risks such as accidents, damage, and legal fees. The main types of insurance are:

  • Public liability – providing cover if someone is injured as a result of your business
  • Professional indemnity – important if you’re providing a professional service to the client
  • Product liability – provides protection if you’re designing/making/selling products

How to start a side hustle as a freelancer

Whether you’re looking to top up your income or maximise skills that are underutilised in your current job or daily life, you’re not alone. 

A poll of 2,000 adults with children in education found 62 percent feel they have skills that aren’t being utilised currently, whether that be at work or as a stay-at-home parent.

If you’re ready to make the leap into the world of freelancing, read on for some ideas and tips to start your venture whilst minimising risk.

Decide what works for you

Ask yourself these questions to understand what you want to get out of starting your own side hustle:

  • Are you looking for long or short-term work?
  • Do you want to earn a steady, regular income or make money more quickly?
  • How much time can you spare for your side hustle?
  • Do you need to work from home, or are you willing to travel?

Determine what you do best

The next step is to decide where your talents, skills, and experience lie. If this sounds daunting, ask yourself:

  • What are you good at?
  • What skills do you have that others may need?
  • What interests you?
  • What do your friends and family often ask your advice for?

Check out Indeed’s post on ideas for a side hustle to find ideas and inspiration.

How to start a side hustle suitable for your skills

Once you’ve narrowed down your options, the next step is to start marketing yourself and make your side hustle dreams a reality!

  • Offer services online

One of the best ways to reach potential clients is by advertising your services with an online specialist platform. As the longest-running freelance service in the UK, PeoplePerHour is an ideal place to start. Connecting over 1.2 million clients to freelancers, we provide a secure online marketplace to connect your services with clients and businesses globally.

  • Create a website

Alongside advertising your services online, it’s also worth developing your own website. Although this will take time and you may need to purchase a domain name, etc, it’s a good shop window to showcase examples of your work.

  • Use social media

Create your own social media accounts for your services and advertise on community and local business forums. The analytics in social media can be harnessed to help you increase user engagement and ensure your posts get maximum coverage.

  • Be tax-ready

To avoid being hit with a large tax bill from HMRC, when you start a side hustle, it literally pays to be prepared.

As you’ll be classed as self-employed, income tax and National Insurance won’t automatically be deducted from your income. Plan ahead for this and:

  1. Become tax savvy – Know the rules regarding personal tax limits. You can get the lowdown on this and more with Money Helper’s guides for freelancers.
  2. Start saving – Put away some of your earnings each month to go toward your taxes
  3. Keep track of expenses – Noting expenses, such as business mileage, costs of setting up a home office, etc may reduce the amount of tax you’ll owe

Challenging, yet rewarding

So, now you know how to start a side hustle. There’s no doubt it takes hard work and dedication, particularly when you’re juggling paid employment or responsibilities. Never lose sight of your end goal and what made you go solo in the first place. There are countless resources out there to help get you started and turn your side hustle dreams into reality. So, why not give it a try?