Starting a sole proprietorship: Where to begin?

Hey everyone,

I'm thinking about starting a small side hustle as a sole proprietor alongside my full-time job.
It’s nothing massive—not looking to build an empire, just hoping to pull in maybe $2k-$3k a year—and I'd hate to lose out on that extra cushion. Mostly, I'm trying to figure out what this will actually cost me monthly...
For instance, what does the overhead look like if I make zero dollars versus if I actually hit that $2k-$3k mark?

If anyone here is in a similar boat or has gone through this, I'd love some insight—does the whole setup even make sense at this scale?

Thanks

swiftnomad67 said:Hey everyone,

I'm thinking about starting a small side hustle as a sole proprietor alongside my full-time job.
It’s nothing massive—not looking to build an empire, just hoping to pull in maybe $2k-$3k a year—and I'd hate to lose out on that extra cushion. Mostly, I'm trying to figure out what this will actually cost me monthly...
For instance, what does the overhead look like if I make zero dollars versus if I actually hit that $2k-$3k mark?

If anyone here is in a similar boat or has gone through this, I'd love some insight—does the whole setup even make sense at this scale?

Thanks

Look, since you're talking about $7.50, in dollar terms you'll be in the lowest possible tax bracket. We're talking about roughly $510 in income taxes you'll owe regardless of whether you actually see any profit or not. You could technically put the business on hold and try to ask the IRS to waive those obligations, but you'd have to provide a legitimate reason why the business is dormant.

Since you already have a steady job, you won't have to worry about monthly Social Security or Medicare contributions, but expect a lump sum bill from the IRS at the end of the year once you file your returns.

After a year, you'll also have to deal with monthly chamber of commerce fees $25. As for banking, you can just use your personal account; there's no requirement to open a dedicated business account, so that saves you money right there. You don't even need to rent office space if you work from home—you just need to show proof of residency or owner consent to run the business from that location without paying rent.

You won't even need a cash register if all your payments go straight to your bank account.

casualstag4 said:Look, since you're talking about $7.50, in dollar terms you'll be in the lowest possible tax bracket. We're talking about roughly $510 in income taxes you'll owe regardless of whether you actually see any profit or not. You could technically put the business on hold and try to ask the IRS to waive those obligations, but you'd have to provide a legitimate reason why the business is dormant.

Since you already have a steady job, you won't have to worry about monthly Social Security or Medicare contributions, but expect a lump sum bill from the IRS at the end of the year once you file your returns.

After a year, you'll also have to deal with monthly chamber of commerce fees $25. As for banking, you can just use your personal account; there's no requirement to open a dedicated business account, so that saves you money right there. You don't even need to rent office space if you work from home—you just need to show proof of residency or owner consent to run the business from that location without paying rent.

You won't even need a cash register if all your payments go straight to your bank account.

Contributions for the lowest tier are roughly $2,000, so his total overhead will likely hover around $1167 annually, whether he makes a sale or not.

I ended up having to open a completely new business checking account, even though I already had my own personal one ready to go.
It’s only been a few weeks since I set it up, so the details are still pretty fresh in my mind.

Since I find myself in a nearly identical situation to what our colleague mentioned—well, I have to ask immediately. 🙂

Up until this point, my primary employer just handled everything by adding my tax refund directly to my December paycheck.
Does that process change now that I’ve started my own LLC? Am I suddenly responsible for filing those specific tax forms with the IRS by February 15th?

Arthur Ross said:I ended up having to open a completely new business checking account, even though I already had my own personal one ready to go.
It’s only been a few weeks since I set it up, so the details are still pretty fresh in my mind.

Since I find myself in a nearly identical situation to what our colleague mentioned—well, I have to ask immediately. 🙂

Up until this point, my primary employer just handled everything by adding my tax refund directly to my December paycheck.
Does that process change now that I’ve started my own LLC? Am I suddenly responsible for filing those specific tax forms with the IRS by February 15th?

Nothing changes regarding that. You need to submit that specific tax filing by January 15th, not February 15th.

Thanks, thanks, thanks,

you guys were a huge help!

thanks again...

Hey everyone!

I’ve got a question regarding sole proprietorships—specifically how the accounting works. What happens to the cash sitting in my business checking account at the end of the year? For instance, if I have $6.75 left over and I don't plan on withdrawing it before the year wraps up, does that money count as profit for the following year? If I start January with a balance of $6.75, am I essentially being taxed on that carryover as new income?

Also, what's the protocol when a client pays in cash? Say I issue an invoice and they hand me the money directly. Am I supposed to just take that cash down to the bank and deposit it straight into the business account?

Hi everyone,
I'm looking into starting a sole proprietorship on a part-time basis while keeping my current job. Since I won't be working in the same industry, there shouldn't be any conflict of interest with my employer. Honestly, everything I've researched so far makes sense—except for one thing—SO PLEASE HELP ME OUT, guys!
Since I want to set up this sole proprietorship for construction work, HOW do I actually pick the right activity code? Okay, I read this bit: "Check the North American Industry Classification System and list what isn't explicitly covered"??? For example, according to the NAICS, maybe 238220—Other Plumbing, Heating, and Air Conditioning Contractors. Can someone walk me through how this works with an actual example? Am I supposed to use those exact codes from the NAICS or what?
Also, does anyone happen to know if I can add extra business activities alongside construction, and would I still qualify for small business grants if I set things up this way? Thanks in advance for the help...