Of course, if the side business does work out and starts to grow, you can make an informed decision as to whether you want to focus on it full-time.

Until then, you’ll be able to work on your side business part-time at your own pace. You’ll still learn a great deal about starting and running a business, which will be incredibly valuable when you take your side business to the next level (or start up another new business).

If you don’t know how to start a side business, we’re here to help.

We’ve supported over 500,000 people to form their business and provided answers to transform them into entrepreneurs. We’ll guide you through what you need to know to create your side business and get it off the ground.

From validating your business and doing the research to filing your paperwork and running your business, this guide will help you out.

Read on for some insight into creating your own side business and becoming an entrepreneur.

Why You Should Start a New Side Business

If you’re wondering how viable it is to start a side business in addition to your regular job, here are some statistics to inspire you.

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6 out of 10 Around 6 in 10 people who run a side business have a full-time job already

Around a quarter of Americans have some sort of side business (almost 60 million people)

The main reason for starting a side business is to boost finances, with two-thirds of side business owners saying that was their main motivation

Just over half of side business owners said they could see their side business become a full-time career

Around six in 10 people who run a side business have a full-time job already Half of side business owners devote 10 or more hours a week to their side business

A quarter of side business entrepreneurs are using the business to make a lifestyle change or pursue their passion

If you want to find out whether a side business is right for you, the time to start is now. We're here to help you figure out how to do that.

What Type of Side Business Should You Start?

Ideally, you want a side business to be relatively hassle-free. If you’re running a side business on top of another job, the less time you spend on setting up the business (and the more time you spend earning money) the better. Here are some good opportunities to achieve this:


Start Blogging and Writing

If you can find a subject you’re knowledgeable about and can create exciting, engaging content, you might be able to make it as a blog writer. You can write when you have the time and monetize your blog through advertising, affiliate marketing or selling products you’ve created yourself.


Provide Freelance Services Through a Marketplace

Becoming a completely independent freelancer can be tough, as there’s a lot of competition. One great way to build up experience and see if its right for you is to provide creative services through a freelance marketplace. Services like Upwork, Fiverr and People Per Hour will allow you to list your services and attract potential clients.


Sell Products Via a Marketplace

If you’d rather sell products than services, a third-party marketplace like Amazon, eBay or Etsy could be ideal. You’ll need to find the right niche, understand profit margins and ship products, but this can be a great way to get started with e-commerce and online retail.


Offer Driving Services Through Lyft or Uber

Uber and Lyft provide a good way to earn some side income, and their reach and influence is increasing. Although the money you’ll get won’t be a huge income, driving for one of these services is a useful way to learn about self-employment.


Rent Property

Whether you rent a spare room via Airbnb or have apartments that you lease to renters, property management can be a lucrative side business. There can be a lot of work involved in managing a rental property, and it can be capital intensive, so it's not for everyone.


Offer Tutoring and Coaching

If you’ve got some skill at helping others, tutoring and coaching are in demand. You’ll need to demonstrate experience and expertise in your topic, but it’s a low-cost business to start.

If you want to start a successful side business, it's important to know what your options are. Here are some of the more popular business ideas.

Validating Your Side Business Idea

Remember, the ideas above are just a starting point, You can define and tweak exactly what type of side business you want to run through conducting your own research.

You will need the right skills to run a successful side business, and you’ll need to work those out before launching your new venture. For example, you need good creative skills to become a freelancer, and you’ll need to do plenty of marketplace research to find products you can sell successfully.

Another important area to think about is how much time, effort and energy you have to put into your side business.

You need to commit to any venture in order to make it successful. And every side business will have dozens or hundreds of competitors, sometimes from full-time entrepreneurs.

Getting started in a side business is easy, but becoming a success is harder. Before committing too much time, energy and money into your new side business, it’s important to test the marketplace. These points will be more valid to some side businesses than others — for example, if you’re driving for Uber, you probably don’t need to worry too much about understanding your market and talking to clients. On the other hand, competitor research will be very important to selling products on Amazon.

Identify your online business’s unique selling points (USPs)

Whether you’re competing on features, price, quality, speed or something else, your USPs set you apart from competitors and encourage customers to come to you.

Look at who your competitors are in the space

Having competitors is a good thing as it shows there’s a market, but if there are too many, you’re likely to struggle without a really good USP.

Understand your market

Clearly identify exactly who your customers are likely to be, where they hang out and how you’re going to reach them. This will be essential to your marketing, communications, sales and customer support.

Talk to clients

Speak with potential customers to understand what they want from your products and services, and validate this by asking if they would commit to spending real money on them.

Get involved with business communities and discussion groups

One of the great things about side businesses is that there are plenty of great communities and discussion groups. Get involved with them and learn the ins and outs of your chosen market before committing.

Your Side Business Needs a Business Plan

It’s easy to think you won’t need a business plan for a side business, but they can give you a surprising number of benefits (especially if you want to expand your business). A business plan will help you define your side business, market yourself, get sales, make a profit and grow.

Business plans do vary slightly, but they should all cover the following areas:


An executive summary with the most important points from your business plan


Your goals and what you hope to achieve with your side business


A description of your side business, background information and contex


A market analysis and likely demand


An overview of how your side business is structured


Your online business model


How you will market and sell your offerings


Financial projections, revenue and profitability



We’ve got the perfect guide to writing your business plan.

Choose the Right Business Structure and Register Your Side Business

Choose the Right Business Structure and Register Your Side Business

There are five main business structures you can have in the U.S., and it’s important to choose the right one. We’ve shared your options below. They are:

Sole Proprietorship

This is the "default" business structure and is what your side business will be if you decide not to create a more formal structure. We don't recommend this type of business as it doesn't give you the legal protections you need.


This is a type of business that is formed when two or more people work together without creating a more formal business entity. Like a sole proprietorship, it may not give you all the protections your side business may need.

Limited Liability Company or LLC

The most common type of business entity, an LLC is fast, simple and inexpensive to set up and maintain. It protects your personal finances and assets and is a great way to start your side business.

S Corporation

This is a more complex type of business and isn't generally recommended for smaller organization.

C Corporation

These are the largest and most complex types of businesses, and they are typically far more than the average entrepreneur or moving business owner will need.

Our in-depth guide covers more of the advantages and disadvantages of different types of business entities, and you’ve still got questions, you can read our answers to frequently asked questions on choosing the right business structure.

In most cases, our recommendation for a side business would be to create an LLC. See our complete guide to creating an LLC to learn everything you need to do, or and have Incfile register your business for you. No matter what state you’re in, we’ve got you covered.

Setting up Your Side Business and Business Operations

Once you've legally created your side business, you’ll need to get some other things in place.

The Complete "Start Your Business" Checklist

A Clear and Comprehensive Guide to Starting Your Business the Right Way

The Complete

Rules, Regulations and Taxes for Your Side Business

Some side businesses will also have local, state and federal licenses and permits, and we can help out with researching your business licensing needs.


Taxes are a fact of life if you’re in business, and there are various ways you will need to file and pay them. Side businesses do have to pay taxes like any other type of business. This can include self-employment tax, state income tax and federal income tax. Depending on where and how you’re selling products and services, you may also be liable for sales and use tax.

As a rule of thumb, we recommend holding back around a third of your earnings to pay your taxes. We can also prepare and file your tax returns for you.

Maintaining Your Side Business

There are certain forms and legalities you need to follow to keep your side business in good standing.


File an Annual Report

Most states require all businesses to file a report once a year. This report has details of any major changes to who owns a business and other major impacts on a business’ legal status. We can file your Annual Report on your behalf.


Pay estimated taxes

You will be expected to pay estimated taxes on what you plan to earn in the current business year. Typically, you will need to pay estimated taxes in April, June, September and January (of the following year).


Renew Business Permits and Licenses

Your business will probably have several licenses, permits and other regulations. These typically need to be renewed every year.


File your taxes

You will need to file your taxes once a year.


Pay payroll and sales taxes

If applicable, you will need to make payroll and sales tax payments on a regular basis.


Prepare Your Taxes

You will need to work with your accountant to prepare all the taxes you need to pay.

Useful Online Tools for Your Side Business

Here are some really great online tools for managing your side business. They will reduce the time you spend on administration, help you to collaborate with others and free up your time to grow and manage your new venture.

Ready to Start Your Side Business? 

As you can see, you have plenty of options for starting a side business. When you’re ready, be sure to check out our Start a Business Checklist to make sure all your bases are covered. We recommend keeping your administration and management overhead low, so you can focus your efforts on earning money.

We hope you’ve found this guide helpful, and that it inspires you to start a side business you can grow into a full-time career.