July 25, 2025Turning Your Side Hustle into a Small Business

Turning a side hustle into a full-fledged small business is an exciting journey that combines passion, purpose, and a bit of risk. Whether you’re selling handmade products, offering freelance services, or building a brand around your skills, making the leap from part-time project to full-time venture takes planning and preparation.   

If you’ve been considering turning your side hustle into something more, we’re here to walk you through the essential steps to launching your small business. We’ll help you understand which parts of starting a business are essential, share some smart tips, and help you find the credit union products that can support your financial needs as you grow.  

Starting a Small Business  

Whether you’ve always dreamed of owning a business, recently discovered a passion or skill with great money-making potential, or are looking for additional revenue streams due to life or career changes, starting a company could be the key to unlocking joy and independence.  

As with any major decision, financial or otherwise, there are several benefits and potential risks that should be carefully evaluated so you can determine what’s right for you. Let’s look at the possible pros and cons facing future entrepreneurs:  

Pros 

• Being your own boss 
• Enjoying an extra source of income  
• Setting your own hours 
• Pursuing your passions 
• Feeling fulfilled  

Cons 

• Facing stress and uncertainty 
• Finding sufficient funding for startup costs and continuing operations  
• Committing the time and effort to succeed  

Additionally, you must take several critical legal and financial steps to launch a business and ensure compliance with state and federal laws. The U.S. Small Business Administration provides a helpful checklist of these steps required to start a business. We recommend starting there to make sure you cover the basics and learn more about the various legal requirements.  

Smart Financial Moves When Starting a Small Business  

Before launching your new venture, you want to ensure your business has everything it needs to succeed. Here are the money moves you must take to set your small business up for success:  

• Check the Laws:  

Start by checking your state’s website for the specific legal requirements for starting a business. This step will ensure that your business complies with federal and state laws to avoid any legal consequences and non-compliance fines.   

• Register Your Business:  

Registering a new business is typically less than $300, but the exact fees may vary depending on your state and business structure (LLC, sole proprietorship, partnership, corporation, or non-profit). Many online legal websites will help set up your company, or you can work with an attorney directly if your business format is more complex. 

• Create a Budget:  

Building your business budget won’t be an exact science when starting from scratch. Begin by identifying your expenses, including fixed costs that stay the same month-to-month, like rent or lease, insurance, taxes, and loan payments. Then, add variable costs that fluctuate throughout the year, like inventory, supplies, materials, etc. From there, you can begin to predict your revenue and make budget adjustments as needed.  

When starting out, it’s best to overestimate expenses and underestimate revenues. Unexpected expenses always pop up for business owners, especially when you’re trying to get your company off the ground. 

• Pay Your Employees:  

If you plan to hire employees, there are additional legal steps to ensure they are paid properly. Have your employees fill out the necessary tax forms (Form I-9 and Form W-4) and be sure to include room in your budget for employee paychecks.   

Working directly with a payroll company can help simplify this process and guarantee all tax and legal requirements are fulfilled properly. 

• Secure Startup Funds:  

Determine how much money you need to get your business off the ground. You may have funds from savings or friends and family members willing to chip in. Still, you’ll likely need to secure outside funding for bigger business plans, especially if you’re considering a storefront or other property to run your venture.  

Pro Tip:  

While borrowing startup funds may seem tempting, we recommend holding off for as long as possible. Especially avoid borrowing from venture capital (VC) firms or predatory lenders with too-good-to-be-true offers. Far too many new entrepreneurs pursue rapid growth to enhance their reputation and clout, only to end up oversaturated in debt and have their company go under because they can no longer afford payments. 

Just like your personal finances, you should only borrow money when necessary. 

We’re Here to Help! 

If you’ve been considering turning your side hustle into a small business, we’re here to help you. From securing financing for startup costs and providing accounts for day-to-day operation to offering support and guidance through every phase of your journey, we’ve got you covered.  

If you want to learn more, we would be happy to help you. Please stop by any of our convenient branch locations or call 800-226-6673 to speak with a Member Advocate. 

 

 

Each individual’s financial situation is unique and readers are encouraged to contact PEFCU when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.