During the day, Benjamin LeFort works as an economic policy advisor for the Ontario Federation of Agriculture; evenings and weekends, the 33-year-old is the founder and editor of Making of a Millionaire, an online personal finance magazine and newsletter.
The side hustle is a passion for the former financial services advisor with a master’s degree in economics.
“In my formative years, my 20s, and going into grad school, I had some pretty rocky financial circumstances and it really kind of derailed things,” Mr. LeFort says.
Like with any investing advice, he says the key is to diversify.
“Most people have one paycheque – and if that paycheque goes away, they have no more income coming in and that to me is a bit of a scary financial position to be in,” Mr. LeFort says. “That really is the genesis of why I have always had a second income, knowing that no matter how secure your job may seem, nothing is guaranteed. I can’t get laid off from my side hustle because it’s my business.”
Launched in 2018, the online publication about personal finance, budgeting and economics has grown to 45,000 readers and his newsletter has 6,000 subscribers. Of late, he’s noticed a growing reader interest in people starting their own side hustles and looking for expert guidance.
“Now that a lot of people are working from home, they have more time,” he says. “There’s been a huge growth in the amount of interest in online businesses and making money from home.”
Side hustle goes mainstream amid the pandemic
The gig economy has grown substantially over the past decade, but side hustles picked up steam with many workers furloughed by the pandemic lockdown.
A 2021 Abacus Data poll showed that nearly a third of Canadians looked for opportunities to make extra money during the pandemic, many of whom were laid off or looking for extra income. The poll, for Direct Sellers Association of Canada, also showed that three in five survey respondents, especially those in Generation Z, intend to pursue opportunities to make additional money to support their income this year. They don’t want to leave money on the table.
Interest in entrepreneurship has spiked and colleges and post-secondary institutions across Canada are responding to the demand.
At Durham College in Oshawa, Ont., the entrepreneurship and small business diploma program has the highest enrolment this year since the program began in 2010, says Keri-Ellen Walcer, the program coordinator for entrepreneurship and small business at the School of Business, IT and Management.
The part-time certificate and online programs are also bustling, she adds. This fall, the business school at Durham plans to launch a part-time, in-person weekend diploma program in response to the rising interest, she says.
Many of those students work full-time and plan to start businesses at least initially as part-time side businesses, she says.
“We’ve seen an increase in the number of people who want to turn their passions into profits,” Ms. Walcer says.
The pandemic certainly accelerated the trend. There was a feeling of powerlessness for some as public health closures sidelined their jobs. Others found themselves working from home with time for creative hobbies that they then turned into a side hustle
“People need to find other ways to earn an income,” Ms. Walcer says. “And because we have this amazing opportunity to sell online, and there’s so much happening in digital marketing, in the digital landscape, it makes those types of businesses much more accessible to start than ever before.”
The side hustle tax angle
While people have been very creative about their side hustles, there is no room for creativity come tax time.
Part-time income is still income and, to make your side hustle work for you, it’s important to understand the tax rules, says Susan Watkin, an accountant, and spokesperson for TurboTax Canada, the income tax solution produced by Intuit.
“Any earnings from the business for a sole proprietorship become part of your total income for tax purposes,” Ms. Watkin says.
Income and expenses related to a business, if they are eligible business expenses, must be reported on the T2125 form, The Statement of Business or Professional Activities.
“The number one thing I tell everyone is to ‘track those expenses,’ because you want to make sure that you are able to use them to calculate your business’ net income, if eligible,” she says, as a way of reducing the tax bill.
Generally, things like office supplies and equipment are allowable business expenses, but she says there are also more specific expenses depending on the industry and business.
“It’s really important to make sure that you know what you are spending money on in your business and that you’re tracking those costs,” she says.
Ms. Watkin has worked with many start-up companies and small businesses over the years, and too many miss out on allowable expense deductions they didn’t realize could be included, she says. And business owners are responsible for knowing whether and when they must collect GST or HST, too.
She recommends small business owners connect with a tax expert early in the tax season to ensure they get the support they need, with the best return possible.
The Premier and Self-Employed products might be the best fit for people with side-hustles. TurboTax Premier is for those with a more complex tax situation, including investment income and rental properties, while TurboTax Self-Employed is for those who have personal and business income and expenses as part of their tax return. With the Self-Employed option users can expect questions that ensure their return covers all their eligible claims as a self-employed person.
All Canadians aged 25 and under can now select any version of TurboTax Online, Assist & Review or Full Service free of charge. Watkin says that with these software options, and the ability to connect with a tax expert, means business owners can get the support they need to ensure they’re claiming the right expense and not missing out on any deductions and credits to help with any taxes owing.
Watkin also says people with side hustles can use TurboTax Online to file on their own but opting for the Assist & Review or Full Service options in the early stages will help them understand the tax rules and ensure they are on the right track with the help of a real tax expert.
“As a small business owner, doing taxes isn’t necessarily your field of expertise. No matter your business or specialty, you can find a professional to help you understand what applies to your business,” she says.
“No matter the size or whether it’s a side business or full-time business, it’s still a business. Take it seriously,” Ms. Watkin says. “Help yourself out. Get the right tools to help you manage the business throughout the year, which will make tax time much less stressful.”
This article was originally published by The Globe and Mail – How to manage a side hustle while keeping your day job, including the finances