Why You Should Start a Side Hustle Even If You Have a Full-Time Job: 3 Tax Benefits

Having a full-time job has many benefits. You get a steady paycheck, insurance coverage, and a stable life.

But having a full-time job also has many drawbacks when it comes to taxes. You pay income tax and sales tax twice, you can't deduct your business expenses, and you have limited ways to increase your income.

On the other hand, if you start a side hustle, you can take advantage of various tax-saving strategies, generate revenue, and increase your income in multiple and unlimited ways.

In this post, I will show you three tax benefits of starting a side hustle even if you have a full-time job.

1. You can save taxes by deducting your net income only.

When you have a full-time job, income tax and social security contributions such as pension, health insurance, and employment insurance are automatically deducted from your salary.

The amount deducted is not your actual income, so you can get a refund when you file your tax return.

But in this process, you pay income tax and sales tax twice.

Why? Because your company already paid income tax and sales tax before paying you your salary.

This means that you pay more taxes than your actual income by adding the taxes paid by your company and the taxes paid by yourself.

On the other hand, if you start a side hustle, you only have to pay taxes on your net income after deducting your necessary expenses.

This means that all the expenses incurred by your side hustle are tax-deductible.

For example, office rent, labor costs, advertising costs, material costs, transportation costs, travel expenses, etc. are all recognized as business expenses and can save you taxes.

Also, you have several ways to adjust your income tax rate as a side hustler.

For example, if you register as a corporation, your income tax rate is fixed unlike individuals, so your tax burden will be lower even if your income increases.

Also, you can reduce your income tax by distributing your income through retirement pension or children's education expenses, donating to charities, investing, saving, transferring your assets, etc.

2. You can deduct your business expenses.

When you have a full-time job, you can't deduct your work-related expenses from your taxes.

For example, the computer, smartphone, internet fee, transportation fee, food expense, education fee, etc. that you use at work are all considered as personal expenses.

Therefore, you can't deduct these expenses when you file your tax return.

This means that you pay for all the expenses you need to perform your work out of your own pocket.

On the other hand, if you start a side hustle, all the expenses related to your business are tax-deductible.

For example, the computer, smartphone, internet fee, transportation fee, food expense, education fee, etc. that you use for your side hustle are all recognized as business expenses and can save you taxes.

This means that you can get your money back from the taxes you need to perform your business.

3. You can increase your income.

When you have a full-time job, you have limited ways to increase your income.

Your income is mainly composed of salary, bonus, allowance, etc.

To increase these income, you have to get a raise or a promotion, find a side income, invest, etc.

But these methods all require a lot of time and effort, have high risks, are limited, or are uncertain.

This means that you don't have much control over your income and are influenced by various external factors.

On the other hand, if you start a side hustle, you have multiple and unlimited ways to increase your income.

You can generate revenue through your time and effort, improve your business model, increase your customers, diversify your products or services, adjust your prices, enhance your marketing, expand your partnerships, extend your business area, sell your business to someone else, etc.

This means that you have a lot of control over your income and can change it according to various internal factors.

Conclusion

In this post, I showed you three tax benefits of starting a side hustle even if you have a full-time job.

You can save taxes, deduct your business expenses, and increase your income by starting a side hustle.

These benefits are hard to get as a full-time employee.

Therefore, you should start a side hustle even if you have a full-time job.

There are various and easy ways to start a side hustle.

For example, you can sell your hobbies or talents online, share your knowledge or experience through consulting or education, create content related to your interests or expertise and generate revenue through platforms such as blogs or YouTube, etc.

These methods are all relatively easy and cheap to start, and you can do them without being bound by time and place.

Also, these methods help your growth and development.

You can increase your value, communicate with others, discover new opportunities, challenge new things, achieve new things, and feel new satisfaction through your hobbies or talents, knowledge or experience, interests or expertise.

These things are hard to get as a full-time employee.

Therefore, you should start a side hustle even if you have a full-time job.