Why Most Side Hustles Fail Financially (And How to Avoid It)
Starting a side hustle is exciting. You’re finally turning that idea into income - whether it’s selling products online, offering freelance services, or monetizing a creative skill.
But while starting is easy… staying profitable is where most people stumble.
The truth? Most side hustles fail not because the idea is bad: but because the finances are messy, ignored, or misunderstood.
So if you’re growing a side hustle and want to avoid the most common money pitfalls, read on. These business finance tips for side hustles will help you stay in control, stay profitable, and build something that actually lasts.
🚩 The Most Common Financial Mistakes Side Hustlers Make
Before we dive into the fixes, here are the biggest financial red flags I see when working with new side business owners:
❌ Mixing personal and business finances
All your earnings and expenses live in one bank account, and you’re constantly guessing what’s what.
❌ No tracking of expenses or income
You might be using Venmo, your personal PayPal, or forgetting to record purchases altogether.
❌ Forgetting to save for taxes
You spend the full amount of every payment you receive and are blindsided by tax bills later.
❌ No financial planning or goal setting
You don’t know your profit margin, can’t predict cash flow, and aren’t sure how much you need to earn to make it worthwhile.
💡 Sound familiar? You’re not alone, and the good news is, these are all fixable.
✅ 7 Business Finance Tips for Side Hustles That Want to Succeed
Let’s break down what you should be doing instead….whether you’re earning $200 a month or building your side hustle toward full-time income.
1. Open a Separate Business Bank Account
Seriously, this one action will make everything easier.
Why it matters:
Keeps your transactions organized
Helps you track what’s actually business-related
Makes tax time 10x less painful
💡 You don’t need an LLC to open a business account, many banks offer options for sole proprietors or freelancers.
2. Use Simple Bookkeeping Software from Day One
You don’t need a fancy setup, but you do need something to track what’s coming in and what’s going out.
Recommended tools:
QuickBooks Online (QBO) – great for freelancers and scalable growth
Wave – free and beginner-friendly
Excel or Google Sheets – better than nothing, if set up right
💡 At Breakspears Bookkeeping Services LLC, we help side hustlers set up easy systems that fit their income level and goals.
3. Track Every Expense—Yes, Every One
Side hustles can have more deductible expenses than you think, like:
Website hosting and domain fees
Software subscriptions (Canva, Zoom, Adobe, etc.)
Home office use
Business coaching or online courses
Mileage or travel for business-related activities
💡 Even if you’re earning a small amount, these deductions can significantly lower your tax bill.
4. Set Aside Taxes Monthly
When side hustlers get hit with a big tax bill, it’s often because they didn’t realize they were responsible for setting aside taxes themselves.
General rule:
Save 20–30% of your net income (after expenses) in a separate savings account.
Better safe than sorry.
💡 You don’t need to be perfect, you just need to be consistent.
5. Know Your Profit Margins
You might be making sales, but are you actually making money?
Track:
Revenue (total income)
Cost of Goods Sold (COGS) if you sell products
Overhead (subscriptions, website, etc.)
Then calculate:
Profit = Revenue – Expenses
💡 If your profit margin is below 20%, it’s time to reevaluate pricing, costs, or offer structure.
6. Pay Yourself—Even If It’s Just a Little
Side hustlers often reinvest everything they earn or treat the money like “fun money.” But even paying yourself 10% shows you value your time and effort.
💡 Set a goal to increase your “owner’s draw” as your side hustle grows.
7. Check In with Your Finances Monthly
Just 30 minutes once a month can make all the difference. Review:
Your income and expenses
Your bank account balance
Any overdue invoices or upcoming bills
💡 We recommend setting a “money date” each month: light a candle, pour a coffee, and treat it like a CEO check-in.
🧠 Why Side Hustles That Understand Their Finances Grow Faster
When your finances are organized, here’s what happens:
You know what to charge (and why)
You stop underpricing yourself
You’re ready for tax season
You feel more confident and professional
You can actually turn your side hustle into your main gig—without stress
💬 Final Thoughts: A Successful Side Hustle Starts with Smart Money Habits
You don’t need to be an accountant to run a profitable side hustle. But you do need a clear, simple system for managing your money: so your business doesn’t just make income, but actually builds wealth.
The best part? You don’t have to figure it all out alone.
📌 Need Help Getting Your Side Hustle Finances Set Up?
At Breakspears Bookkeeping Services LLC, we help side hustlers, freelancers, and small business owners:
✅ Organize their finances
✅ Set up QuickBooks or Wave
✅ Track profits and prepare for taxes
✅ Feel confident about their money—even if they hate spreadsheets
👉 Explore our flat-fee remote bookkeeping packages
👉 Book a free 15-minute discovery call to start making your finances work for you—not against you.
