The U.S. unemployment rate is at its highest rate since the Great Depression with roughly 36 million Americans now without work
Even people who are still employed face increased worries about the future of their employment and are looking for new, creative ways to create an income for long-term financial stability during these uncertain times. Perhaps you have a full-time, salary job but are concerned about the possibility of being laid off . . . and you have an idea for a side hustle. This begs the question—is a pandemic a good time to start a side business? The answer is a resounding, “Yes!” Starting a side business now can possibly create some extra income now and perhaps transition into a more long-term job/income.
Protect Yourself and Your Family by Diversifying Your Income
We’ve all heard the saying “don’t place all your eggs in one basket.” If you are completely financially reliant on your current job and the company faces hardship due to the Coronavirus (or if you’ve already lost your job), you may find yourself out of luck. However, if you are able to diversify your income while you currently have a job, you can use your current income as a floatation device to help you stay afloat as you start a new side venture. Plus, you can continue using your current health benefits. And really, diversifying is never a bad idea, even after the current pandemic.
Is there a product that you can make that you want to sell? Is starting a private practice something that you’ve always wanted to do? Have an idea for a unique service? Now might just be the perfect time to invest in yourself and your idea in order to gain additional side income. But, you need to do it smartly and be informed.
Although there will be some time and money investment to focus on your side work, it is a long-term investment—if your full-time job is at risk later, you might be able to transition your side venture into a full-time work opportunity or use it to sustain yourself as you find new full-time work. Diversifying your income can definitely help in long-term financial stability.
Why an LLC is the Way to Go
LLC is short for limited liability company. There are many benefits to forming an LLC. One of the main benefits of having an LLC is that it provides protection by limiting your personal liability. Business debts, claims, lawsuits, etc. are limited to the business itself. Another important benefit is that having an LLC provides tax benefits, including pass-through taxation. LLC is a popular choice for new business owners for these reasons. Also, having an LLC makes your business more legit to customers and clients. People are more likely to take your business seriously. Read more about Anonymous LLCs and our services here.
Possible Pitfalls and Why You Need an Attorney
If you are currently employed, you will need to ensure that you do not have any current conflicts with your employer, i.e., non-compete agreement, prohibitions on moonlighting, etc. If it looks like you can safely start a new business, there are some items you need to be aware of when starting/operating this new business, including, not using your current employer’s time/resources for this other job, not using confidential information of your current employer, etc.
If you are currently unemployed and receiving benefits, there are additional concerns that you need to be aware of and take into consideration before starting a business. Bringing in more income could affect your unemployment or other benefits, and that could be an unintended consequence of the side business.
This is a great time to start consulting with one of our attorneys. We will take you through every step of forming the LLC, while ensuring you are operating within the bounds of any current employment you may have, current benefits, etc. By starting your new company properly from the beginning, you are putting yourself in the best possible position for continued business success.