Side work and managing finances?
"I have done similar software work. You do not need an LLC to write off business expenses. The income and expenses go on Schedule C of your tax return. It is easy to write off even small expenses such as travel - if you keep records. The income should be reported to you on a 1099 form, filled out by your client, not yourself.  For a financial advisor you should find one you can visit with personally and who operates as a ""fee-only"" advisor. That means they will not try to sell you something that they get a commission on. You might pay a few $hundred per visit. There are taxes that you have to pay (around 15%) due to self-employment income. These taxes are due 4 times a year and paid with an ""estimated tax"" form. See the IRS web site, and in particular schedule SE. Get yourself educated about this fast and make the estimated tax payments on time so you won't run into penalties at the end of the year." "I've done various side work over the years -- computer consulting, writing, and I briefly had a video game company -- so I've gone through most of this. Disclaimer: I have never been audited, which may mean that everything I put on my tax forms looked plausible to the IRS and so is probably at least generally right, but it also means that the IRS has never put their stamp of approval on my tax forms. So that said ... 1: You do not need to form an LLC to be able to claim business expenses. Whether you have any expenses or not, you will have to complete a schedule C. On this form are places for expenses in various categories. Note that the categories are the most common type of expenses, there's an ""other"" space if you have something different. If you have any property that is used both for the business and also for personal use, you must calculate a business use percentage. For example if you bought a new printer and 60% of the time you use it for the business and 40% of the time you use it for personal stuff, then 60% of the cost is tax deductible. In general the IRS expects you to calculate the percentage based on amount of time used for business versus personal, though you are allowed to use other allocation formulas. Like for a printer I think you'd get away with number of pages printed for each. But if the business use is not 100%, you must keep records to justify the percentage. You can't just say, ""Oh, I think business use must have been about 3/4 of the time."" You have to have a log where you write down every time you use it and whether it was business or personal. Also, the IRS is very suspicious of business use of cars and computers, because these are things that are readily used for personal purposes. If you own a copper mine and you buy a mine-boring machine, odds are you aren't going to take that home to dig shafts in your backyard. But a computer can easily be used to play video games or send emails to friends and relatives and lots of things that have nothing to do with a business. So if you're going to claim a computer or a car, be prepared to justify it. You can claim office use of your home if you have one or more rooms or designated parts of a room that are used ""regularly and exclusively"" for business purposes. That is, if you turn the family room into an office, you can claim home office expenses. But if, like me, you sit on the couch to work but at other times you sit on the couch to watch TV, then the space is not used ""exclusively"" for business purposes. Also, the IRS is very suspicious of home office deductions. I've never tried to claim it. It's legal, just make sure you have all your ducks in a row if you claim it. Skip 2 for the moment. 3: Yes, you must pay taxes on your business income. If you have not created an LLC or a corporation, then your business income is added to your wage income to calculate your taxes. That is, if you made, say, $50,000 salary working for somebody else and $10,000 on your side business, then your total income is $60,000 and that's what you pay taxes on. The total amount you pay in income taxes will be the same regardless of whether 90% came from salary and 10% from the side business or the other way around. The rates are the same, it's just one total number. If the withholding on your regular paycheck is not enough to cover the total taxes that you will have to pay, then you are required by law to pay estimated taxes quarterly to make up the difference. If you don't, you will be required to pay penalties, so you don't want to skip on this. Basically you are supposed to be withholding from yourself and sending this in to the government. It's POSSIBLE that this won't be an issue. If you're used to getting a big refund, and the refund is more than what the tax on your side business will come to, then you might end up still getting a refund, just a smaller one. But you don't want to guess about this. Get the tax forms and figure out the numbers. I think -- and please don't rely on this, check on it -- that the law says that you don't pay a penalty if the total tax that was withheld from your paycheck plus the amount you paid in estimated payments is more than the tax you owed last year. So like lets say that this year -- just to make up some numbers -- your employer withheld $4,000 from your paychecks. At the end of the year you did your taxes and they came to $3,000, so you got a $1,000 refund. This year your employer again withholds $4,000 and you paid $0 in estimated payments. Your total tax on your salary plus your side business comes to $4,500. You owe $500, but you won't have to pay a penalty, because the $4,000 withheld is more than the $3,000 that you owed last year. But if next year you again don't make estimated payment, so you again have $4,000 withheld plus $0 estimated and then you owe $5,000 in taxes, you will have to pay a penalty, because your withholding was less than what you owed last year. To you had paid $500 in estimated payments, you'd be okay. You'd still owe $500, but you wouldn't owe a penalty, because your total payments were more than the previous year's liability. Clear as mud? Don't forget that you probably will also owe state income tax. If you have a local income tax, you'll owe that too. Scott-McP mentioned self-employment tax. You'll owe that, too. Note that self-employment tax is different from income tax. Self employment tax is just social security tax on self-employed people. You're probably used to seeing the 7-whatever-percent it is these days withheld from your paycheck. That's really only half your social security tax, the other half is not shown on your pay stub because it is not subtracted from your salary. If you're self-employed, you have to pay both halves, or about 15%. You file a form SE with your income taxes to declare it. 4: If you pay your quarterly estimated taxes, well the point of ""estimated"" taxes is that it's supposed to be close to the amount that you will actually owe next April 15. So if you get it at least close, then you shouldn't owe a lot of money in April. (I usually try to arrange my taxes so that I get a modest refund -- don't loan the government a lot of money, but don't owe anything April 15 either.) Once you take care of any business expenses and taxes, what you do with the rest of the money is up to you, right? Though if you're unsure of how to spend it, let me know and I'll send you the address of my kids' colleges and you can donate it to their tuition fund. I think this would be a very worthy and productive use of your money. :-) Back to #2. I just recently acquired a financial advisor. I can't say what a good process for finding one is. This guy is someone who goes to my church and who hijacked me after Bible study one day to make his sales pitch. But I did talk to him about his fees, and what he told me was this: If I have enough money in an investment account, then he gets a commission from the investment company for bringing the business to them, and that's the total compensation he gets from me. That commission comes out of the management fees they charge, and those management fees are in the same ballpark as the fees I was paying for private investment accounts, so basically he is not costing me anything. He's getting his money from the kickbacks. He said that if I had not had enough accumulated assets, he would have had to charge me an hourly fee. I didn't ask how much that was. Whew, hadn't meant to write such a long answer!"
So, you don't necessarily have to have your job be your life to work in finance. That's good to know, and makes sense, since surely there aren't enough Type A's to populate an entire, large, industry.   Man, I don't understand how one could work 100 hours a week for more than maybe one week. It would seem like basic needs such as sleep would become difficult with that level of work. In the current economy there is no upside to working for yourself.  Get in a salaried position as soon as you can, and sacrifice to whatever gods you worship that you don't get made redundant. If you're already working for yourself, and wouldn't give it up for anything, hire someone, and get them off the street. If commuting is a big budget item, then can you: A side job is one way to make extra money, but I'd suggest a home business.  If your wife substitute teaches, I bet she writes fairly well, and in any case you can.  Write a personal finance blog or just a site with articles.  Focus on surviving and thriving with child(ren) in a one-income Christian household in the suburbs of Philadelphia.  Or if you have a hobby that stokes your furnace, write about that.  Heck, do both.  The content just stays there and gets traffic day after day that you can monetize. My main suggestion would be to start this now because it's not overnight money.  But in the long run it can turn into a nice, fairly passive income. The big advantage of this is that mommy gets to stay home with the kids and build up a decent business.  The cost is $10/year for the domain (per domain) and maybe $10/month for hosting. Or, if some other legitimate work-at-home business presents itself, go with that.  I suggest blogging because it's what I know, but everyone's an expert in something unique. "I did this a couple of years ago, and boy do I regret it. After many months of delayed, and new faces coming onto the team for a short period before leaving, there wasn't much hope to ever complete the project. I ended up accumulating debt (About 4.5 grand) that I am still paying off because I chased my dream. Unfortunately, anything can happen when you choose to pursue a goal. It can get delayed, stopped, or outright fail. At the bare minimum, you would best be prepared to deal with delays, competing products, and outright failures. If you say ""I have enough money to last me 12 months and I expect to take 7 months"", then you best be prepared to answer: These are just a handful of ideas, and there are plenty more that would need to be addressed. Probably the best thing that I have seen a few friends do is to ask for reduced hours. Working part time allows you more time while reducing, but not eliminating, the pay. Even better is that depending on your company, you could ask to go back to full time if your startup didn't work out. Another option is to do what I'm doing currently: Find a job with lots of downtime. My job is critical and the market here is starved of good techs. Even then, I have a solid 2-4 hours of work each day. The other 4-6 hours I can spend on my personal projects that may eventually lead into a startup. If you plan to do this though, make sure to read your agreements carefully. There may be restrictions on copyright and the likes by working on a personal project on company property. If you do plan to go this route, you might want to consult a lawyer (like I did) to make sure you won't get screwed later." You should be receiving monthly P&amp;L statements at the very least. Who did you have filing taxes, doing payroll, performing audits? It seems that many restaurants and bars have a slippery cash issue where profits seem to just slide out the doors. Everyone touching cash might be skimming and if the manager is doing all the totals and reconciling the tills and filing taxes then that single point of failure is going to KILL you. Read the game of numbers by nick Murray.  You have to find money to call yourself a money manager and most of the job is sales. You won't stay in business if you're bad at managing it, but step #1 is finding something to manage.  Hani Thanks for the feedback. What area of finance are you currently in?  I've heard that RMI jobs are in demand right now as well, and I feel like that coupled with a background in computer science could really help. Running a sandwich shop and, say, a software consulting service are quite different things.  I had two employees at one point, following the kind of thinking in the article.  But I found what that meant was that I had to spend more time being a manager and salesperson and much less time doing the work I enjoyed.  To make it viable I would have had to scale up to the point where I had at least one salesperson and maybe a manager, which would have required more income-producing staff to support them.  Instead, I scaled back to just myself, and have been very happy with that decision.  The article also underestimates what can be made in consulting or IT contracting.  Rates well above $100/hr are common for people with expertise (as opposed to commodity providers), and billing at least 40 hours a week is not usually a problem.  It's certainly true that a one-man operation is much more likely to put a ceiling on your earnings, but (a) that ceiling can be a lot higher than the article suggests, and (b) depending on the business, breaking that ceiling and earning much more is certainly possible in some businesses, for example where you have the opportunity to sell your work in product form rather than hourly. Hey, not really related, but could I ask you some questions through PM? I'm a rising junior majoring in finance and minoring in stats with interests in corporate banking/credit risk, but I'm really interested in the buy-side work you do/your dealflow experience/industry expertise/analyst experience before Associate "Here's another perspective - I work in FP&amp;A at a large Chicago bank. I originally was interested in treasury, but here it is mostly cash management/reserve requirements/etc. - not really my cup of tea. A lot of our M&amp;A activity and fundraising roles are held by former I-Bankers. It might be hard to make it into that role.    I don't have any ""Accounting Functions"" - the accounting teams do that. While I am involved in planning and forecasting, I also provide a lot of strategic analysis on projects and ad-hoc/pro-forma reporting. Here, FP&amp;A is more the voice of the financial function in strategic decision making.   One other piece of advice - see if you can talk to some people on the team and see what their day-to-day is like. If you're interested in FP&amp;A in the true sense and not accounting/GLs, try looking for a larger firm." Not sure why you're posting in r/finance; did you meant to post in /r/PersonalFinances ? Or /r/financialindependence ?  Anyway, I'll play.  There are 3 ways you can go about it, make it 4:  1. Commercial: find yourself a job/career that you'd do it for free.  I once met a guy who was in your similar situation and he had a hot dog stand in the hearth of the financial district of a large US city; he did it for the fun and to be social.  He'd be there only when the Stock Market was open and if the weather was good.  You could also develop a more challenging career for the satisfaction of it: writer, artists, craftsman....  You could go back to school, or take an online class, or do an online degree for the pure satisfaction of it all 2. Start a company. Similar to #1 above, but this this 100% entrepreneurial. It could be just yourself, or enlist the help of the wife; full time or part time. This again, follow your passion; since you're set financially it should not that difficult to break even. With time you could grow and hire people, but that increase the complexity and you might find yourself managing the business and not actually getting the satisfaction of doing what you had set to do. 3. Volunteer: find a non profit whose mission aligns with your values, and volunteer there; 1 or a couple of organizations; if you're up to it with time you could climb up the ranks ...   4. Mentoring: there are a lot of people who dream about being in your situation. I am sure it was not luck but hard work as well. You could become a blogger, write a book (in your name or anonymously); or mentor directly someone, reddit and a web site is a good marketing start.  If you have enough money (accredited investor) you could become an angel investor, or join an angel consortium to help people with your background to make something out of themselves. 5. A combination of 2 or more from the above. it is not a creative career. you don't make anything, you serve your purpose in the economy ofcourse, and it is interesting to be surrounded and in the middle of business like this...but at the end of the day, you sell a service that anyone else can do, and your clients, the businesses, are the actual smart ones. they are the ones that make something and make real decisions. in finance you just trade, or research, or sell your investment banking services...its pretty bs, you leach of what actual creative people are doing. unless you are at a buy side shop, and high up, but then you would be incredibly intelligent and lucky.   that all being said, i have no regrets choosing finance, it is still a great career, and any job gets boring after a bit. i wish i worked in a different area of finance yes, but every area you need to start as someones bitch for a few years, and I'm not sure if I can do that again. More math education always helps in finance Happy to help.   I always recommend you try and solve these types of problems by hand over financial calculators so that you can get a feel for how terms in the equation relate to one another. That's important while you're studying/learning.  But for work--by all means you should use the fastest method, which is probably excel. Yeah, I suppose that's true - and not just in finance but smaller companies in general. I think I might have a good gig right now where I can try my hand on both things. It's a bit tied to one IT system though (Misys Summit) but I guess a lot the skills are transferable. Your problem is one that has challenged many people.  As you said there are two aspects to balancing a budget, reducing expenses or increasing income.  And you state that you have done all the cost-cutting that you can find.  Looking at ways to increase your income is a good way to balance your budget. How big is your problem?  Do you need to find another $100/month, or do you need $1000/month?  There are many part-time jobs you could obtain (fast food, retail, grocery), you could obtain a sales-job (cars, real estate, even working for a recruiting firm) where you could connect buyers and sellers.  If your need is $100/month, a part-time job on weekends would fill the gap. When I was trying to solve my budget problems a few years ago, I thought that I needed to increase my income.  And I did increase my income.  But then I realized that my expenses were too high.  And I re-evaluated my priorities.  I challenge you to revisit your expenses.  Often we assume that we need things that we really cannot afford.  Consider a few of your (possible) expenses, My problems included mortgage debt, auto loans, high utilities, high car insurance, too much spending on kids activities, and a few other problems.