If you’ve got a steady, salaried job, you’ve probably looked at your paycheck before and thought about how nice it would be if you were earning just a bit more. A few hundred more a month could really make a difference in your budget. For some people, the answer to that problem is a side hustle — another job you do on the side for extra income. So is it worth it going through all that effort?
The main consideration when you get a side hustle is the amount of effort you have to put in, and how that compares with the money you get out of it. Seems like a simple thing, right? Just take your salary and compare it to the work, or?
Not quite. When you’re taking on another job, especially freelancing or as a contractor (like as a driver for a delivery app), there’s some additional math you have to do.
The biggest one is your tax liability. Because you’re earning money, you still have to pay income tax. Even if you’re working for a big company, like one of the delivery companies or a rideshare app, you might still be responsible for figuring out how much tax you owe.
The exact rules differ from country to country. Your best bet is to talk to an actual tax advisor or accountants. For now, here are the basics:
In Germany, you might need to register a VAT number, depending on how much money you’ll make per year. If you’re making more than €17,500, it’s mandatory. The type of job you do also determines whether you need to register as a one-person company or not. You can find more information on what jobs don’t involve registration here.
In France, you can set up a micro-enterprise, which simplifies the taxation process. For most professional services, your income as a micro-enterprise cannot be more than €32,900. You also need to register your business with one of three chambers — the full list can be found here.
In Spain, you can become an autónomo, which involves registering as a one-person company. You also need to register for tax and social security contributions and take out health insurance. Depending on if you’re Spanish or an expatriate, you’ll have to make sure you have the correct tax identification number. For foreigners, it’s an NIE. Your taxes will be progressive, depending on how much you make. You can find more information here.
If you’re a national of the country you’re working in, you can skip the rest of this post. But if you’re an expatriate, you’ll also need to make sure you have the right to take on your side hustle in the country you’re in.
The rules here get complicated again. It’s best to ask advice from an actual professional. Most European countries have so-called freelance visas that allow people to work in a self-employed capacity in the country, or to make income from outside the country while residing there. If you’re already employed though, you’ll have to check your exact visa, and what type of work it allows. Often, the rules will stipulate that your secondary employment doesn’t earn you more money or take up more time than your main job — that is to say, that your side hustle doesn’t become your main hustle.
And last but not least, your work contract also needs to allow you to take on additional employment. Most work contracts have boilerplate language forbidding this, but you can ask for an amendment. Make sure your work isn’t in the same field as your current job, as almost all companies absolutely forbid conflicts of interest or working for a competitor.
It can sound like a lot of work — and it can be, but if you’re set on earning extra income, and you’re well-prepared, it can be a great way to improve your finances.