We all have that Uncle who swears he “just needs 500 bucks” to start his million dollar food truck. No? Well, maybe that’s just me……The fact is, the average American tax filer gets almost $3000 back from the IRS each year in the form of a tax refund.
So if you’re wondering how you can put your tax refund to good use this year, assuming you don’t need it to pay for life’s essentials, here are some better-than-novelty-fried-food-truck ideas to get you started!
Will I Get a Tax Refund? How Much?
Everyone’s taxes are different, so the answer to whether or not you’re going to get a tax refund this year is – “it depends.”
Are you a salaried employee or an independent contractor? Does your employer withhold more or less than the proper estimate for FICA and income taxes from your paycheck, if they withhold anything at all? Are you going to take the standard deduction or itemize your deductions? Have you sold any investments for capital gains?
In general though nearly 2 in 3 tax filers should expect to get a tax refund, especially given the expanded refundable credits (like the expanded CTC) and stimulus checks paid over the last few years.
What Does It Take To Start a Side Hustle?
If you’re serious about starting a side hustle, you’re going to have to be willing to make sacrifices. Side hustles are not easy, and they’re usually not free or effortless, either. See a full list of side hustle options here.
If your side hustle doesn’t have a significant startup cost or overhead, it will probably require a sizable time investment, like mine did for this site.
Firstly, you’ll have to buy whatever equipment you need to be able to conduct your business. This could include a vehicle, a laptop, a workbench, or a whole list of other equipment.
You’ll also want to incorporate your side hustle as a legal entity like a S-Corp or LLC in order to make sure all of your income is legitimate and that you have limited legal liability. I suggest engaging an accountant for this to help you plan your business finances and to maximize your potential tax savings.
One other thing that’s recommended, but not necessarily required, to start a side hustle is a mentor. Find someone who is experienced in the field you want to go into or experienced in side hustles in general, and ask them to be on your “board of directors.”
That is, ask them to take an interest in your professional endeavors and mentor you to success. It could be a friend, a family member, or a successful stranger who’s willing to give you their time and wisdom.
Starting Side Hustle Ideas for Your Tax Refund
Here are some out-of-the-ordinary side hustles for you to consider. The idea is to get your creative juices flowing based on these ideas and show that these or variations on them can work for you.
Microgreens Business
Have a little extra space in your house? Growing and selling microgreens like arugula, wheatgrass, kale and many other tiny but mighty greens can be an excellent low cost business. Plus, once you get it started, the business “grows” almost all on it’s own!
If you do have a green thumb, you can always grow and sell bigger crops at farmers’ markets. Of course, bigger crops will require more land and won’t necessarily be as profitable, but it can be a great way to make money from your passion!
Amazon has a whole selection of books on starting your own Microgreen hustle or site business! At worst it will be a tasty and healthy hobby.
Window Cleaning Business
Think of how many windows you see on a day to day basis! Every business and home has windows, and the fact is, someone has to clean them.
You’d be surprised at how lucrative this business model is, but don’t take it from me, take it from Johnny Robinson at Orange Window Cleaning.
Here’s his viral thread on Twitter – how he turned $1500 into a $1.2 million dollar business! And make sure you check out the table below of everything he says you need to get started.
Johnny’s approach can be applied to many home services, not just window washing. There are plenty of jobs out there that involve cleaning or repairing a part of someone’s home or business, and the demand for that kind of work is huge.
With a little (free) marketing, you can have a booming home service business in just a few months! No special skills required.
Pinterest + Etsy Store
Do you love making art, crafting, or making things with your hands? Most people have heard of Etsy, but when combined with the powerful search engine of Pinterest, you can specifically target people who would love your arts and crafts.
Turning your handmade hobby into a side-hustle can be as low cost as simply buying the materials! And during the pandemic many crafters and artists used Etsy to turn their hobby or passion into their profession. So why not you?
Digital Products
Calling all iPad doodlers and digital widget lovers! Many software companies encourage people to use their software to create their own digital products, and then sell them.
You can learn to use a software like, Notion, Canva or Webflow to build your digital designs and products. Often times you can start with a trial version before to committing to paid subscription/
Once you learn your preferred software, you can create your own digital product and start selling on popular sites like Gumroad!
You can also sell the rights to your digital designs, photography, or other products like music to websites that will pay you a royalty every time someone uses your product.
And if you are really tech-savvy and have cryptocurrency you can create your own NFT (Non-Fungible Tokens), but that is another while post in itself.
Baked goods
If the art you enjoy creating is edible, even better! There is a solid market for custom, home-baked goods, especially given how often people celebrate birthdays, anniversaries, and other special occasions.
If you have the time and ability to bake in bulk, you can sell huge orders at a great per-item profit margin. Further, as companies reopen their offices, these baked goods will likely see a lot more demand.
Tips for a Successful Side Hustle
There’s a reason most people just have one job – side hustles are hard! Here are some tips to lighten the load and get your business started right.
Know your work habits
Being self-aware of your working style and current habits is like rocket fuel for a successful side hustle. Starting is the hardest part, but a close second is mismanaging your time.
In order to avoid killing your momentum or burning out, take a week to evaluate when you are most creative or energized for work.
Are you a morning person or a night owl? Experiment with snapping yourself out of lazy, unproductive spots in your day. What refocuses you? Maybe it’s taking a quick walk, listening to music, meditating, or the classic splash water on your face and stare at yourself in the mirror pep talk.
You’ll likely have to try a few different configurations before your side hustle work fits optimally with your personality and schedule. So don’t get discouraged if it takes a little time!
Finally as you grow larger and busier, consider outsourcing or hiring people to help. It takes a village to build a business, and there are only so many hours in the day.
Effort over Time
It’s important to be excited about your side business, but it’s essential to know that emotions can’t build the foundation of a successful business.
A thriving side hustle takes persistence – consistent effort over a long period of time. So take that excitement and funnel it into building sustainability and a long term mindset!
We already discussed a sustainable schedule that fits with your work habits, but another element of sustainability is setting realistic goals.
In order to build persistence, it’s crucial to not put too much pressure on yourself. Focus on doing small things or dedicating a small amount of time every day, rather than burning yourself out with unrealistic goals that always get pushed to tomorrow.
Another essential element of persistence is a long term mindset. Maintaining a long term perspective will help you not get discouraged on the hard days. Many people don’t give themselves enough time to see the true potential of their side hustle, and get too wrapped up in creating overnight success.
Ask for help
You don’t have to wait until something goes wrong to ask for help. When you’re starting a side business, it’s important to optimize your learning. And what better way to learn than to ask experts and people who run similar businesses?
Although business is competitive, people love to share what they’re good at. Demonstrate interest and persistence, and you’ll be able to get time with experts in your field.
Building a network of mentors and advisors is invaluable, and way more fun than being a lone-wolfpreneur!
Are There Any Other Costs of Starting a Business?
Equipment costs aren’t going to be the only expense you have when starting a business. You’ll also want to consider insurance for your business, taxes, and the cost of creating the business itself.
Most states have small business help pages on their government or treasury websites (google it). These can provide a trove of information to get you started the right way.
Final Thoughts
A tax refund can be a very exciting treat, and it can be tempting to spend it all on yourself. But if you want to use that money to set yourself up for future success, consider investing it in something like a side hustle.
You might be surprised at how much money you can earn doing something you enjoy!