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.

Are You Overpaying? The Real Cost of Managing Business Finances

Let’s be honest: running a small business comes with a lot of hidden costs.

But one area that sneaks up on a lot of entrepreneurs? Managing your business finances.

Whether you're DIY-ing your bookkeeping, hiring a professional, or just winging it with a spreadsheet and crossed fingers, there’s a cost. And if you're not tracking that cost properly, you might be paying more than you think (in money and time).

So let’s break it down. Here's what goes into the cost of managing small business finances….and how to make sure you're getting the best return on every dollar you spend.

💼 The Three Ways to Manage Small Business Finances

There are generally three main approaches small business owners take when it comes to handling their money:

1. DIY (Do-It-Yourself)

You manage everything yourself: tracking income, expenses, taxes, and reporting.

2. In-House or Contracted Staff

You hire an in-house bookkeeper, accountant, or VA with financial experience.

3. Outsourced Bookkeeping Services

You partner with a remote bookkeeping service (like Breakspears Bookkeeping Services LLC) that handles everything for a monthly flat fee.

Let’s break down the real costs of each.

🧾 Option 1: The DIY Approach

💰 Direct Costs:

• QuickBooks, Xero, or Wave subscription: $0–$90/month

• Receipt scanning apps or mileage trackers: $10–$30/month

• Your time: priceless… but not really

Let’s say you spend:

• 1 hour/week categorizing transactions

• 2 hours/month invoicing + chasing payments

• 2 hours/month preparing for taxes

That’s 6 hours/month x your hourly rate.
If your time is worth $75/hour, that’s $450/month in hidden costs - not including stress or mistakes.

⚠️ Common Risks:

• Misclassified expenses = missed deductions

• Late invoicing = delayed cash flow

• Tax prep panic = missed deadlines or penalties

• You’re flying blind with no accurate monthly reports

💡 DIY can be cost-effective at the beginning - but it’s not sustainable long-term if you want to grow.

🧍‍♀️ Option 2: Hiring In-House or Freelancers

💰 Costs:

• In-house bookkeeper: $3,500–$5,500/month (salary + benefits)

• Freelance bookkeeper or accountant: $40–$100/hour

• Software still needed: $30–$90/month

✅ Pros:

• High-touch support

• Can work alongside you daily

• Customizable tasks and hours

❌ Cons:

• More expensive than outsourced options

• Management overhead (training, oversight)

• May still need a CPA for taxes

💡 This is ideal for larger or high-volume businesses, but overkill for many freelancers and solo business owners.

📦 Option 3: Outsourced Bookkeeping Services (Flat-Fee)

Outsourcing your bookkeeping to a remote service (🙋‍♀️ like ours) gives you:

• Professional support

• Transparent monthly costs

• Software setup and integration

• Monthly reports and cash flow clarity

💰 Typical Flat Fee Range:

• $250–$500/month depending on transaction volume and services

• Often includes: reconciliation, categorization, reporting, light advisory

✅ Pros:

• You save 10–15+ hours/month

• No payroll costs or contracts

• No tax-time scramble

• You gain clarity, consistency, and peace of mind

💡 At Breakspears Bookkeeping Services LLC, our clients tell us the cost is a fraction of what they were losing in time, mistakes, and missed opportunities.

🧠 What You Really Pay for When You Manage Finances Poorly

If you're doing it yourself, or not doing it at all - you're probably paying more than you realize. The real costs of poor financial management include:

• Overpaying taxes (missed write-offs)

• Late fees or penalties

• Stress and burnout

• Unpaid invoices

• Missed growth opportunities (because you didn’t know what you could afford)

The truth is: you either pay to stay organized—or pay to clean up the mess later.

📈 How to Make Financial Management Affordable and Effective

To get the best value out of what you spend, follow this checklist:

✅ Use bookkeeping software (QuickBooks, Wave, or Xero)
✅ Separate business and personal accounts
✅ Set aside 20–30% for taxes monthly
✅ Run monthly reports (P&L, cash flow)
✅ Know when to delegate
✅ Choose a support system (DIY, hire, or outsource) based on your stage of business

💡 If you’re spending 5+ hours/month on your books, it may be time to outsource.

💬 Final Thoughts: Pay Less by Managing Smarter

You don’t have to overspend to get help. You just need to understand the true cost of managing small business finances - and make choices that align with your time, growth goals, and peace of mind.

At Breakspears Bookkeeping Services LLC, we offer affordable, remote bookkeeping services for freelancers and small business owners who are ready to ditch the chaos and finally feel in control of their numbers.

📌 Want to Know If You’re Overpaying?

Let’s run the numbers. We’ll show you exactly how much time and money you could save with a flat-fee monthly package.

👉 Explore our services or book a free discovery call today.

Don’t Start a Business Without Knowing These 5 Financial Basics

Starting your own business is exciting……but also a little terrifying. You’ve got the ideas, the passion, maybe even a logo. But before you dive into designing your website or printing business cards, you need to get your finances in check.

If you’re like most new entrepreneurs, you probably didn’t start your business because you love accounting. But here’s the truth:

👉 Understanding a few financial basics can be the difference between success and struggle.

Let’s walk through the five financial basics every new business owner needs to know - because skipping these can cost you time, money, and peace of mind.

💡 1. Separate Your Business and Personal Finances

This is the #1 mistake new business owners make: mixing personal and business money.

Why it matters:

• You’ll waste hours trying to figure out which Amazon purchase was for your office and which was for your dog

• It complicates tax time (and can trigger IRS red flags)

• It makes it hard to know if your business is actually profitable

What to do instead:

• Open a dedicated business checking account

• Use a separate debit or credit card for all business purchases

• Connect your account to an accounting software (more on that in a sec)

💡 Pro tip: If you’re operating as an LLC, this separation also helps maintain your legal liability protection.

📊 2. Know Your Income, Expenses, and Profit

This might sound obvious, but you’d be surprised how many small business owners don’t actually know if they’re making a profit.

You need to know:

• Revenue: How much money you’re bringing in

• Expenses: What it costs to run your business

• Profit: What’s left after expenses

Why it matters:
You could be bringing in $5,000 a month and still be losing money. That’s why profit > revenue when it comes to measuring your success.

💡 Use accounting software like QuickBooks Online or Wave to track these numbers from day one. At Breakspears Bookkeeping Services, LLC, we help you understand these reports in plain English—no accounting degree required.

📅 3. Set Aside Money for Taxes (Yes, Even If You’re Just Starting)

No one wants a surprise tax bill. But if you’re earning income and not setting money aside, that’s exactly what you’re risking.

Rule of thumb:
Put aside 20–30% of your net income (profit after expenses) for taxes. Set up a separate savings account just for this.

Also:

• Keep digital copies of receipts for deductible expenses

• Track mileage, home office use, and software subscriptions

• Consider working with a bookkeeper to stay organized year-round

💡 You don’t need to know all the tax laws—you just need to keep clean records. We can help with that.

📁 4. Learn the Chart of Accounts (Your Business’s Filing System)

Your chart of accounts is a list of categories used to track all your income and expenses. It’s like the foundation of your financial reporting.

Here’s what it includes:

• Revenue accounts (e.g., product sales, services)

• Expense accounts (e.g., marketing, supplies, subscriptions)

• Assets and liabilities (e.g., bank accounts, credit cards, loans)

Why it matters:
This structure helps you stay organized and prepare for taxes, loans, or even hiring in the future.

💡 We help new business owners customize their chart of accounts so it actually reflects how your business runs, not just a default template.

📈 5. Understand the Three Key Financial Reports

Every month, you should look at three simple reports:

1. Profit & Loss (Income Statement) – shows income, expenses, and profit

2. Balance Sheet – shows your financial position (assets vs liabilities)

3. Cash Flow Statement – shows how money moves in and out

These reports help you:

• Make better decisions (like when to invest or cut costs)

• Spot trends or issues before they become problems

• Stay tax- and audit-ready

💡 At Breakspears Bookkeeping Services, we deliver these reports monthly and explain what they actually mean for your business.

🧠 Final Thoughts: You Don’t Have to Be a Finance Expert—But You Do Need a Foundation

Starting your own business is a bold move. But it’s one that only works if you have your financial foundation in place.
Understanding these five financial basics for new business owners will help you:

• Make confident decisions

• Avoid tax-time stress

• Set your business up for sustainable growth

And the best part? You don’t have to do it alone.

✨ Need Help Getting Your Finances Set Up?

At Breakspears Bookkeeping Services, LLC, we specialize in helping new entrepreneurs and small business owners build financial systems that are simple, affordable, and stress-free.

👉 Explore our remote bookkeeping packages
👉 Book a free intro call and let’s get your business finances in shape from day one.

How to Manage Business Finances Without Losing Your Mind

Let’s face it, managing business finances isn't exactly a party. Spreadsheets, tax deadlines, invoices, receipts from six months ago stuffed in a drawer somewhere... it’s no wonder most entrepreneurs feel like their brains are doing somersaults when it's time to "do the books."

But here's the good news: You can learn how to manage business finances without losing your mind….or your weekends. With the right habits, tools, and mindset, even the most numbers-averse small business owner can feel confident and in control.

Let’s break it down, step by step.

Step 1: Separate Business and Personal Finances (Immediately!)

If you only take one thing from this article, let it be this: open a dedicated business bank account.

Mixing personal and business funds is like mixing paint, it gets messy fast. Not only does it make bookkeeping harder, but it can also land you in hot water at tax time. A separate account keeps things clean, professional, and makes it easier to track income and expenses.

💡 Pro tip: Link your business bank account directly to your accounting software for automatic transaction imports.

Step 2: Choose an Accounting System That Works for You

You don’t need to be an accountant to use accounting software. In fact, platforms like QuickBooks Online, Wave, or Xero are designed for business owners with zero finance background.

Here’s what to look for:

• Bank syncing

• Invoice generation

• Expense tracking

• Mobile app access

• Financial reports (profit & loss, cash flow)

💡 Keep it simple. You don’t need all the bells and whistles, just what helps you stay organized and tax-ready.

Step 3: Set Aside Time Each Week for Your Books

Think of your finances like laundry: ignoring them doesn’t make them go away - it just makes the pile bigger.

Block out 30-60 minutes once a week to:

• Categorize your expenses

• Reconcile your bank transactions

• Send invoices and follow up on payments

• Review your cash flow

💡 Make it a vibe. Light a candle. Put on a podcast. Make a cup of tea. Turn “finance time” into a weekly check-in that actually feels good.

Step 4: Understand the Basics (without the jargon)

If you're wondering how to manage business finances effectively, learning a few key terms can go a long way:

• Revenue: What you earn before expenses

• Expenses: What you spend to run your business

• Profit: What’s left after expenses

• Cash flow: The movement of money in and out of your business

• Chart of accounts: A categorized list of all your business transactions

💡 Not sure where to start? Ask your bookkeeper or accountant to explain your financial reports to you in plain English.

Step 5: Plan for Taxes Year-Round

Waiting until April to think about taxes? That’s a trap.

Instead:

• Save 20–30% of your net income each month for taxes

• Track all deductible expenses (software, travel, subscriptions, etc.)

• Use accounting software to organize everything

💡 Bonus tip: Consider working with a tax pro once a year just to make sure you’re maximizing deductions and staying compliant.

Step 6: Know When to DIY vs. Delegate

Trying to do everything yourself is a fast-track to burnout.

Here’s when to consider hiring a bookkeeper or accountant:

• You’re consistently earning over $5K/month

• You’re behind on your bookkeeping

• You want to grow but don’t fully understand your numbers

• You hate doing it, and it’s stopping you from focusing on your actual business

💡 Hiring help doesn’t mean you’re bad with money - it means you’re smart about where your time is best spent.

Step 7: Create a Simple Budget (and Actually Use It)

You don’t need a 10-tab spreadsheet to create a budget. Just list out:

• Expected income (monthly)

• Fixed expenses (rent, software)

• Variable expenses (marketing, supplies)

• Savings goals (taxes, new equipment, rainy day fund)

Use this to guide your decisions - like whether you can afford that new course or rebrand.

💡 Check in with your budget monthly. Adjust as needed. You’re allowed to evolve.

Step 8: Review Your Financials Every Month

At the end of each month, take 15–30 minutes to look over:

• Profit & loss statement

• Bank balance

• Outstanding invoices

• Any big wins or unexpected costs

It’s a great way to spot red flags early and celebrate your progress—even if it’s just being less stressed about your finances than you were last month.

💡 Make it fun: turn it into a “money date” with yourself or your business partner.

Final Thoughts: You Don’t Have to Be a Numbers Person to Be Financially Empowered

Learning how to manage business finances isn’t about becoming a math genius: it’s about building confidence, clarity, and control.

Start small. Stay consistent. And remember: you’re not alone. There are tools, communities, and experts (👋 like me!) ready to help you ditch the overwhelm and make peace with your money.

Need help managing your business finances without the stress?
Let’s chat - Breakspears Bookkeeping Services is here to make sense of your numbers so you can focus on growing your business.