She Gets Everyone Ready for the Big Night. Now Her Weekend Work Is a Real Business.
By Andrew Pham, CPA
TL;DR
Kelly's weekend beauty work had outgrown "once in a while," but she didn't know whether it should become a store someday or stay a side hustle. With Andrew, she measured how many days a year she works and what she earns, set it up as a proper business, and used a second meeting to learn which deductions are ordinary and necessary and which are frivolous.
The numbers
- Day job
- Diversity and inclusion manager, Fortune 250 company
- Side work
- Nails, hair and makeup, mostly on weekends
- Engagement
- Silver consulting package, two meetings
- Focus
- Business structure and which deductions hold up
A girl's girl
Kelly has always been a girl's girl. She grew up as the eldest of four sisters, and from an early age her mother reminded her: "We must uplift others so we are uplifted."
That stuck.
Weekdays at a Fortune 250. Weekends getting everyone ready.
During the week, Kelly is a diversity and inclusion manager at a Fortune 250 company.
On weekends, she helps women get ready for their next event. Nails, hair, makeup: she does it all.
Where is this going?
Kelly enjoys the work. What she didn't know was where to take it.
Is the goal to open a store in 10 years? Or keep it the way it is, "once in a while," with a sprinkle of weekends full of back-to-back appointments?
She decided to engage in the Silver consulting package with Andrew to figure it out.
Meeting one: turning a side hustle into a business
They started with the basics. How many days of the year does Kelly actually work? How much income does she earn?
Once those numbers were isolated, they could structure her side hustle as a proper business, rather than something that just happens on weekends.
Meeting two: ordinary and necessary, or frivolous?
With business income comes business expenses. Kelly is risk-averse and doesn't like the idea of getting in trouble, so she used her second meeting to get clear on deductions.
Which expenses are ordinary and necessary for her work, and which ones are frivolous? Knowing the difference meant she could claim what she's entitled to without worrying about it.
In her words
"I appreciate Andrew's willingness to let me share my concerns while he listens without judgment."
What are you doing on the weekends?
Maybe you do hair, bake, photograph weddings or coach. If people are booking you back to back, it might be time to treat it like the business it already is.
You don't need to decide today whether it's a store in 10 years. Start by knowing how much you work, what you earn and which expenses count.
If you're not sure where your side hustle is headed, give us a call. We'll figure it out with you.
How the work went
- 1
Measured the work
Isolated how many days a year Kelly works and how much income she earns from her weekend appointments.
- 2
Structured it as a proper business
Set up her side hustle as a business, so business income and business expenses are tracked and reported properly.
- 3
Sorted deductions: ordinary and necessary vs. frivolous
Used a second meeting to understand which expenses hold up and which don't, so she can claim deductions with confidence.
Questions people ask about this one
What does "ordinary and necessary" mean for business deductions?
It's the IRS standard for deductible business expenses. Ordinary means common and accepted in your line of work. Necessary means helpful and appropriate for the business. Expenses that are personal or extravagant don't qualify.
Do I have to report income from doing hair, nails or makeup on weekends?
Yes. Income from side work is reportable whether you're paid in cash, by app or by card. When it's run as a business, related expenses can reduce the taxable amount.
Is my weekend beauty work a hobby or a business?
It generally turns on whether you're doing it to make a profit: regular appointments, pricing that covers your costs, good records and effort to grow. Business treatment lets expenses offset the income.
Do I need to open a store to treat my side hustle as a business?
No. Many side businesses run as sole proprietorships reported on Schedule C. Whether to open a store someday is a separate decision you can make once you know what the business earns.
Discussion
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