6 Hidden Costs of Starting a Side Hustle

Start-up costs breed like aphids.

There are two main reasons people turn hobbies into hustles:

• To try to make their passion a career; or,
• To boost their personal finances.

If you're motivated by the former, then you probably don't care too much about the costs. You're in it for the experience. If you're in the latter group, however, then how much a side hustle costs to start can be a big factor in whether it's worth the investment.

While the specific costs will depend on what you're doing (and even where you're doing it), some of the costs are universal. And while many may be obvious, there are a number of extra costs you may not think to include in your calculations. Here are a few to consider.

1. Banking/merchant fees

One of the best things to do when starting any new business is to open a bank account for that business. This keeps your expenses clean from the start, which will make it much easier to track (and tax) everything along the way. 

As with consumer checking accounts, however, business accounts can have monthly maintenance fees tacked on. There are a good number of free business bank accounts out there, however, so keep an eye out.

A bank account is also necessary if you intend to take customer payments. And if you want to accept credit cards, be prepared to pay extra fees for that, too.

2. Insurance

Many popular side hustles also come with associated insurance costs, though whether you need insurance -- and how much you need if you do -- will depend on your industry. 

Driving for a ride share company, for instance, means having excellent auto insurance. If you want to start a home repairs business, you may need some sort of liability insurance. This is also the case for kicking off that pet sitting side hustle you've been pondering.

Be sure to research if you need insurance for your new venture, and include that cost in your start-up budget.

3. Marketing

The key to any successful business is marketing. (If nobody knows about you, they can't give you their money!) Yes, ideally you'll get some word-of-mouth marketing once you start developing a reputation. But you can't rely on that alone, and you certainly can't rely on it when you're just starting out. 

Getting your name out there will come with a variety of fees. For starters, you'll need a website no matter what you plan to do. If you deal with customers, a telephone line may also be useful (you certainly don't want to give them your personal phone number.) Stickers, web ads, flyers -- marketing materials for digital and analog alike will all come with an extra cost.

4. Tools/supplies

It's probably already crossed your mind you'll need some basic tools and supplies for your side hustle. But you may be underestimating what you'll need.

Let's go back to driving for a rideshare service. On the surface, you only need a vehicle and a phone, right? But that's not all. Many riders now expect extras, like water bottles and charging cables. 

And the same thing can apply to just about any type of hustle you might start. Selling clothes on eBay? Don't underestimate all the packaging you'll need. Walking dogs on the weekend? Be sure to buy stock in the poo-baggie manufacturer.

5. Taxes

While not necessarily something inherent to starting a side hustle, it is, nonetheless, an expense you need to keep in mind all year long. If you make at least $400 during the year, you'll need to pay taxes on it. And if you don't pre-pay those taxes by making estimated tax payments throughout the year, you could be hit with an underpayment fee when you finally file.

6. Time

Sure, you knew that starting up a side hustle was going to take some time investment. But it's highly probable the time you think it will take will be significantly less than the time it actually takes.

What's great about a side hustle, however, is that you can spend exactly as much time on it as you want. If you just want some pocket money, a few hours a week is perfectly fine. If you want to potentially change careers, you'll need to dedicate quite a bit more time to turning your side hustle into a profitable business.

Either way, be sure you know what you want out of it before you get started. As we've shown, the time cost is just a part of it -- the financial investment can really add up, too.