Maximizing Your Money Through Side Hustles

One of the highest impact personal finance things every working professional should consider:

Freelancing or starting a business on the side

It's potentially the most powerful money move you can make for a few different reasons:

#6 is my favorite and the most important

— Ankur Nagpal (@ankurnagpal) June 23, 2023

1 - You can deduct so many things from taxes you wouldn't otherwise be able to

If you work from home on a W-2 corporate job, you cannot deduct your home office rent / mortgage, internet, phone, education

But if you have a side hustle, you can pay for all that with pretax money

— Ankur Nagpal (@ankurnagpal) June 23, 2023

If you have an expensive hobby or passion, think about how you can make it a business

Travel creators can deduct expenses on trips they take for work

Food writers can deduct meals they write about

What expensive hobby do you have that you can start a side hustle around?

— Ankur Nagpal (@ankurnagpal) June 23, 2023

2 - If you ever sell your business, you are taxed at a lower rate

Capital gains rates are lower than ordinary income

But it's even more significant if you own a C-Corp

You could qualify for a Qualified Small Business Stock (QSBS) exemption & pay no taxes on up to a $10M sale

— Ankur Nagpal (@ankurnagpal) June 23, 2023

3 - Taxes as a business owner in general are lower

The worst type of income to have for taxes is your salary or W-2 income

But as a business owner, you can set up an S-Corp to bifurcate your revenue into:

1) Salary
2) Profits

And pay a lower rate on your business profits

— Ankur Nagpal (@ankurnagpal) June 23, 2023

4 - Benefits!

You can use business credit card points for personal use & travel in style

You can pay for insurance for yourself + family members

You can hire your spouse, parents, and children to work for your business and reduce your taxable income

— Ankur Nagpal (@ankurnagpal) June 23, 2023

You also get access to the most powerful retirement plan in America - the Solo 401k

You get a private 401k that lets you:

- Invest in anything
- Get a $66K tax deduction
- Roth contributions
- Borrow up to $50k from it

Super powerful and only available if you own a business

— Ankur Nagpal (@ankurnagpal) June 23, 2023

5 - Real Estate

If your business has a physical location or any real estate tied to it, you unlock a ton of benefits

Could be an office or location for meetings or off-sites

You could buy property with your biz to take advantage of depreciation to reduce your taxable income

— Ankur Nagpal (@ankurnagpal) June 23, 2023

Alternatively, you can rent real estate that you personally own to your business

In fact, you can legally rent your home to your business for up to 14 days a year and pay zero taxes on what your business pays you (!)

So much you can do here, but talk to a specialist!

— Ankur Nagpal (@ankurnagpal) June 23, 2023

6 - The single most important reason I recommend every working professional start earning money on the side:

It breaks you out of a scarcity mindset

Your stop looking at your income as "fixed"

You learn that you can always make more money

This is the most important lesson

— Ankur Nagpal (@ankurnagpal) June 23, 2023

We're now in a world where it's easier than ever to have multiple income streams

I feel so strongly about this that I just added a section at the end of my "Personal Finance 101 for Professionals" workshop to focus specifically on why everyone should own a business

Just do it!

— Ankur Nagpal (@ankurnagpal) June 23, 2023