A second stream of income through a side hustle can be a big benefit to your finances. But it also comes with new challenges. What are some of these challenges? And how can you best meet them and build a successful second income on your own? Discover five things to know.

1. Your Taxes May Get Complicated

When your only source of income is a salaried or wage-earning job, income taxes may be reasonably simple. However, any sort of business or investment income makes things more complicated. You will need to file new forms such as Schedule C to report business income and expenses or Schedule E for rentals. You may also need to manage things like 1099 forms, sales taxes, and capital gains tax.

Most of these reporting requirements are unfamiliar to many Americans. And the consequences of completing them incorrectly - or worse, not fulfilling your tax obligations - can be severe and financially draining. The best plan is to work with experienced tax preparers at least until you are more established.

2. You Should Treat It Like a Business

The tendency for many very small business operators is to run things informally, often mixing personal and business transactions and failing to keep diligent records. These habits can hamper your business and make profit more difficult.

But if your goal is to turn a profit and build on it, learn the right way to keep your books, perhaps using professional software. You'll need to avoid mistakes that can increase personal liability. And you'll want to learn how to thoroughly gauge your profit and make smart choices to increase it.

3. The Type of Business Entity Has Major Effects

Today's entrepreneurs have many choices for business structure. And these choices can have serious effects on their personal liability, their finances, and the growth of the business. While many entrepreneurs start out as a simple sole proprietorship, for instance, this carries with it the most personal financial and legal liability. This can also make growth and investment harder.

Every business entity - from sole proprietorships and LLCs to partnerships, trusts, S corporations, and C corporations - has legal and financial pros and cons. Consult with an accountant and attorney to choose the one that will best serve your goals.

4. Good Business Plans Are Vital

When you start out a small enterprise, creating a full business plan may seem like overkill. But this document helps you work out a good strategy and ensure this is a realistic expectation. A good accountant can help you write a business plan that includes important details like how you will finance your gig, what your market is like, how you'll run the business, and how to forecast income and expenses.

5. Professional Help Makes It Easier

Professional assistance will be a big help in getting your side project up and running and providing a steady income. Everyone who starts a side gig should begin by consulting with a business attorney and an accountant in their state.

An accountant, in particular, will help you set up your books, understand basic accounting, and analyze business opportunities. And because you pursue your hustle alongside your regular career, you may also want to outsource much of the actual bookkeeping and tax work to a professional.

Ready to get started on your side income project? No matter what stage of planning or development you're in - even if you've already begun working - learn more by meeting with Bliss & Skeen Certified Public Accountants. We will help you get on the road to a profitable gig that will help ensure a solid and stable financial future for you and your family. Call today to make an appointment.