Are you doing some work on the side? Running a small business? It’s a good idea to keep track of your side hustle finances starting from your early days.
I’ve been doing side hustle work for more than 10 years. I’ll share some easy and quick ways to keep track of your money so you can focus on your work and succeed. Let’s get to it! Here’s what we’ll cover:
- Pro tip: Keep it separated
- Side hustle finance tracking tools
- Personal finance tools (and why not to use them)
- A free way to mange your side hustle right away
You gotta keep ’em separated
First things first, a pro tip that pretty much all business owners agree on…
You’ll want to keep your side hustle or small business money separate from your primary checking account. There are dozens of reasons. Here are just a few.
- It makes keeping track of everything easier
- You don’t want to accidentally spend your rent, mortgage, or grocery money on a business expense and create a problem at home
- If you were to get audited by the government, unlikely but not impossible, they would look favorably on your organizational skills
- For many types of work you’ll ask for a deposit up front from the client, it’s a best practice to hold that money until the job is done, putting deposit money in a separate account helps you make sure you don’t accidentally spend it on Taco Bell and a new camera lens (not that that’s happened to me 😅)
Think like a business owner
Even the smallest side hustle is a business. Think like a business owner. Think ahead.
The more you grow, the more complicated your side hustle or small business gets, the more this is important. If you have lots of expenses, you want to make sure you pay for them, and you also don’t want to spend your car payment money on accident. If you start having contractors or employees to pay, it just gets more and more complicated. It’s better to start off the right way.
It is possible to just “be organized” and keep money “mentally separated” with just your personal checking and savings account. I’ve tried it. In the end, it wastes time that should be spent scoring clients and doing jobs. It’s far easier to set up a business bank account. Plus, there are many other benefits, which I will explain.
Setting up a (free) business banking account
I’ve worked with several banks over the 10+ years I’ve been doing video and web work on the side of my day job. What bank you choose often varies by your region and country.
The “big banks”
In the last few years, I’ve found the big banks are charging higher and higher fees. For example, one bank started charging me $25/month for my basic checking and $25/month for my business account, after years of being a loyal customer. 😡 So I moved my personal banking to a credit union, and my business banking to an online bank. Be careful to watch for sudden and changing fees.
Consider looking at credit unions in your local area. They often have advantages to the big banks, and even donate to local causes in your community. This website helps you find one in your area. Just like big banks are insured, in the USA, by FDIC, credit unions are backed by the NCUA (National Credit Untion Association).
In the recent past many credit unions had bad websites and terrible (or no) smartphone apps. But I’ve found that the technology is democratizing and more and more smaller banks and credit unions have easy-to-use websites, apps, and the cool check deposit features that only the big banks used to be able to offer.
Online banks (my suggestions)
I’ve been talking a lot about banks, and I’ve learned a thing or three. However, I’m not a banking expert, and I can’t provide rock-solid fiduciary advice. That said, I did research which online bank to move my business finances over to.
Scared about the word “online”?
What’s an online bank? I’m not talking about cryptocurrency. We’re dealing with real/fiat/traditional currency. An online bank is a “real” or traditional bank. It’s a bank that still has a physical branch somewhere, or partners with a chain of local banks. However an online bank focuses on serving a global or nation-wide customer base primarily through it’s website and mobile apps. They usually partner with ATM networks like AllPoint to provide similar services to your local bank.
Benefits of an online bank
These online banks are fintech companies too. That means they’re always working to make it easier to get things done with the power of the internet. They typically care more about their website and app and manage to make easier-to-use apps than the Big Banks sometimes.
The first big benefit to an online bank is that you can do everything you need online. No need to drive anywhere. A good online bank also provides many other benefits:
- The ability to create/debit virtual credit cards that you can set up quickly and pay for online expenses
- The ability to also set up credit/debit cards and have them mailed to you
- Allowing for easy transfers online to your personal accounts
- Providing a mobile app for doing everything on the run
Which online bank should I use?
I use Relay Bank. I’ve been happy with it. They have a great website and mobile app. Everything is free. I easily set up multiple sub-accounts, and multiple physical and virtual debit cards for each of our companies (my wife and I run HustleBooks, Vapor, and Wells_Copy). My wife and I can manage, track, and move all the money from our businesses keeping it separate from our personal accounts. It’s far more convenient than the “Big Banks” (Comerica, Chase, Bank of America) the types I used to use.
The other online bank that I considered was Mercury. I found Relay from a review on Nerdwallet. Remember many websites like Nerd Wallet earn money from affiliate links, they get a referral fee in many cases. So always think about why they are recommending what they are recommending, and get multiuple sources of recommendations. For example, check this article from The Credit Review as another resource for finding online banks.
Side hustle finance tracking tools
There is a SaaS for everything. SaaS is short for software as a service. I love a good SaaS. They are so convenient. Gone are the days of installing an app on your personal computer that only stores data and works on that one personal computer. Modern SaaS tools store data on the internet (in the cloud) and work right in your web browser. Some, if needed, also have apps that install on your mobile devices and computer and all your data syncs without you having to think about it.
In most cases the best tool for managing your side hustle finances is a SaaS. You want to be able to easily access the tool from an phone, laptop, or computer with an internet connection. This is convenient and assures you can always access it.
There are many professional accounting apps/SaaSs available. Also, in some cases you can use a personal finance app to manage your side hustle or small business, but I don’t recommend it. Let’s look at some popular options.
Online accounting tools
Here are some web-based business accounting (SaaS) tools you can use. Each has pros and cons, especially in the context of a new cash-strapped side hustle or small business.
First is FreshBooks. Ten years about this app would probably not go first on a list like this. Starting around 2003, FreshBooks was the new app, it was “disrupting” QuickBooks. QuickBooks at the time was an app that only worked on your computer, with limited cloud storage and cloud-sync options. FreshBooks was a cloud-native SaaS app, and that was still kinda new. Now FreshBooks dominates the solo entrepreneur and small business space.
I used FreshBooks during my first year of running my own business. It worked well. I stopped using FreshBooks because it didn’t make sense to pay monthly for a service, that I didn’t use some months. Some months I don’t do side hustle work, so it’s painful and useless to use a SaaS that charges per month. Instead, I developed my own SaaS, of sorts. Years later, here I am sharing it with you (HustleBooks).
- Accounting (tracking your money in, money out)
- Payments (paying expenses, contractors, or employees)
- Tracking time
- Project management
You use FreshBooks primarily as a desktop ‘app’ in your web browser. They also have a mobile app that does pretty much everything the web app does, although sometimes its easier to use the desktop app. The mobile app even has a mileage tracking tool.
Note: our pros and cons are mostly from the perspective of a solo side hustle just getting started.
QuickBooks Pros and Cons
|🟢 FreshBooks Pros
|🔴 FreshBooks Cons
|Powerful tools for all aspects of your business
|Might be more than you need for a new side hustle
|Proven and trusted company
|Expensive ($17/month, after 12 months at discounted $13.60, that’s $204 a year, every year, for the rest of your life, for the cheapest plan)
|Easier to use and understand than other accounting software
|You have to pay for the ‘plus’ plan for your accountant or other to have access
|You can only have 5 clients, or you have to pay for ‘plus’ or higher plans, so the recurring costs scale as your business grows
|No true payroll feature, if you have employees, it integrates with a third-party payroll service called Gusto (which is a pretty great services, I’ve used it), but you’ll have to pay for another service
Next up is QuickBooks. QuickBooks, by Intuit, started in 1983 as a DOS app (that’s before Microsoft Windows!) It’s been hugely successful and helped tons of small businesses over the years.
I used to work at a company that used QuickBooks. I managed projects and worked with the office manager who managed our QuickBooks setup. She hated using it. She said it was slow and hard to use. It also didn’t help us track our project status in a way that worked for us. I’m sure they’ve improved the app since then. But at the time, I developed a project tracking spreadsheet that she loved using to augment QuickBooks. It was the first version of what became HustleBooks!
The app has transitioned over the years from just being desktop software running on a Windows or macOS that you access locally into more of a SaaS app with a with online capabilities. But ten or twenty years ago, when FreshBooks burst on the scene, it was very much a desktop app with limited cloud-sync and online integrations. That’s why FreshBooks became so successful. FreshBooks was cloud-native, simplified, and easier to use.
Similar to FreshBooks, QuickBooks has solutions for pretty much any accounting challenge you can think of. The Simple Start plan includes tools for:
- Income and expenses
- Invoice and payments
- Tax deductions
- General reports
- Receipt capture
- Mileage tracking
- Cash flow
- Sales and sales tax
- Connection to one eCommerce website
- Payroll (add-on, if you have employees)
One thing you’ll notice on QuickBooks website is they have lots of different products. It can be tricky to understand them and know which one you need. Here’s just a few: QuickBooks Online, QuickBooks Online Advanced, QuickBooks Desktop, QuickBooks Enterprise, and QuickBooks Essentials. To track your time, or contractors/employees time, you need a separate app called QuickBooks Time which works only with some of the versions I just listed.
QuickBooks is still kinda two apps: the older legacy desktop version and the newer online version (which may be an answer to FreshBooks and other SaaSs.
QuickBooks Pros and Cons
|🟢 QuickBooks Pros
|🔴 QuickBooks Cons
|The OG, proven and trusted company
|Might be more than you need for a new side hustle
|A feature to solve any challenge you can think of
|Might be hard to use or know which version you need
|Tools for sales tax
|Expensive ($30/month, after first 3 months at discounted $15, that’s $360 a year, every year, for the rest of your life for the cheapest plan)
|Built-in payroll tools
|You have to pay per user, 1 user and 2 ‘accountants’ users (who can see reports only) are included on Simple Start (see confusing usage limits)
|Only for one company or organization (you’d need a new account and subscription if you have multiple companies)
Last, I developed my own solution 😇 to small business accounting. HustleBooks is a simple alternative to these full-blown complicated accounting solutions. It’s designed to be a simple tool that helps you manage side hustle finances quickly. It has what a side hustle or small business needs:
- Tracking project status
- Tracking money in and money out
- Tracking expenses (Pro)
- Creating invoices (free add-on)
It’s a good alternative for side hustle or certain small business situations:
- If you only do seasonal work or a few projects a year (the above solutions are bloated and overkill)
- If you’re just starting out and have limited money (we have free or cost effective solutions)
- If you’re just experimenting with one or more business ideas (you could run multiple companies or organizations at no extra cost)
HustleBooks isn’t a true app or SaaS. That’s good news because that means it doesn’t cost you money every month for the rest of your life. It’s what we call a Spreadsheet-app. We make spreadsheet templates that are easy to use and behave just like an app running in your web browser. They’re designed for Google Sheets, but also work with Microsoft Excel or Apple Numbers.
We also provide video mini-courses to show you how to do DIY accounting. We provide a simple way to keep your business finances organized when you’re small and just getting started. Try it for free.
HustleBooks Pros and Cons
|🟢 HustleBooks Pros
|🔴 HustleBooks Cons
|Free forever version, not a free trial, with HustleBooks Starter
|No time tracking app (but we do offer a free alternative)
|Not expensive – HustleBooks pro is a one-time purchase of $49 (no never-ending monthly or annual subscriptions)
|No payroll tools if you have employees
|Included short video courses that show you DIY accounting methods
|No contractor tolls (like 1099 creation) if you have contractors
|Unlimited users, collaborators, or accountants (with the option to lock sections and limit access)
|No sales tax or ecommerce integration tools
|Run more than one company, unlimited companies, at no extra cost
|No mobile app, our Spreadsheet-apps work on mobile devices with the Google Sheets or Excel mobile apps, but work best on desktop
|Fully customizable, you can modify and make your own versions to perfectly suit your business use case/s
Which online accounting app is best?
It all depends. Every business needs different things.
- FreshBooks was started for, and is ideally suited for, a solo entrepreneur or small team working primarily online. It has robust tools for running a small service-based business, but not so much for selling merchandise. If you have full-time employees and need to run payroll you’ll be using another SaaS with it (Gusto).
- QuickBooks is great for larger small businesses, especially if you need payroll, sales tax for selling online or in person, or inventory management. It’s got a solution for pretty much anything, but that comes with a complicated product line. It’s also pricey and gets pricier as you add services.
- HustleBooks is good for a solo entrepreneur running a simple small business on the side. It’s perfect for getting started and keeping costs low (or at zero).
Here are some helpful articles comparing FreshBooks vs. QuickBooks. These are from, theoretically, objective sources. Remember, whey doing comparisons, a lot of time the top few search results are sponsored content. Always dig a little deeper.
- FreshBooks vs QuickBooks – From the HubSpot Blog (a CRM tool)
- FreshBooks Vs. QuickBooks (2023 Comparison) – From Forbes (a well-established financial magazine)
Personal finance tools. OK for side hustle finances?
We focus on business accounting tools on this article. There are other popular finance tools/apps you may have heard of. You may be wondering if you can use those to manage side hustle finances. You know, keep it simple, use one app. In most cases, I don’t recommend this. Personal finance tools are for personal finances. Remember, you should keep business finances separate, until that income transfers over into personal income. I do recommend using personal finance apps to make and keep a budget.
If you already use one or are trying to save money and do multiple things at the same time, it might work for you. Here’s a quick overview of three of the most popular online personal finance tools. I’ve also used each of these.
First, let’s looked at the very-popular Mint app. Now owned by Intuit, the makers of QuickBooks and TurboTax, Mint is a popular personal finance app. It allows you make a budget, manage expenses, as well as set up or manage IRAs, auto loans, and all things personal finance. If you click around their site you’ll find it has almost no features whatsoever for managing your business. You’ll also notice that this ‘app’ has kinda become one big advertisement funnel for setting up loans or accounts with Intuit partners from which they get a cut. 😬 But that’s another story for another day. The upside is that Mint is owned by Intuit so you can log into your QuickBooks and TurboTax accounts and there are some integrations if you already use one of these. At least everything is in one place.
Next up is You Need A Budget (YNAB). I used to use YNAB. They offer a great app and resources for getting and staying out of dept. It’s both an app and a philosophy that they help guide you through. It does cost $99/year or $14.99 a month, which is a lot, in my opinion. If you don’t already use this, I wouldn’t recommend subscribing to it for the purposes of running your side hustle, it’s just not design for it, and offers few tools to assist you.
Last, I wanted to mention EveryDollar. My wife and I use EveryDollar to create a monthly budget. It has ways to track income from multiple sources and categorize expenses. They have a free version and a premium version. The premium version is $79/year or $17.99/month after the free 14 day trial. The biggest difference between free and premium is that with premium you can connect your bank accounts to automatically sync (they call it “stream”) your transactions. There are no dedicated business or expense tracking tools, so like Mint and YNAB, you’ll be kinda hacking the app to use it for managing your business.
So, I shouldn’t just use one of these personal finance apps?
I’d say no. The challenge is none of these apps are designed to track your business money and your individual jobs/clients. They may track expenses, but not in a way that’s designed for business. They don’t help you manage your business (invoice, track expenses, manage projects/gigs) really just your income.
But what if there were a free way to manage your side hustle, especially if your just getting started. There is! I built one for myself. I’ve used it for 10+ years. And, now, I’ve combined it with a mini video course to each you how to do all this by yourself. For free!
A free way to manage your side hustle finances right away
Online accounting tools work fine, especially once your business gets larger and more complicated. Personal finance tools can be adapted for side hustle work, but they certainly aren’t designed for it. You may be wishing there was something for small little side hustles or a business just getting started. Maybe a business you’re just experimenting with. There is!
I created HustleBooks for side hustles and new small businesses. It’s perfect when you’re just starting out.
I’ve learned to be pretty handy with spreadsheets. I’ve come to realize that spreadsheets are apps. So I’ve developed a short video course and spreadsheet-app that can have your managing your side hustle fiancees in mere minutes!
It’s called HustleBooks Starter. Unlike the online accounting apps, it’s free. Free forever. No never-ending monthly subscriptions. No strings attached. Here’s what you get:
- A free Spreadsheet-app for tracking side hustle finances (jobs, job status, and all the money moving around)
- A free 5-minute mini course that shows you how to get the most out of your Spreadsheet-app
I need your email address to send the links, share future updated versions, and provide other tips and resources.
Thanks for reading! I hope these resources help you learn how to run your side hustle finances. Remember, it’s best to get organized sooner than later. The more money moving around, the more clients you get, the more complex your business becomes. Things will just get harder.
Check out this other free resource for side hustlers like us: