6 Steps to Avoiding Legal Disaster with Your Side Hustle

two women looking over paperwork

Side hustles are having a moment. A recent Bankrate.com study found 37% of Americans of a side hustle, including more than half of Millennials. Upwork found that in the last five years, the freelance workforce grew 5% faster than the non-freelance workforce in the US. Why the precipitous rise? For one, wages are stagnant, meaning one job is often not enough income. Technology has also made it easier to find and create alternate sources for money.

A side hustle can help with financial security. It can provide career growth. It can even turn into an extremely successful business. Whether you’re joining the gig economy, working on a passion project, or starting a side business you want your side hustle to succeed. But with great hustle, comes great responsibility. There are legal considerations you should take into account. From employment contracts to taxes there are a number of problems that can arise. Think you have nothing to worry about? Recently, 6 people were indicted for stealing trade secrets from their previous employer.

Don’t run afoul of your day-job employer, local laws, or the IRS. Before you get started on that billion dollar idea (Uber for Dogs is already taken), check out our guide to making sure your side hustle doesn’t put you on the wrong side of the law.

side hustle

Key Terms:

  • Non-compete agreement – an agreement not to enter into competition with your employer
  • Non-solicitation agreement – an agreement not to solicit your employer’s clients or employees
  • Non-disclosure agreement – an agreement to keep your employer’s private information confidential
  • Invention assignments agreement (AKA intellectual property agreement) – an agreement that anything created, or improved upon, on behalf of the company will be exclusively owned by the company
  • LLC – Stands for limited liability company, a business structure where owners are not personally liable for the company’s debts or liabilities
  • Intellectual Property – a product of creativity to which one has rights and for which one may apply for a trademark, patent, copyright, or other appropriate protection to keep others from using it without permission.
  • Copyright – a form of legal protection to authors of “original works of authorship,” including musical, literary, dramatic, artistic and other creative works.
  • Patent – An exclusive privilege granted to an inventor to make, use or sale an invention for a set number of years.
  • Trademark – A trademark is any word, name, symbol, or design, or any combination those, used to identify and distinguish the goods of one manufacturer from another.

Side hustles can be a great way to make some extra cash. Whether you’re joining the gig economy, working on a passion project, or starting a side business, you want your side hustle to succeed. That means making sure you protect yourself legally. If you don’t, that extra income can turn into financial disaster. Fees and debts that come with legal troubles can hurt your credit, making it harder to get back on your feet. Credit repair can speed the process along so you can return to the hustle.


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