From Dream to Done: Side Hustle to Full-Time and What it Takes to Dive In

Small Business Week is all about celebrating the big wins that start from humble beginnings. Often, those humble beginnings are a side hustle or part-time gig that gains enough momentum to become your full-time job.

If you think you’re on the edge of a breakthrough, and you’re building a game plan to take the leap, here’s a guide to make sure you launch your dream right.

Tune in all week as we celebrate small businesses in honor of #SmallBusinessWeek2025.

Form your business

It’s time to get official. Taking the leap from employee to full-time boss works out best when you’ve built a rock-solid foundation. Make sure you’ve done the following before you turn in that resignation letter.

Choose a legal business structure

If you haven’t already, it’s time to decide on what type of entity or business structure you’ll form to operate your business. LLCs and corporations are the most popular options, and both offer different levels of liability protection and tax advantages.

LLCs are popular for those seeking liability protection and a flexible management structure, whereas corporations work out best for businesses that plan to take on outside investment, since owners can sell shares of the corporation to raise capital. Corporations also enjoy tax advantages that encourage growth, while LLCs have a simpler overall tax structure.

Choosing a legal structure ultimately comes down to understanding your business goals, your plan for raising startup cash if necessary, and the number of active partners you plan to take on.

Apply for an EIN and open a business bank account

In order to separate your business cash from personal funds and avoid liability issues, you’ll need to open a business bank account. To do that, you’ll need to apply for an Employer Identification Number (EIN).

You can think of an EIN like a Social Security number for your business, and you’ll use it for many different reasons, like applying for business loans or filing taxes. While you can open a business bank account with your Social Security number, having an EIN for your business keeps your private information safe when giving out your business’s bank information for paying or receiving payment.

Register a branded domain name

To strengthen your brand and grow your business, it is crucial these days to establish an online presence. That starts with a memorable and relevant business domain name that matches or complements your business name.

From there, you can use your domain name to create a branded email for professional communications, then build a business website to drive organic traffic to your business passively.

Your website can also act as another channel to schedule consultations or make sales through. Installing an e-commerce plugin on a WordPress-built website is relatively easy and can help you generate sales while you sleep.

Northwest has been assisting entrepreneurs at every stage of their journey for years. Let us help you form your business, and we’ll include one year of our premier registered agent service for only $39, plus state fees.

Track profit, not revenue

Before you eliminate the cushion that full-time, traditional income provides, you need to make sure the numbers make sense. Start by tracking every penny coming in and out of your business. This includes:

• Gross revenue: The actual total amount of money brought in from the goods sold or services people have hired you for. If you’re paid to cater an event, for example, your gross revenue would be the amount you’re paid prior to accounting for any supplies or ingredients.
• Net profit: The profit portion of gross revenue from sales AFTER accounting for the cost to purchase or produce goods, like if you have a seller shop on Etsy and pay the 6.5% transaction fee or any shipping expenses for items you send to customers.
• Marketing expenses: Money you pay either out of pocket or from gross revenue to advertise your business.
• Workspace rental or lease payments: How much you pay in workshop rent, office-space lease payments, and even loan payments on auxiliary workspaces.

Once all your income and expenses have been accounted for, and you’ve determined how much you’ll be paying yourself from your business, determine how that income compares to your current job. If your side gig consistently pays you at a rate that matches or beats your traditional job for at least 6-12 months, that might be a sign that your side hustle has the staying power necessary to support you long term.

Pro tip: Account for things like health care, paid vacation, and 401K payments in your calculations to see if your side hustle has the potential not only to pay you but to support you and your retirement goals.

Build a financial safety net

Even if you take every possible step to minimize risk for your business, unpredictable circumstances often arise. Having a financial safety net in place can often be the difference between overcoming a challenge and being overcome by one.

American Express recommends a business emergency fund that covers three to six months of operating expenses. Since you’ll be leaving the world of traditional employment behind, it’s also a good idea to have a personal emergency fund to cover your own living expenses as well. Fidelity recommends a three-month personal emergency fund, or six if you have dependents who rely on you.

Mind your production capacity gap

Meeting your bottom line is great, but it isn’t always reason enough to ditch the W2. Most of the time, the goal of leaving full-time employment is to invest more time in your side hustle or small business.

Consider your plans for scaling your business. Do you have the ability to double your business’s production capacity—the amount of products you can produce or sell, or the amount of services you can provide—tomorrow without your operations devolving into complete chaos?

If a reasonable equipment investment, inventory purchase, or part-time hire would make answering yes to the question above possible, you might be primed and prepared for scaling.

Taking the leap into business

Ultimately, taking the leap into being your own boss full-time comes down to understanding your business well and doing everything possible to set yourself up for success.

This means building a strong financial and legal foundation, knowing the ins and outs of your revenue, and knowing your potential for scale. If you’ve got what you need to launch, the best time to move is yesterday. The second-best time is right now.