Multiple income streams: how to organise and manage finances as an entrepreneur
These days, if you're working just one job, you may be in the minority. A side hustle or extra weekend jobs can be great for earning extra income – but if you’re not careful it can quickly lead to financial disorganization and disarray.
Here's how to manage when your money is coming from several different sources.
Juggling multiple income streams? You’re not alone
The multi-income entrepreneur is no longer a novelty. In the current economic climate, people across the UK are turning away from traditional office jobs and exploring new work arrangements, either to supplement their existing income or replace a nine-to-five job altogether. We all know plenty of people with a side hustle, or sometimes two or three.
Earning money from different income streams is a great way to boost your bank balance, but it requires precise organisation. When you've got multiple businesses to look after, it's all too easy for your finances to slip into chaos, and that comes with dire consequences when it's time to file your taxes.
What counts as a “multiple income” business setup?
Running more than one business takes many forms. Indeed, few people have two similar, traditional businesses; instead, they're more likely to have businesses that vary in size and focus, with one taking up most of their time and the other being more of a side hustle.
Some examples of multiple income streams include:
Running a small online business alongside your day job. Perhaps you do freelance work while also maintaining an online shop.
"Gig economy" style jobs. Many people who depend on gig work have multiple streams of income, which balance each other out. That could include freelance contracts, consulting, and seasonal jobs. This type of work is particularly common for creatives like actors or artists, who may struggle to make a comfortable living from just one job.
A hobby business alongside your day job. The classic side hustle. Your hobby business may be using skills learned from your main job. For example, many medical professionals perform part-time beauty work on the side. In some cases, you might be hoping to grow your side hustle so that it eventually becomes your main source of income.
A "moonlighting" setup. This is an extra job organised around your main working hours, at weekends or in the evenings. Freelance taxi drivers are often moonlighters.
People with multiple income streams are often said to have a "portfolio career". It's an alternative to a traditional job, which can offer greater autonomy and the potential to maximise your earnings. Still, no matter what your particular portfolio career looks like, it requires precise money management.
The hidden risks of a messy setup
"Organised chaos" is one of those terms that many people use to describe their setup, especially when they've got multiple income streams on the go. Let's be honest, though. Often, they may be chaotic, but they're certainly not organised. This can lead to serious problems.
It's essential to learn how to manage money with multiple income sources. If you don't, here are a few of the pitfalls that could be waiting for you:
Missing tax deadlines or misreporting income
There are small business taxes, which must be paid on all but the tiniest of microbusinesses, and if you're not well organised, you might forget to pay them. In fact, you might not even be aware of them at all.
There are immediate penalties for missing tax deadlines, starting at £100 if you're even a single day late. Misreporting your income or failing to declare can have consequences that go far beyond a simple fine: offenders can be prosecuted.
It's impossible to overstate the importance of getting your taxes in order when you have multiple income streams. Many people bury their heads in the sand, thinking their side hustle will fly under the radar. Still, in recent years, there have been an increasing number of reports of HMRC cracking down on very small businesses, such as people who sell clothes on Vinted or eBay. This is something every business owner should take very, very seriously.
Undervaluing your profitability
Many side hustlers dream of one day quitting their day job and turning their passion into a full-time business. Without careful financial management, that's doomed to remain nothing more than a dream.
If you can successfully organise your business finances, you'll have a clearer picture of how to make bigger profits. You may have poor cash flow management, so you're not entirely sure how much money is coming in or going out, and how each income stream is affecting that.
People with a small side business often feel frustrated because it seems like they're not making any money. In fact, your business may be more profitable than you realise; you just can't see it. This is a particular problem if you don't maintain a separate business account, so your income and outgoings are jumbled up with your personal finances.
Difficulty planning ahead
What does the future hold for your small business? That question is impossible to answer if you can't manage multiple income streams. Don't be surprised if you keep plodding along the same old path, maybe even for years, without a clear portfolio career or effective money management. There's simply no way you can prepare an effective business plan.
When you have structured, organised finances, you can earmark some money for a particular purpose, like investing in new inventory or doing more marketing. This allows your business to grow: as the saying goes, you have to spend money to earn money. If your business finances aren't separated from your other money, how can you even begin to plan for growth?
How to get your finances organised
The first thing you need to do is a key part of any entrepreneur's financial planning: open a business account. This immediately lets you separate your personal money from your business money, which is always the first step in getting organised. It might be worth getting a business account with its own debit card. This way, you can get into the habit of keeping your personal and business spending completely separate.
Within your business account, you can divide your money by using categories or tags to reflect different streams. At once, things will start to become clearer. That clarity will grow even more when you set up a regular bookkeeping time. Set aside a couple of hours once a week to work on your accounts. To ensure you stick to this schedule, add it to your calendar app, and don't let yourself put it off until tomorrow. You don’t need to be a financial expert. Just start with a few simple habits that make your income work for you.
A good business account comes with in-built tools that can track your income and expenses, which will make your regular bookkeeping sessions easier. Let technology work for you as you take control of your finances.
Spreadsheets vs software: What’s right for you?
Like many small business owners, you may have started out using Microsoft Excel or Google Docs. These familiar tools are fine for microbusinesses, but they really aren't great at tracking different revenue sources, and they won't help you get organised when the taxman comes knocking. Spreadsheets don't work for a growing business, either. Even if your business is still growing, your financial system should support where you want to go, not just where you are now.
Look for a business account designed for small businesses, with integrated tools to make organising side hustle finances a breeze. A clear system gives you the freedom to make decisions, stay compliant, and plan for the future.
The SumUp Business Account comes with an Expenses feature, which allows you to track your outgoings on the go, either automatically, if you use your Business Account Mastercard, or by simply scanning receipts. Expenses automatically categorises your receipts into different groups, which is extremely helpful for people with multiple income streams.
Another crucial feature of the Business Account is automatically generated and tracked Invoices, which will make a huge difference if you're doing work as a freelancer or consultant. The Bookings feature is key when it comes to organising your calendar, helping you to save time on responding to inquiries while also making sure you don't double-book: another common problem for side hustlers and moonlighters.
When to seek professional support
Many aspects of small businesses can be organised on a DIY basis. However, there are times when you might need to turn to a professional. Here are some telltale signs it's time to call an accountant:
You find it impossible to keep your books up to date.
You're spending a disproportionate amount of time on bookkeeping; perhaps it's keeping you from working on other income streams.
You panic at the thought of tax season.
Your taxes have become too complicated from your multiple income streams, and you have no idea how or what to declare.
Before hiring an accountant, consider how much it'll cost you, and how much your side business is actually making. In some extreme cases, it may make more sense to shut down your side hustle rather than spend more than you can afford on professional help.
