The Leap: Side hustle to Full time
You started your business with a great idea and a lot of passion. Maybe you've been doing it on the side, juggling clients and projects while working a full-time job. But now, that side hustle is growing, and you can't help but dream: What if I could do this full-time?
Making the leap from a side hustle to a full-time business is an exciting and transformative step. But it’s also a big one, especially financially. The rules change when your passion becomes your primary source of income. In this guide, we'll walk you through the key financial milestones you need to consider before you take the leap. We'll show you how to set up your business for full-time success and provide a clear roadmap to a sustainable future.
The Three Financial Milestones You've Already Hit ✓
You might not realize it, but by running your side hustle, you’ve already crossed a few key financial milestones that will make your transition to a full-time business much smoother.
You've Proven Your Idea: You've generated revenue and likely have paying clients. This is the single most important proof of concept for your business. You know your services are valuable because customers are willing to pay for them.
You’ve Learned to Manage Your Time and Money: Juggling a side business and a day job forces you to be disciplined. You've already learned how to track time and money, even if it was in a notebook or a basic spreadsheet.
You've Gotten a Taste of Tax Season: You've faced the challenge of paying estimated quarterly taxes and keeping track of business-related expenses. While it may have been stressful, you've learned that taxes are a year-round responsibility, not just a once-a-year event.
The Next Financial Milestones for Your Full-Time Business 🎬
While your side hustle laid the groundwork, running a full-time business requires a different level of financial discipline. These next milestones are crucial for ensuring your business is not just profitable, but sustainable.
Setting a Realistic Salary: When your business is your only source of income, you need to pay yourself a consistent, realistic salary. This requires separating your owner's pay from the business's profits and budgeting based on that regular income.
Creating a Real Budget and Forecast: A budget for your full-time business is a non-negotiable. It allows you to plan for upcoming expenses, set aside money for taxes, and see exactly how much cash you need to generate each month to cover all costs, including your salary.
Building a Cash Reserve: As a side hustler, a few slow months might have been okay. As a full-time business, a financial downturn can be a real threat. A cash reserve of three to six months of operating expenses is your financial safety net, giving you the security to weather a storm.
Separating Business and Personal Finances (for Real): You may have been using separate accounts, but now you need to be meticulous. All business expenses, revenue, and payroll must flow through your business accounts only. This makes bookkeeping and tax preparation infinitely easier and more accurate.
Why a Professional Bookkeeper is Your Co-Pilot ⚖️🤝🏻
You started your business to pursue your passion, not to spend hours on spreadsheets and financial reports. When you go full-time, your focus needs to be on your clients and growing your business—not on the books. This is where a professional bookkeeper becomes your most valuable asset.
You Gain Time: Every hour you spend trying to reconcile your accounts is an hour you could have spent serving a client, marketing your business, or simply enjoying your freedom. A bookkeeper gives you that time back.
You Get a Clear Picture: We don't just track transactions; we provide the insight you need to make smart decisions. We can help you create that realistic budget, forecast your cash flow, and ensure your finances are always ready for that next big leap.
You Avoid Costly Mistakes: As a full-time business, a financial mistake can be far more costly. A professional bookkeeper ensures your records are accurate, your taxes are on track, and your business is always in compliance.
In short, a bookkeeper doesn’t just clean up your records; we are your co-pilot, helping you navigate the financial complexities of your journey from side hustle to full-time entrepreneur.
Making the leap from a side hustle to a full-time business is a monumental step. It's a journey filled with excitement, freedom, and big dreams. But to make that dream a sustainable reality, you need to be financially prepared. By separating your finances, creating a solid budget, and building a cash reserve, you’re not just preparing for the future—you’re building a foundation that will give you the confidence to thrive. Ready to stop juggling and start focusing on your passion full-time?
At Jetty Waves Bookkeeping, we're here to be your co-pilot. We'll handle the financial details, so you can focus on what truly matters: serving your clients and growing the business you've worked so hard to build.
༄ Contact us today to get started on your full-time journey.
Question of the day August 29, 2025
How do you decide when it's time to invest in new equipment or technology?
Leave a comment below and let us know.
Your Roadmap 🛣️ to a Bank Loan: A Financial Checklist✔️
You've put in the hard work to build a successful business, and now you're ready for the next step—expansion. But whether you're looking to purchase new equipment, hire more staff, or open a second location, you'll likely need a bank loan to make it happen. Applying for a bank loan can feel intimidating. The stack of required documents and the financial jargon can make the process seem overwhelming. But it doesn't have to be. The truth is, a bank loan application is simply a financial conversation. By understanding what lenders are looking for and preparing the right documents in advance, you can approach the process with confidence.
In this guide, we'll give you a clear roadmap to a successful bank loan application.
Understanding the Lender's Mindset
Before we dive into the checklist, it helps to understand what a bank lender is really looking for. When you apply for a loan, the bank is essentially assessing two things:
Your Ability to Repay: Do you have a history of financial stability and consistent revenue? The bank wants to see that your business generates enough income to comfortably cover the new loan payments.
Your Business's Financial Health: Is your business fundamentally sound? The bank will look at your assets, liabilities, and overall profitability to determine if your business is a good long-term investment.
To answer these questions, lenders rely heavily on your financial documents. They tell the story of your business's past performance and its potential for the future.
The Financial Checklist:
A bank lender will use a few key financial documents to assess your business's health. The cleaner and more accurate these are, the better your chances of approval.
Profit & Loss (P&L) Statement:
What lenders look for: Lenders use your P&L to determine if your business is consistently profitable and generates enough income to cover loan payments. A strong history of profitability is a major plus.
Balance Sheet:
What lenders look for: The balance sheet tells lenders about your business's stability. They'll look at your assets to see what collateral you have and your liabilities to see how much debt you're already carrying.
Cash Flow Statement:
What lenders look for: Lenders need to know you can pay your bills. The cash flow statement is a critical indicator of your business's ability to generate enough cash from its daily operations to handle the new debt.
Business Tax Returns:
What lenders look for: Lenders often use your tax returns as a final verification of the information in your P&L and Balance Sheet. They see them as the most objective summary of your financial performance.
Why a Clean Ledger is Your Secret Weapon
You’ve seen the checklist. It may seem like a lot to prepare, especially if your financial records are disorganized. This is where a clean, well-maintained ledger becomes your most powerful asset.
It's All at Your Fingertips: When your books are professionally managed, all the documents a lender needs are accurate and ready to go. You won't have to scramble to compile a year's worth of data.
Telling a Clear Story: Lenders want to see a clear, consistent, and positive financial history. A professional bookkeeper ensures your books tell that story accurately, with no missing pieces or confusing entries.
Confidence in Your Numbers: By working with a bookkeeper, you can be confident that your P&L and Balance Sheet are error-free and reflect the true health of your business. This confidence translates directly to your conversation with the lender.
A clean, accurate ledger is your greatest asset. It doesn't just make the loan application easier; it makes your business look more professional, stable, and creditworthy. Preparing for a bank loan doesn’t have to be an intimidating process. By understanding what lenders are looking for and getting your financial documents in order, you can confidently take the next step toward growing your business. It tells a clear story of your business’s health, demonstrates your professionalism, and gives you the confidence you need to secure the funding you deserve.
Question of the day August 28, 2025
What's one financial goal you have for your business this year?
Leave a comment below and let us know.
The 💓Lifeblood of your business
Profit vs. Cash Flow: The Key Difference
Imagine this: your business is thriving. Your Profit & Loss (P&L) statement shows a healthy profit for the quarter, and you're celebrating your success. Then, a few days later, you get a surprise—your bank account is nearly empty, and you're struggling to pay your upcoming bills. How can a profitable business be short on cash? This common and confusing scenario is why business owners need to understand the critical difference between profit and cash flow. While profit tells you if your business is financially healthy on paper, cash flow tells you if your business has the money it needs to operate day to day. It’s the true "lifeblood" of your business.
In this guide, we'll demystify cash flow, explain why it's more important than profit, and give you the tools you need to understand your business's true financial pulse.
Profit vs. Cash Flow: The Key Difference
🥛 Imagine a single glass of water.
Profit is how full the glass is. Profit is what's left after you subtract all your business expenses from your total revenue over a specific period (e.g., a quarter or a year). A profitable business means you're making more money than you're spending.
Cash flow is the water actually flowing in and out of the glass. It's the movement of cash into and out of your bank account. A business can be very profitable but have poor cash flow if, for example, a major client takes 90 days to pay an invoice. That revenue is counted as profit, but the cash isn't in your bank account yet to pay your bills.
In short: Profit is a feeling; cash flow is a fact. You can have a profitable business on paper, but if you don't have enough cash, you can't pay your employees, your rent, or your suppliers. This is why a profitable business can fail.
The "Why": The Lifeblood of Your Business
While profit is a great long-term indicator, cash flow is the true lifeblood of your business. It's the fuel that keeps your operations running smoothly. Without sufficient cash flow, you can't:
Pay Your Bills and Suppliers: You need cash on hand to cover your immediate expenses, such as rent, utilities, inventory, and materials.
Meet Payroll: Your employees rely on a steady paycheck. If you have to wait for a client to pay you, you might not be able to pay them on time, which can create serious trust and morale issues.
Invest in Growth: Whether it's buying new equipment, hiring more staff, or launching a new marketing campaign, every business investment requires cash. Poor cash flow can stifle your ability to grow and take advantage of new opportunities.
Handle Unexpected Expenses: All businesses face surprises—a broken piece of equipment, a sudden increase in material costs, or an unexpected legal fee. A healthy cash flow provides a buffer to handle these emergencies without going into debt.
In essence, cash flow is a measure of your business's short-term health and stability. It's the reason why a business that looks good on paper can suddenly find itself in a very serious situation. While there's no single perfect number for every business, the widely accepted rule of thumb among financial experts is to have enough cash on hand to cover three to six months of operating expenses.
Here’s why this is a good target and what to consider:
Three Months: This is generally considered the bare minimum for most businesses. It provides a safety net to cover essential costs like payroll, rent, and utilities in case of a sudden downturn in revenue, a slow-paying client, or an unexpected expense.
Six Months or More: This is an even more secure position. It provides a more substantial buffer, allowing you to weather a longer business slump, invest in a growth opportunity without needing a loan, or handle a major emergency.
Factors that influence your ideal timeframe:
Industry: Businesses in more volatile or seasonal industries (like construction or retail) might aim for a higher cash reserve (e.g., 6-12 months) to prepare for off-seasons or market shifts.
Business Maturity: A new startup with unpredictable revenue may need a larger cash buffer than an established, stable business.
Growth Plans: If you plan to expand, hire more staff, or make a large purchase, you'll need a larger cash reserve to fund that growth.
Ultimately, your ideal timeframe is a personal decision based on your risk tolerance and business goals. A bookkeeper can help you calculate your average monthly expenses and set a specific, achievable goal for your cash reserves.
Reading 👀 a Cash 💵 Flow Statement
While the Profit & Loss statement tells you if you’re making a profit, the Statement of Cash Flows shows you exactly where your money is coming from and where it's going. It's broken down into three main sections:
Operating Activities: This is the most important section for most small businesses. It shows the cash generated or spent from your core business operations. This includes cash from sales, and cash paid for things like inventory, payroll, and daily expenses. This number tells you if your main business is generating enough cash to stay afloat.
Investing Activities: This section shows the cash spent on or generated from investments. For a small business, this would include things like purchasing new equipment, vehicles, or property. It also includes cash received from selling an asset.
Financing Activities: This section shows the cash flow between a business and its owners or creditors. This includes cash from loans, new investments from owners, and cash paid back to lenders or owners.
By looking at these three sections, you can quickly see if you have enough cash coming in from your daily operations and where any cash shortages or surpluses are originating.
While profit is a great indicator of your business's long-term health, cash flow is the reality check. It tells you if you have the funds to pay your bills and grow your business today. Understanding your cash flow is the first step toward gaining true financial control and avoiding the stress of an empty bank account. Don't wait for a crisis to understand your cash flow. At Jetty Wave’s Bookkeeping, we can help you not only manage your day-to-day transactions but also analyze your cash flow to ensure your business is stable and ready for growth. We'll help you stop just surviving and start thriving.
✆ Contact us today to learn how our services can help you get a clear picture of your cash flow and build a more secure financial future.