6 Business Costs Killing Your Side Hustle Profits

Running a side hustle sounds simple. Make something. Sell it. Keep the cash. But if you’ve ever checked your balance and thought, “Where did my profit go?”, then don’t worry. Most of us have been there at some time or another.

When I started my first side hustle, I made what I thought was decent money. It was only later that it dawned on me how many small business costs were eating away at my income. It wasn’t the lack of sales that was the issue. It was hidden business expenses I wasn’t tracking properly.

I don’t want anyone else to experience this. So, if you find yourself in this boat of wondering why your side hustle isn’t making money, I want to help you. Here are six of the most common costs that drain your profits. And how you can go about fixing them.

Why Isn’t My Side Hustle Making Any Money?

There is a bit of a myth around that most side hustles fail because people don’t work hard enough or devote enough time and energy to them. But that is not always the case. Instead, they fail because people often don’t measure where their money goes.

Side hustle expenses pile up fast, especially when you first start it. I remember being shocked at how quickly the cost of software subscriptions, transaction fees, marketing costs, and even taxes accumulated. That is why I put together a system to track my business expenses. Without one, it’s easy to underestimate how much you spend.

I learned early on that financial planning for side hustles can be the difference between feeling broke and actually building profit margins that make the effort worth it. Therefore, if your bank account doesn’t reflect what you’re putting in, the problem might not be your side hustle itself. Rather, it’s probably the way you’re handling the costs.

6 Hidden Business Costs That Are Draining Your Profits

So, what are some of these hidden costs that might be killing your side hustle? Here are six to be aware of.

1. Transaction Fees and Payment Charges

If you are selling products and are accepting payments online or through an EFTPOS system, you’re already paying fees. They might look small on the face of it. 1.5% here, a couple of dollars there. But, trust me. They add up fast.

When I started taking card payments, I noticed transaction costs were quietly chipping away at my sales. In fact, every dollar that passed through a payment processor came with a fee attached.

Thankfully, I discovered the fee-free EFTPOS terminal with Smartpay Zero Cost EFTPOS, which was a game-changer for me. I recommend all small business owners and side hustlers take a look at it.

After all, the less you lose to payment charges, the more of your earnings stay in your pocket.

2. Software and Subscription Services

Many people use online tools to manage their side hustles. These include apps for design, marketing, bookkeeping, or scheduling. While they can be a great help, if you are not careful, you could spend hundreds of dollars on them.

I know people who run Microsoft 365, Canva Pro, Grammarly, and Zoom Pro subscriptions all at once. It might work for them. But at what cost?

I recommend doing an audit of your subscriptions every few months. If you haven’t used something for a while, cancel it. At the same time, look for free versions or cheaper alternatives. The more you can reduce your unnecessary software subscriptions, the bigger the difference it can make to your profit margins.

3. Taxes and Superannuation

Here’s one of the biggest mistakes I made early on. Not setting aside enough money for taxes.

When you’re self-employed, no one withholds taxes for you. That means when tax season arrives, you could owe the government thousands of dollars. Add in your obligatory superannuation contributions, and it can feel like your profit has disappeared overnight.

The way to fix this is actually quite simple. All you need to do is set up a separate account just for taxes and pay yourself like a business. You can even use a free budgeting app or spreadsheet to estimate what you owe each quarter.

If you are not sure what taxes you’ll have to pay for your side hustle, contact the ATO for clarification.

4. Marketing and Advertising Spend

Marketing is important for any side hustle. After all, your customers need to find out what you offer them. But if you are not careful, it can quickly spiral out of control. Even the simple act of “boosting” a post on social media can turn into hundreds of dollars with no clear return if you don’t keep a handle on it.

It is not uncommon for people to spend one or two months’ worth of profit on Facebook ads that barely generate any clicks. That is why I always recommend people focus their efforts on creating free, organic growth. This can be through social media communities, word of mouth, or SEO-friendly content. If you do want to pay for advertising, track your ROI closely.

The goal should always be to grow your audience without letting costs creep up on you. Here is how to choose the right marketing approach for your industry.

5. Equipment and Supplies

You probably needed to invest in tools or equipment to get your side hustle started. That’s fine as it’s part of the process. But over time, these costs can balloon.

Rather than buying everything you need brand new, a handy tip is to rent equipment. This could be everything from your laptop and office furniture to packaging machines and a vehicle.

You might think renting is “dead money”. But it’s a lot cheaper than purchasing something outright that you may no longer need in a few months if your hustle was to fail. You could always purchase them later, once your venture is more established.

6. Time and Opportunity Cost

This one’s often overlooked by many entrepreneurs. Every hour you spend working on your side hustle has a value, even if you don’t pay yourself an hourly rate.

For instance, if you spend hours on admin tasks, chasing payments, or managing emails, that’s time you could spend on higher-value work. I suggest automating wherever you can through the use of templates, batching, or task schedulers.

Your time is always one of the biggest business costs you’ll incur, despite not showing up on a spreadsheet.

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More Recommended Ebike/Scooters

Check out these other ebikes and scooters I've reviewed:

Urban Arrow Ebike – Last year, I made one of the largest purchases I’ve ever made – I bought a $9,000 electric cargo bike from Urban Arrow. In my Urban Arrow review, I will discuss what it is and why I decided to buy this bike, as well as discuss how impactful a bike like this can be on your journey to financial independence.
Troxus Explorer Step-Thru Ebike – The Troxus Explorer Step-Thru is a fat-tire ebike that I’ve had the pleasure of riding for a while now. It has amazing power, great looks, and awesome range. If you’re looking for a great fat-tire ebike that offers a lot for the price, the Troxus Explorer Step-Thru is definitely one for you to consider. Check out my Troxus Explorer Step-Thru Review.
Hovsco HovBeta Ebike – The HovBeta is a folding ebike with great specs and a lot of interesting features, and importantly, it’s sold at a good price point. I’ve had a blast commuting with it and using it to do deliveries with DoorDash, Uber Eats, and Grubhub. Check out my Hovsco HovBeta Ebike Review.
Vanpowers Manidae Ebike – The Vanpowers Manidae is a fat tire ebike that I’ve been riding as my primary winter commuting bike and have also been using it to do food delivery with apps like DoorDash, Uber Eats, and Grubhub. After clocking in a decent number of miles with this ebike, I wanted to write a post sharing what my experience with the Vanpowers Manidae ebike has been like. Check out my Vanpowers Manidae Review.
Sohamo S3 Step-Thru Folding EBike Review – A Great Value Folding Ebike – The Sohamo S3 Step-Thru Folding Ebike is an entry-level folding ebike that offers a lot of value for the price point. I’ve been riding the Sohamo S3 for a while now, putting the bike through its paces, and I have to say, this bike has exceeded all of my expectations. Check out my Sohamo Review.
KBO Flip Ebike – The KBO Flip is an excellent bike. I’ve had a great time riding it and think it’s a versatile bike that can be used for a lot of purposes and can fit a variety of lifestyles. It’s worked out great for me as a general commuter bike and as a food delivery bike. Check out my KBO Flip Review.
Hiboy P7 Commuter Ebike – The Hiboy P7 is an excellent electric commuter bike that’s offered at an affordable price point. The range and speed of this bike are both very good, so you won’t have any trouble getting anywhere you need to go with it. As a food delivery vehicle, this is also good – with how much range it offers, you’ll be able to work all day on a single charge. Check out my Hiboy P7 Commuter Electric Bike Review.
Himiway Escape Ebike – The Himiway Escape is an interesting bike for anyone looking for a moped-style ebike. If you’re a gig economy worker, the Himiway Escape is particularly interesting and it’s possible to think of it as an investment, especially if you can opt to do deliveries with the Himiway versus using a car. It’s not cheap, but you can definitely make your money back when you compare the mileage you’ll put on your car versus using an ebike. Check out my Himiway Escape Bike Review.
Espin Sport Ebike – The Espin Sport is a good ebike for someone who is looking for an ebike that feels and rides more like a regular bike. There are many ebikes that are really only bikes in name. In reality, they’re basically electric mopeds. The Espin Sport, by contrast, is a bike you could probably ride without the battery and you’d feel like you’re just riding a regular bike. Check out my Espin Sport Review.
Varla Eagle One Scooter – The Varla Eagle One is an excellent scooter that can make sense for a lot of people. It can work as a primary mode of transportation. You can use it to work on gig economy apps like DoorDash, Uber Eats, and Grubhub. And it can also be a recreational vehicle if you’d prefer to use it for that. Check out my Varla Eagle One Review.
Varla Falcon Scooter – The Varla Falcon is an excellent scooter that offers a good amount of power at a lower price point compared to more powerful scooters. It’s not exactly an entry-level scooter, nor is it a high-powered scooter. I think it fits somewhere in-between those two categories – an intermediate scooter if I had to give it a category. Check out my Varla Falcon Review.
Hiboy S2 Scooter – The Hiboy S2 is an excellent entry-level commuter scooter that's perfect for someone looking to save some money in transportation costs and improve their commute. Check out my Hiboy S2 Review.
Hiboy S2R Scooter – The Hiboy S2R is one of the more interesting electric scooters I’ve been able to test out. It’s not a high-powered scooter, but for an everyday transport option, it’s very useful, especially given some of the unique features that it has. Indeed, for the price, the Hiboy S2R might be the best value scooter I’ve used. Check out my Hiboy S2R Review.
Fucare H3 Scooter – The Fucare H3 is a fun scooter and I’ve enjoyed testing it out. For a daily commuter or quick trips or errands, the Fucare H3 is probably the scooter I’ll use. It’s portable and easy to maneuver, so it’s just easier to take on the road when I need it. Check out my Fucare H3 Scooter Review.

More Recommended Investing App Bonuses

For additional investing app bonuses, be sure to check out the ones below:

M1 Finance ($100) – This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account. Check out my M1 Finance Referral Bonus – Step-By-Step Guide.
SoFi Invest ($25) – SoFi Invest is an easy brokerage account bonus that you can earn with just a few minutes of work. Use my SoFi Invest referral link, fund your SoFi Invest brokerage account with just $10 and you’ll get $25 of free stock. I also have a step-by-step guide for the SoFi Invest referral bonus.
Robinhood (1 free stock) – Robinhood gives you a free stock valued between $2.50-$225 if you open an account using my referral link.
Public (1 free stock) - Public gives you a free stock valued between $3-$70 if you open an account using my referral link.

More Recommended Bank Account Bonuses

If you’re looking for more easy bank bonuses, check out the below options. These bonuses are all easy to earn and have no fees or minimum balance requirements to worry about.

Ally Bank ($100) – Of all the banks out there, Ally is, without a doubt, my favorite. At the moment, Ally is offering $100 to customers who open an eligible Ally account and meet the requirements. Here are the step-by-step directions to earn your Ally Bank referral bonus.
Chime ($100) - Chime is a free bank account that offers a referral bonus if you use a referral link and complete a direct deposit of $200 or more. In practice, any ACH transfer into this account triggers the bonus. This bonus is easy to earn and posts instantly, so you’ll know if you met the requirements as soon as you move money into the account. I wrote a step-by-step guide on how to earn your Chime referral bonus that I recommend you check out.
US Bank Business ($900) – This is a fairly easy bank bonus to earn, since there are no direct deposit requirements. In addition, you can open the Silver Business Checking account, which comes with no monthly fees. Check out how to earn this big bonus here.
GO2Bank ($50) - GO2Bank is an easy bank bonus that I recommend people take advantage of if they have an easy way of meeting the direct deposit requirement. I like that it’s easy to open the account and that the bonus pays out quickly. Check out my step-by-step guide on how to earn your GO2Bank $50 referral bonus.
Current ($50) – Current is a free fintech bank that’s offering new users a $50 referral bonus after signing up for an account using a referral link. Current is an easy bonus to earn and also gives you access to three savings accounts that pay you 4% interest on up to $2,000. That means you can put away up to $6,000 earning 4% interest. That’s very good and makes Current an account I recommend to everyone. Check out my step-by-step guide on how to earn your Current Bank bonus.
Novo Bank ($40) - Novo bank is a free business checking account that’s currently offering a $40 bonus if you open a Novo business checking account using a referral link. In addition to being a good bank bonus, Novo is also a good business checking account. It has no monthly fees or minimum balance requirements and operates a good app and website. Indeed, it’s the business checking account I currently use for this blog. Check out my post on how to easily open a Novo account.
Varo ($25) – Varo is a free fintech banking app similar to Chime or Current. It’s currently offering a $25 bonus to new users that open a new Varo account with a referral link. The bonus for this bank is very easy to meet, all you need to do is spend $20 within 30 days of opening your Varo account. Check out my step-by-step guide to learn how to earn this bonus.

Kevin is an attorney and the blogger behind Financial Panther, a blog about personal finance, travel hacking, and side hustling using the gig economy. He paid off $87,000 worth of student loans in just 2.5 years by choosing not to live like a big shot lawyer.

Kevin is passionate about earning money using the gig economy and you can see all the ways he makes extra income every month in his side hustle reports.

Kevin is also big on using the latest fintech apps to improve his finances. Some of Kevin's favorite fintech apps include:

SoFi Money. A really good checking account with absolutely no fees. You'll get a $25 referral bonus if you open a SoFi Money account with a referral link, and an additional $300 if you complete a direct deposit.
5% Savings Accounts. I'm currently getting 5.24% interest on my savings through a company called Raisin. Opening a Raisin account takes minutes to complete, it's free, and all of your funds are FDIC-insured. I explain how it works, why I'm now using it to store my emergency fund and any other cash savings I have, and why I recommend everyone check it out in this review.
US Bank Business. US Bank is currently offering new business customers a $900 signup bonus after opening a new account and meeting certain requirements.
M1 Finance. This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account.
Empower. One of best free apps you can use to monitor your portfolio and track your net worth. This is one of the apps I use to track my financial accounts.

Feel free to send Kevin a message here.