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Side gigs and side businesses have become increasingly popular ways to earn extra income. However, many entrepreneurs still need to know the complex web of local laws and regulations governing these operations. Tune in to this episode of the Ask Ralph Podcast with Ralph Estep Jr. as he shares how seemingly harmless side businesses can unwittingly break the law. Is Your Side Hustle Actually Illegal? With Ralph Estep, Jr.
In Episode 185 of the Ask Ralph Podcast, Ralph Estep Jr. discusses the legal complexities of operating side hustles, particularly ride-sharing services like Uber and Lyft. They highlight the importance of researching local regulations, licensing requirements, and taxes to avoid legal troubles. Ralph advises listeners to consult with local small business lawyers or accountants to ensure their side hustles are set up legally and sensibly.
00:00 Episode Overview
00:24 Recap And Show Announcements
01:50 Bible Verse
02:59 Is Your Side Hustle Illegal?
03:52 Illegal Side Hustle 1: Ride-Sharing Services
04:40 Illegal Side Hustle 2: Be Careful Listing Your Home For Short-Term Rental Sites
05:20 Other Quick Pitfalls To Avoid.
05:53 Researched The Local Regulations Carefully
06:24 What Steps Can You Take To Ensure Your Side Hustle Stays Aboveboard?
08:07 Episode Recap
08:59 Outro
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Ralph Estep Jr.:
Hey there hustlers, grinders, and side giggers! Do you ever worry that your side hustle could get you into legal trouble? Have you heard of people getting busted for operating an illegal business? Well, today on Ask Ralph, we're going to talk about how to make your side gig stay on the right side of the law. Nobody wants to get in trouble with their side business.
Ralph Estep Jr.:
Welcome to another episode of Ask Ralph, the show where we master our finances from a Christian perspective. I'm your host, Ralph, and you're listening to July 3rd, 2024 edition of our Wacky Wednesday show. We get a little lighthearted. We still want to deliver good content.
Ralph Estep Jr.:
Before we get into today's topic, I want to thank you all for tuning in. It's an honor and a privilege to be able to share my knowledge and experience with you each day. I truly consider it a great honor. Our community continues to grow, and I'm so grateful for your support. If you're new here, my goal is pretty simple. I want to provide you with daily content to help you gain financial freedom and growth in your Christian faith.
Ralph Estep Jr.:
All right. Well, let's talk about yesterday's show. We had a great discussion on no credit check and other loan options for folks who may not qualify for traditional lending. We covered tips from rebuilding your credit, ethical lending alternatives, and responsible borrowing practices. The feedback has been tremendous. So be sure you go back and listen, if you missed it.
Ralph Estep Jr.:
Now, for a preview of what's coming up tomorrow, we'll be tackling the tricky topic of handling taxes when you work in multiple states. It's a lot of T's in there. This is a frequent question I get from clients as well as our listeners. I'll share some key factors to consider, I'll talk about some common pitfalls and some true tax prep strategies to help you get through that. So whether you're a digital nomad, remote worker, a business owner where customers across state lines, you don't want to miss this info coming to you tomorrow.
Ralph Estep Jr.:
Let's start ourselves first by reflecting on today's Bible verse. This comes to us from my favorite book of the Bible, and that's Romans 13:1, and it says this, "Let everyone be subject to the governing authorities, for there is no authority except that which God has established. The authorities that exist have been established by God."
Ralph Estep Jr.:
That's a good one, isn't it? This verse reminds us that we should respect and abide by the laws and regulations put in place by governments and authorities. As Christians, we're called to be model citizens and live blamelessly, even when we disagree with certain rules or find them inconvenient, violating the law ultimately goes against God's design for an orderly society.
Ralph Estep Jr.:
This applies directly to operating our business and any side businesses. Well, we may be tempted to cut corners or fly under the radar, Romans 13:1 encourages us to follow proper channels and the permitting process. By doing that, we show respect for the authorities while ensuring we avoid punitive fines or legal troubles down the road. When we obey the law, we can have peace of mind knowing that our work aligns with God's will.
Ralph Estep Jr.:
All right. Well, let's get to today's main topic. Is your side hustle actually illegal? Maybe you drive for Uber on weekends for some extra cash. Perhaps you rent rooms in your home on Airbnb when you take vacations, or you buy and resell items from thrift stores on eBay. These are all common and on the surface legitimate side hustles.
Ralph Estep Jr.:
But did you know that depending on where you live and the fine print of local laws, some typical gig work could potentially be illegal. You might think your side income is innocuous, but you could be unknowingly breaking ordinances and statutes. I want to explore this issue so you can avoid these fines penalties, and you definitely want to avoid criminal charges. The last thing you want is for a well-intentioned pursuit of extra income to land us in legal trouble. So let's uncover some surprising ways the law may look unfavorably on certain side hustles.
Ralph Estep Jr.:
First up, let's consider ride sharing services like Uber and Lyft. These have become incredibly common ways for people to earn extra cash in their spare time. But did you know, some cities and counties actually ban private ride sharing entirely? Places like Austin, Texas and Vancouver, Canada once made it illegal to operate as an Uber driver.
Ralph Estep Jr.:
These regulations around these transportation network companies are complex and they're constantly evolving. Even when ride sharing is legal, there are needs for special licenses. Maybe you have to complete paperwork and there's fees required by individual cities, counties, and states. And here's the problem. Violators can face tickets, you can get your car impounded, and you might even be subject to arrest. So while driving for Uber seems harmless, make sure you understand all the local rules.
Ralph Estep Jr.:
Next, be careful listing your home on Airbnb or other short-term rental sites. Many municipalities restrict or prohibit the rental private residence for less than 30 days. They kind of look at it like a hotel. For example, in New Orleans, operating an Airbnb without a license can lead to fines of $500 per day.
Ralph Estep Jr.:
Wow. That will certainly cut into your profits. The limits are aimed at preventing residential areas from morphing into unregulated hotels. And here's when you may not have known. Landlords in New York City have even been evicted for illegally listing rent-stabilized apartments. So, while renting out a spare room may seem harmless, don't underestimate the regulatory hurdles.
Ralph Estep Jr.:
Here's some other quick pitfalls to avoid. Flipping houses can run afoul of local ordinances for unlicensed contractors and inspections. Collecting scrap metal or junk for cash may require special permits and handling of regulated materials. Childcare services often require licensing and background checks even if you're just watching one or two children.
Ralph Estep Jr.:
Operating food trucks or carts on public streets is usually really highly restricted. And pyramid sales, multilevel marketing programs or pay to play schemes can easily cross into illegal territory. Those are things you want to avoid. My main point is this. When seeking ways to earn extra money, you've got to carefully research the local regulations that pertain to that business. Read up on those zoning laws. Read up when there's operational requirements. Understand the taxes and health codes.
Ralph Estep Jr.:
Even if you see others doing the same thing, it doesn't mean it's actually allowed in your area and violations can quickly spiral into expensive tickets. They can shut you down or worse, maybe they'll put you in jail. You got to know the law and as they say, ignorance of the law is no excuse.
Ralph Estep Jr.:
So you may ask, "Ralph, what steps can you take to make sure your side hustle stays above board?" Well, here are some very good best practices. Google your city or county name, along with words like short-term rental regulations or ride share laws or rules to find applicable laws. Read through all policies and guidance on peer-to-peer platforms like Airbnb, Uber, Etsy, regarding local requirements. You can contact your local small business administration or chamber of commerce to inquire about permits, licenses, taxes, and all those things.
Ralph Estep Jr.:
Another thing that you can do is consider forming an LLC, which offers certain liability protections and makes business operations clear. Now, look. An LLC doesn't magically make the illegal, legal, but it may give you some liability protection. And you got to make sure you report all your income and pay required taxes to avoid tax evasion accusations. I feel like I just did a show on that. That's right. I did. And I encourage you to check out that show catalog. You can see all of those at askralphpodcast.com.
Ralph Estep Jr.:
You need to track your expenses. You need to keep receipts, follow occupational rules and carry the proper insurance for all your work. These are not just side hustle good practices. These are all good business practices to follow, and they'll generally keep you out of hot water. And when in doubt, consult a local small business lawyer, or accountant like myself to review your plans. Their expertise can pay off.
Ralph Estep Jr.:
You're welcome to schedule a consultation with me with Zoom. I can meet with people all over the world and I can explore these issues with you one-on-one. The truth is, folks, following these steps take some extra work initially. But it's actually worth it to avoid steep fines or worse, down the road. With proper diligence, you can ensure your side hustle is set up sensibly and legally.
Ralph Estep Jr.:
All right. Well, let's recap what we covered today. We discuss how common side gigs like Uber driving, Airbnb rentals, house flipping, childcare services, scrap metal collection, and multi-level marketing can potentially run into legal trouble at the local level. Even though these may seem harmless on the surface, violations of zoning codes, licensing rules, inspection requirements, and more can add up to expensive penalties and might land you in jail.
Ralph Estep Jr.:
To keep your side income legit, be sure to thoroughly research all the regulations in your area and do this my friends, consult experts when needed. Following best practices, like forming an LLC, reporting taxes properly, tracking expenses, all this helps keep your side hustle running smoothly and legally. The last thing we want is for well-intentioned efforts to earn extra cash to end up doing more harm than good. Nobody wants that.
Ralph Estep Jr.:
Well, that wraps up this edition of wacky Wednesday here on the Ask Ralph Show. I hope you found today's info helpful for ensuring your side gig stays on the right side of the law. As always, I encourage you to visit askralphpodcast.com to access all of our episodes. We got tools and resources there.
Ralph Estep Jr.:
And be sure to join our email list so you can get a free copy of my guide. This is my book, Mastering Your Finances, 47 pages. Now, if you went on Amazon to buy this, it would cost you $15, but you can get it absolutely free just by joining the list. So share this episode with any hustlers or grinders and side giggers in your life who may need these tips. And remember, I'll be back tomorrow, talking taxes across state lines. Until then, stay financially savvy and God bless you abundantly.
