You can start a business while employed in many situations, but your job, your contract and your time all deserve a careful look first.
Start a business while employed: read your agreement first
Many employers have policies or contracts about outside work, competing activities and the use of company time or equipment. This article is general information, not legal advice. Read your employment agreement and handbook before you begin, and ask an employment attorney if anything is unclear.
- Read your employment agreement
- Check outside-work and conflict rules
- Ask an attorney if unsure
Avoid conflicts when you start a business while employed
Do your business work on your own time and your own equipment. Do not use your employer’s customers, contacts, files or confidential information. Be careful if your new business competes with your employer, since some contracts restrict that. When in doubt, ask for permission in writing. Keep this in mind with start a business while employed.
- Use your own time and equipment
- Do not use employer information
- Be careful with competing work
Plan your time and energy
A job plus a business is a heavy load. Pick a realistic number of hours, protect your sleep and set clear boundaries. Many people begin with a small service or product, and our guide on low-cost business options compares models that fit evenings and weekends. Our guide on whether to start now or wait can help you decide on timing. It is a key part of start a business while employed.
- Choose a realistic weekly time budget
- Start with a small, simple model
- Protect your sleep and your job performance
Money and taxes when you start a business while employed
Keep business money in a separate account, and track income and expenses from the first sale. Our guide on opening a business bank account explains how. Side income is generally taxable, and our guide on estimated taxes for small business explains why you may need to pay during the year. Remember this about start a business while employed.
- Open a separate account
- Track income and expenses
- Plan for taxes on side income
Set up the basics properly
Even a small side business may need a name registration, a license or an EIN. Our guide on legal basics for starting a business lists the steps, and our guide on licenses and permits helps you check local rules. Our guide on business insurance basics explains coverage to ask about. This is central to start a business while employed.
- Check registrations and licenses
- Get an EIN if needed
- Ask about insurance
When to make the leap
Many people keep the job until the business earns steady results and they have savings for slow months. Set clear targets, review them on a date, and decide with facts. Free mentors at SCORE can help you think it through. This matters for start a business while employed.
- Set clear targets
- Build a savings cushion
- Review on a set date
Related reading on starting a business while employed
- Start a Business Now or Wait? How to Decide
- Low-Cost Franchise Options: What to Compare Before You Buy
- How to Open a Business Bank Account
- Estimated Taxes for Small Business Owners Explained
- Legal Basics for Starting a Business: A Checklist
- Business Licenses and Permits: A Starter Checklist
- SCORE free business mentoring
- America’s SBDC small business advising
- SBA guide to launching your business
- SBA guide to planning your business
