I've been thinking on this topic a lot lately because it offers a unique advantage to my situation.
In my employment, I have a pension and access to a 457(b) plan which I have now maxed out. It has come to my attention that it is possible to max out tax deferred investments in BOTH a 457(b) and a 401(k) at $18000 in each for a total of $36000 per year. But I don't have access to a 401k. But I would have access to a solo 401K if I had my own business. So I am tossing around a lot of ideas in my head for a sole proprietor business to build, just to make that $18000 in profit that could be invested tax free, no more.
My ideas so far:
High school/junior college tutor - I am very strong in math and sciences and passable in history and english. I have done tutoring in the past and have done well with it. My fiance would be a brilliant tutor for english (MA in creative writing, now in nursing school) and has experience at both the tutoring and adjunct professor levels so perhaps we could start a joint company.
Certified Tax Preparer - As I learn more about personal finance, I find that I have more and more conversations with people about how to use the tax code to their advantage. Might as well get paid for it. This carries the initial investment of a $5000 bond but I think it could be well worth it, especially since it is a topic which I would love to learn more about but I will never go through the investment to take it all the way to the CPA level, that would just be ridiculous.
Yard Work - I've got all the tools and knowhow, but in my area there is a ton of competition so not likely to take this route
Wedding DJ - I have got all the stuff, mixer, bumping soundsystem, software. I know how to DJ for raves but not for weddings so it might take a bit of getting used to, plus building a library of music that I am not super into but that people are going to want to hear. I think it could be super fun and might work really well if I were working graveyards at work and DJing one or two nights on my days off.
One question that I have is this: If you build a business with the intention of being the sole proprietor in order to set up your solo 401(k) - does the business have to specialize in one thing? Or could it be a combination? Like "Headwinds Math and Science Tutoring, Tax Preparation, and Wedding DJ" sort of thing? Sorry if this is a thread hijack, I may start another thread with exactly this question.
Headwinds, I believe you can invest more than 18k in your solo 401k, even while you max out your other plan. As I understand them (not an expert, just was reading to hatch my own schemes), the rules are:
1. The amounts contributed to 401k plans are separate from other types of accounts, including 457b accounts. Yay!
2. You can do solo 401k for more than one business, so it doesn't matter whether you have one business or several. The limit simply applies to total of your 401k contributions from the businesses.
3. $18,000 is not the limit for solo 401k. The limit is $18,000 PLUS 20% of the ordinary income you earn from the business! http://www.irafinancialgroup.com/solo401kcontributionlimits.php
The 20% is basically the amount of employer matching that you can provide as your own employer. So you would want to earn more than $18k. I think the right number would be $27,820 after accounting for self-employment tax, which is 15.3%.
a. 27,820 x .153 = 4256 in tax.
b. 27,820 x .2 = 5564
c. 18,000 + 5564 = 23,564 in contributions to solo 401k.
d. 23,564 + 4,256 = 27,820.
(edited to add link and correct my math)
Sorry about thread hijacking. On topic:OP, one surprising side hustle with outdoor work is rodent extermination.
I hired a person to do this at a rental property I own, because initially I failed at the task myself. After watching him and talking to him, he appears to be making out like a bandit...and the majority of his work is actually outside.
$ - he charges $125/hour. I think he makes over six figures working about 40 hours. A determined person could probably net $40 or $50 an hour part time in the right area. I am thinking about this myself, though probably will not due to other ideas I am pursuing.
Outdoors - The key is to find and seal the indoor/outdoor access routes the rodents use. So most of the work in the estimating stage involves a thorough examination of the home or building's exterior. Then you estimate hours to repair, multiply by 100 or 125. If the customer says no, charge 125 for the visit; if yes, spend x hours sealing the holes with steel mesh and maybe some foam. Then lay some traps in the attic along the edges where rodent routes are and reset the traps every couple days until they're all dead. Over half the time is just outdoor repair work. Another 20% is just driving around to customers.