Running a business is hard work! You dedicate most of your waking life to it, and 80% of the time, it fails. Why do so many talented people fail? It's because they don't use the power of passive income to build wealth by working smarter instead of harder. We’ve made your search for the perfect passive income stream easy by narrowing the list to the top 41 ideas. We’ve even got lesser-known passive income ideas (who knew you could create and sell Alexa skills?) and work-from-home options that’ll bring in $10K+ a month (just by creating digital files!).   We’ll also map out a plan for getting your business started so you can start earning passive income right away.  [su_note note_color="#dbeafc"] Get ready to find out:

1. What is passive income?
2. How to earn passive income
3. Passive income ideas that can make millions
4. How to create a passive income stream
5. How to generate passive income: a case study

Click any of the above text to jump to that section of the article. [/su_note] Let's dive in!

What is Passive Income?

The Internal Revenue Service (IRS) defines passive income as income that meets two standards:

1. You don't actively work to earn the revenue.
2. You are paid regularly.

Remember to read IRS Publication 925 to learn about the tax treatment when you earn passive income.

How to Earn Passive Income

According to Graham Cochrane, whose blogs and courses are raking in more than $1M each year, the process for earning passive income is quite simple. Here are the steps to succeed:

1. Explore passive income stream ideas
2. Perform market research
3. Create a customer avatar
4. Build the system
5. Create content or ads
6. Gather emails
7. Convert followers to customers

We'll look at steps 2-7 a bit later. First, let's check out 41 great passive income ideas!

Passive Income Stream Ideas

There are a lot of ways to generate passive income, but here’s Graham’s method: [su_quote]Find the intersection of what you love and can make money on. It will never dry up.[/su_quote] He also explained that automation plays a huge role in generating passive income, so you'll want to consider that in your decision-making process. In addition, you might want to consider whether you have the starting capital to create a passive income stream. Don't worry if you don't have a lot of money left over from your active income. You can start generating passive income with an initial investment of $50 or less.

What do passive income ideas require?

As you consider each idea, you'll want to weigh the following factors:

• Upfront time investment
• Upfront investment funds
• Potential for income

Keep reading for 41 passive income ideas. WARNING: The passive income investments mentioned in this blog are meant to be ideas only. We are not financial advisors, nor are we providing financial advice. Always make sure to consult with a licensed financial advisor and do your own research before making any monetary investment.

#1: Single-Family Rental Properties

[su_note note_color="#dbeafc"] Upfront time investment: Medium to High Upfront financial investment: $100,000+ if investing independently Passive income potential: High ($10K+ per month) [/su_note] Real estate investing is a great source of cash flow and wealth building. It is the number one source of wealth building in the United States according to the Census Bureau. Find out how Mike Andes approaches rental properties in our interview below. [su_youtube url="https://youtu.be/AXeqIxPVn6A"] Emma Powell has turned real estate investing into a 100% passive income stream, and shared her advice on getting started in an UpFlip podcast interview. You'll need to hire a property management team if you want cash flow without managing the property. Make sure you aim for 10%+ annual returns on investment. Pros:

• Builds long-term wealth along with short-term rental income
• Very high-income potential if you invest in multiple properties
• Potential for a 100% passive income once your business is established

Cons:

• Large initial investment if you’re buying properties
• You need employees from the start to make it truly passive

#2: Dividend Stocks

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: Your choice Passive income potential: 10%-15% of investment [/su_note] Many publicly held companies pay dividends on a quarterly, monthly, or annual basis. These dividend stocks can create passive income that increases the longer you hold them. If you use a brokerage account that offers a dividend reinvestment plan (DRIP), you can increase your:

• Passive Income: Through routine payouts
• Asset Value: If the stock price goes up, your net worth goes up. Historically, the stock market has increased by 10% per year. That means stocks tend to double in value every seven years.
• Number of Shares: Every time you get a dividend, a DRIP reinvests that income into the dividend stocks, which earns you more passive income.

You can set these on autopilot by scheduling recurring payments to help you grow wealth much faster. I use TD Ameritrade, but there are plenty of other brokerage services. More than 1,000 dividend stocks are paying more than 5% in annual returns. I'd stay away from the ones paying 50% or more because they are high risk. Pros:

• You don’t need tons of money to start
• 100% passive using a brokerage service
• Low risk compared to other investment options

Cons:

• Long-term investment that won’t bring immediate returns

#3: Real Estate Investment Trusts (REITs)

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: $1,000-$25,000 Passive income potential: 10%-15% of investment [/su_note] You can buy real estate investment trusts to generate passive income. REITs invest in real estate and earn money from rental income. They then pass the gains on to the investors. You can buy REITs as stocks or use private equity. Publicly available stocks tend to pay investors less but have the advantage of being more liquid than private equity investments. We filtered the available TD Ameritrade dividend stocks down to monthly dividends because this is the easiest way to identify REITs in their system. Here are the top monthly dividends on TD Ameritrade: Pros:

• More liquid than other real estate investments
• Completely passive income with a low up-front time commitment
• Affordable way to get into real estate investing

Cons:

• Your investment could be affected by real estate market trends and interest rate changes
• Can take a long time to see significant returns

#4: Custom-Designed Products

[su_note note_color="#dbeafc"] Upfront time investment: High Upfront financial investment: $500-$50,000 Passive income potential: High ($50K+ per month) [/su_note] You can start an e-commerce store with dropshipping or print-on-demand options to earn passive income. The initial investment is essentially free, but you need to have the money for advertising, the initial cost of the products, and the monthly software costs. Find out how to get started in ecommerce. Custom apparel is a popular niche for print-on-demand passive income businesses, and one with a high revenue potential. 1-800-Tshirts, for example, brings in $500K every month. You can hear how founder Tom Rauen started and his advice for growing a t-shirt printing business in this interview.  Kerry Egeler founded Shirt School as a resource for online t-shirt printing business owners, so that’s a great site to check out if you want to explore this option (hear our interview with Kerry). Etsy is a popular store platform for custom designed products. That’s where Vlad Kuksenko sells his custom pet tags and collars. Hear advice on how to get started on Etsy in Vlad’s podcast and YouTube interviews.  Heather Johnson chose Etsy for her print-on-demand business, too, which she started as a side hustle in 2020 and has grown to revenue of $15,000+ a month (listen to our interview with Heather). Pros:

• High income potential
• Start earning income as soon as your store opens
• Excellent option for creative entrepreneurs and designers

Cons:

• Building a customer base can require a high initial time commitment

#5: Bonds and Bond Index Funds

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: $25-$10,000 Passive income potential: 4%-7% of investment [/su_note] Bonds are a way to lend money. A company or government asks for an upfront investment and agrees to pay you back more than you lent them. The payment terms will vary based on the amount borrowed, the duration, and the borrower's creditworthiness. The gold standard of bonds are purchased from U.S. Treasury Direct. Pros:

• Very low risk investment
• Funds can be reinvested to increase earnings over time
• 100% passive

Cons:

• You don’t see any earnings until the bond matures
• Interest rates are locked at the rate from when you bought the bond (even if they go up later)

#6: High-Yield Savings Accounts and Money Market Funds

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: Your choice Passive income potential: 0.15%-5% of investment [/su_note] These accounts are offered by legacy and online banks and give customers higher interest rates than you would normally receive. (None of the earning rates beat inflation, though. The best current high-yield savings account earns 3.5% APY, which means you're still losing money after calculating inflation.) Money market accounts are currently earning 4.45% annually. You can find them by unchecking the savings account box in the link above. While these are highly liquid, they don’t generate enough passive income to satisfy my expectations of growing wealth. Pros:

• Minimal risk
• Easy to set up and manage
• Low minimum investment with few to no fees
• Wide variety of online banking options to choose from

Cons:

• Lower return than other investment options

#7: Peer-To-Peer (P2P) Lending

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: $25 minimum Passive income potential: 6.46%-17.74% of investment [/su_note] If you just want to earn some passive income on your existing cash, peer-to-peer lending can give you great returns. The lending agreements you fund at Lending Club provide interest rates of up to 17.74%. Take note that higher earnings come with higher risks (borrowers with lower credit scores), so it might not be the best idea to go straight for the 17.74% interest rates because Lending Club takes 30% of the loan for themselves if they have to pursue collection. Pros:

• Easy to invest through a P2P platform
• Low ongoing time commitment
• Borrowers are vetted through the platform

Cons:

• Higher interest rates carry more risk
• No collateral on loans

#8: Create an Online Course

[su_note note_color="#dbeafc"] Upfront time investment: High Upfront financial investment: Low ($150-$300/month) Passive income potential: Medium-High ($500-$10K+ per month) [/su_note] An online course is one of the most profitable and popular passive income ideas. When Graham Cochrane lost his job, he expected to make money mixing music, but he quickly found that people were more interested in learning how to do it themselves and were willing to pay to learn those skills. Graham created a course that made over a million dollars—without ever updating it.  Jacques Hopkins of Piano in 21 Days saw similar success with his online course, starting off with a budget of around $150 a month and growing to a $40,000 a month revenue, about 50% of which is profit (listen to our interview with Jacques to hear more of his advice and story). Today's environment is more competitive, but it's still one of the best ways to make passive income in 2024. Pros:

• Easy to publish and market your course through an online course platform
• 100% passive income once the course is published
• Income is scalable with high profit margins

Cons:

• High initial time commitment if you’re writing the course yourself
• Course platforms charge fees that can cut into your profits

#9: Student Income-Share Agreements (ISAS)

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: $5,000 minimum Passive income potential: 12% of investment [/su_note] If you are an accredited investor, you can invest in the future by helping promising students go to college. Loan them money, wait a year, then earn interest by getting a percentage of their future income. You can use sites like these to get started:

• Edly
• Meratas (Form your own ISAS)

Pros:

• 100% passive once you’ve invested
• Get monthly payouts after the first year
• Shorter duration than other investment options

Cons:

• Can lose your investment if the borrower defaults
• Fees are relatively high (up to 4% on investment plus 5% of cash flows)

#10: Invest in Digital Assets (Crypto/NFTs)

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: Your choice Passive income potential: up to 20% of investment [/su_note] This section is solely the opinion of the author and does not represent the beliefs of UpFlip, its owners, or any other members of the team. Personally, I enjoy the crypto and NFT markets for high liquidity and income generation. They are highly volatile, which means you can trade them for quick 20% gains, but you can also hold them or provide the resources to operate the network. The safest of these investments to invest in are BTC and ETH, but both have been known to skyrocket or plummet more than 20% in a day.  If you invest in any crypto, understand that you do so at your own risk. These investments are unregulated, and you are effectively going into private equity without the regulatory environment that protects accredited investors. That said, my personal favorite projects are:

• Presearch: This privacy search engine is beta testing ChatGPT, has more than 75,000 independent node operators, and acts as a search engine aggregator (It’s my secret weapon for blogs). They also offer advertising opportunities that cost as little as $6 per month. The returns vary based on the pricing, but my assets have quadrupled since 2021.
• Vaporfi: The team at VaporFi has a loyalty rewards program called Stratosphere that partners with crypto projects and business owners to provide members rewards for interacting with their partners. They also run a decentralized exchange and a residual income project, and they have a lot of other cool projects in the pipeline. I currently hold 50 times the assets within their products compared to when I started and have gotten residual income greater than my initial investment.
• Avalanche: VaporFi operates on the Avalanche network which has deals with AWS and Alibaba to launch validators. The validators process the transactions on the Avalanche network. The staking rewards are currently 8.54% per year.

If you want to learn more about crypto, I suggest starting at Coin Market Cap’s Crypto Glossary. Pros:

• Can potentially see high returns very quickly
• High long-term growth potential 
• Low time commitment to make and manage your investment

Cons:

• High volatility means higher risk of losses

#11: Sell Stock Photos

[su_note note_color="#dbeafc"] Upfront time investment: Medium Upfront financial investment: Low to none Passive income potential: 15%-45% of sales ($.05-$.25 per image per month on average) [/su_note] If you love photography but want to avoid taking on clients, stock photos might be your answer. Stock photos are used by businesses for marketing purposes. You take pictures of in-demand products and post them on the site with keywords that describe them. Then companies pay to use them. There are a variety of sites that you can use to earn a passive income stream, but Getty Images is the leader in this market. You can earn up to 45% on each image used, which converts to $.015 and up. Other stock photo websites have different rates, but Getty sells approximately $1 billion of stock photos, graphics, and videos each year. Pros:

• Excellent way for creative entrepreneurs to make money with their passion
• 100% passive after images are taken and uploaded
• Easy to scale your income by adding more photos
• No need to find or communicate with clients directly

Cons:

• Images need a lot of downloads to earn higher royalty rates
• Earnings are low if images don’t sell

#12: Write an E-Book

[su_note note_color="#dbeafc"] Upfront time investment: High Upfront financial investment: $0 Passive income potential: 35%-70% royalties [/su_note] E-books are another great way you can make a passive income from your upfront time investment. Publishing has always been challenging, but now tools like AI copywriters and Audible make it where you can get in front of billions of potential customers without printing a single page. Graham told us: [su_quote]I wrote a book called How to Get Paid for What You Know.[/su_quote] Download it on Audible for more advice on how to earn a passive income from e-books and online courses. Pros:

• Faster and easier than traditional book publishing
• Requires no financial investment
• Establishes you as a thought leader and helps to build a personal brand

Cons:

• Significant upfront time commitment
• May need to invest lots of time in marketing if you don’t already have a following

#13: Create an Affiliate Marketing Business

[su_note note_color="#dbeafc"] Upfront time investment: Medium Upfront financial investment: Low ($50-$500) Passive income potential: $1,000-$100K+ per month [/su_note] Another way to create a passive income is to create an affiliate marketing business. You can easily get links for most software companies and start adding passive income streams by reviewing the software you use everyday.You'll be adding value for the people following you while you gain passive income.  Many affiliate programs can make thousands or millions from a few hours of work. Check out some of the best affiliate programs of 2024 or listen to our interview with Matt Diggity to learn more about affiliate marketing. Pros:

• Completely passive once you’re set up
• Wide variety of affiliate programs to choose from
• Make money recommending products and services you use and enjoy
• Low to no initial financial investment required

Cons:

• Need a website with high traffic to earn reliable income

#14: Music Licensing

[su_note note_color="#dbeafc"] Upfront time investment: High Upfront financial investment: $0 Passive income potential: 40%-60% of streaming revenue [/su_note] If you're a musician or want to help musicians earn a living, you can earn a passive income from licensing your music to movies, streaming services, and businesses. You get paid every time someone plays the song. You can find out how to make passive income online through different streaming platforms. Pros:

• Steady long-term source of passive income
• Build a following and gain exposure while earning royalties
• Variety of streaming platforms to choose from
• No financial investment required to get started

Cons:

• Risk of your songs being pirated or copied

#15: Create a Blog or YouTube Channel

[su_note note_color="#dbeafc"] Upfront time investment: High Upfront financial investment: $0 Passive income potential: $800-$1,400 per month [/su_note] Blogging and YouTube channels are passive income ideas that require similar skill sets. You'll need to provide useful information, optimize it for search results, and share it. Sure, the equipment is different, but either option can make you a ton of extra money. It’s quite easy to create a YouTube channel. Pros:

• Easy to monetize by integrating ads and affiliate links
• Fun way to profit from your areas of expertise
• Doesn’t take any money to get started

Cons:

• Creating the content can be time-consuming
• It will likely take some time to grow your following before you see significant income

#16: Rent Out Useful Household Items

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: $0 Passive income potential: Medium (up to $4,000 per month) [/su_note] If you have tools or other useful household items, you can rent them out to other people using a variety of sites. Check out sidehusl’s blog for a list of sites to rent specific items. Pros:

• Make money from items you already own
• Easy to get started through one of the many online platforms
• Very low ongoing time commitment

Cons:

• Some risk of your items being damaged or stolen

#17: Buy and Sell Websites

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: $10-$200+ per site Passive income potential: High [/su_note] Did you know that buying a website and selling it could make you up to $90 million? That's how much Vegas.com paid to purchase LasVegas.com. If you find a website that you can imagine being a desired domain name, buy it and save it until a company is willing to pay way more for it. You can monetize those websites while you own them, too. Rob Stefanski currently owns seven websites that generate about $30,000 every month in revenue. You can listen to his podcast interview to hear his insights on how to buy, grow, and scale revenue for a website. Pros:

• 100% passive
• Can earn short-term income while waiting to sell
• Potential returns are high if you buy the right websites
• No limit to the number of domains you can buy

Cons:

• Return on investment isn’t guaranteed
• May need to sit on a site for a while before you find a buyer

#18: Invest in Vending Machines

[su_note note_color="#dbeafc"] Upfront time investment: Medium Upfront financial investment: $2,000-$120,000 Passive income potential: High ($10K+ per month) [/su_note] Vending machines are another source of income. For those wondering how to create passive income from vending machines, check out our vending machine business course taught by Adam Hill, who turned an investment of $120K into $600K of annual revenue. Insert sign up for the Vending Machine Boot camp. Pros:

• Fairly easy to earn enough to replace a full-time job
• Variable time commitment and startup costs
• No specialized skills, knowledge, or training required

Cons:

• Ongoing time commitment unless you have employees (not completely passive)
• Potentially high initial investment if you want to purchase an entire vending route

#19: Advertise on Your Car

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: $0 Passive income potential: $100-$900 per month [/su_note] Your car can be a source of multiple streams of income. You can advertise your own businesses or earn easy passive income by advertising other brands. Some providers to check out include:

• Wrapify: Earn $180 to $500 per month to wrap your car in advertising.
• Carvertize: Earn up to $300 per month per campaign for car wrapping.
• FireFly: Earn up to $300 per month to have a lighted billboard on the top of your car. You must be a rideshare or taxi driver and drive over 40 hours per week.
• Play Octopus: Make an extra $100 per month plus $25 per referral by letting rideshare passengers play games on a tablet.
• Vugo: Earn Up to $300 per month from the oldest name in rideshare advertising.

Pros:

• Excellent add-on revenue stream for delivery and rideshare drivers
• No ongoing time commitment once the advertising is in place
• You choose what types of ads you display and how much of your car they cover
• No permanent changes to your vehicle

Cons:

• Relatively low stand-alone income source
• Won’t make much if you drive infrequently or in low-traffic areas 

#20: Invest with Robo-Advisors

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: Your choice Passive income potential: 2.91%-6.1% of investment [/su_note] Robo-advisors are apps that automatically pick investments and manage your portfolio. All you do is answer a few questions about your risk tolerance and investment goals, and their algorithms take care of the rest. Credit Donkey’s list of the best robo advisors is a great place to start if you’re looking for more information.  Pros:

• No investing skills or knowledge required 
• Doesn’t take much time to set up or manage
• You can invest as much or as little as you want

Cons:

• Little control or customization of what you invest in
• Need to invest a lot to see significant returns

#21: Flip Items with an Online Store

[su_note note_color="#dbeafc"] Upfront time investment: Medium Upfront financial investment: up to $1,000 for initial inventory Passive income potential: High ($30K+ per month) [/su_note] The old adage that one man’s trash is another man’s treasure is true and can be a great way to earn income if you have a sharp eye for products that will sell.  Mike Wilson’s story is a prime example. He started an eBay store to resell items after retiring from his career as a furniture store owner. After investing $1,000 into his initial inventory, he now makes around $30,000 every month with his eBay store. Hear more about how Mike built his online store in his podcast interview.   You can find items to resell for cheap at thrift stores, garage sales, or storage unit auctions. Sites like Craigslist and Facebook’s marketplace sometimes even have free items available, or you could sell unused items from around your home. While you will need to invest some time into acquiring your inventory, it’ll be on your schedule, and the income is still primarily passive.   Pros:

• Don’t need much money to get started
• No specialized skills or knowledge required
• High potential income that’s easy to scale

Cons:

• Some ongoing time commitment to stock and manage the store
• You’ll be stuck with items you don’t need if they don’t sell

#22: Certificates of Deposit (CD) Ladders

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: Your choice Passive income potential: .15%-5% of investment [/su_note] A Certificate of Deposit (CD) is a savings product sold by banks, credit unions, and other financial institutions. The main difference between CDs and savings accounts is that CDs have a fixed term and interest rate.  CD laddering is an approach to maintain your liquidity while investing in CDs. Basically, you invest in a few different CDs with varying terms. As each matures, you can choose whether to keep that money or reinvest it into a new CD. These investments are insured by the FDIC so your principal is protected, a key advantage over more volatile forms of investment.  Pros:

• Full control over how much and where you invest
• Low risk with guaranteed returns
• A laddering approach maintains your liquidity

Cons:

• Can’t access your money until the CD matures
• Interest rates are locked in until the CD matures, even if they go up after your purchase

#23: Crowdfund Small Business Inventory

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: $20 minimum Passive income potential: 15% of investment [/su_note] KickFurther.com is a unique concept in crowdsourced small business financing. Business owners sign up for funding, and investors provide those funds by essentially buying their inventory and selling it through them on consignment. Your profit is earned once the products sell. Kickfurther sellers also get their own store on the site where you can help sell the inventory you purchased and get an extra 5% commission on any items sold through it. Pros:

• Help small businesses while you earn a profit
• Generate your own cash flow through the store
• Potential to be completely passive with no ongoing time commitment once you invest

Cons:

• You won’t make money if the products don’t sell
• Limited support for buyers on the platform

#24: Rent Out Your Car

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: $0 Passive income potential: $850-$7,500+ per month [/su_note] The website Turo uses a similar model to vacation rental sites like Airbnb, but with cars instead of homes. Hosts list their cars on the site and travelers who need a vehicle reserve them for a fee. You can host one car or several, making it a scalable passive income source for those who want something they can grow to replace a full-time job. While there is some risk of your car being damaged while someone’s using it, Turo provides liability insurance coverage up to $750,000, so you won’t be on the hook for repairs if they do. There are other places you can rent out your car, too:

• HyreCar: A site where you can rent your car to rideshare drivers.
• TravelCar: For people who travel often, this is a way to rent your car out while you’re gone, and all you have to do is park it at one of the qualifying airports. 

Pros:

• Earn extra revenue from vehicles you already own when they’re not in use
• Full insurance coverage for your car while others are driving it
• Complete control over who rents your car and when (no penalty for turning down a rental request)

Cons:

• Risk that your vehicle will be damaged
• Can only list newer cars in good condition

#25: Rent Out Space in Your Home

[su_note note_color="#dbeafc"] Upfront time investment: Low to Medium Upfront financial investment: $0 Passive income potential: $50-$1,500+ per month [/su_note] There are a few different ways you can go about this. If you have an unused vacation home, extra rooms in your main home, or under-utilized spaces like a garage or pool house you can turn into a micro-apartment, you can rent it out to travelers on sites like Airbnb or Vrbo.  Travelers aren’t the only people who need to rent space, either. On Neighbor, you can rent out space storage space, whether that’s interior storage for people’s possessions or business inventory, or an outdoor lot where people can park cars, boats, RVs, and trailers. This is a great option for homeowners who have extra space in an attic, garage, basement, or unused room but don’t want to worry about preparing that space for other people to inhabit.  Pros:

• Complete control over who uses the space when
• Easy and free to get started
• No fees unless someone is using your space
• Fast way to monetize unused space

Cons:

• Some ongoing time commitment to prepare a home or room for guests
• Sharing your personal space with strangers

#26: Rent Out a Parking Space

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: $0 Passive income potential: $50-$300 per month [/su_note] If you live in an urban area, especially close to a place where people congregate like a sports venue, fairground, or other event space, you can monetize your parking space for a bit of extra income. Apps like Pavemint and CurbFlip make this easy. All you have to do is list your space and drivers reserve and pay for it right through the app.  Pros:

• Fast and free to set up
• High demand in busy and urban areas
• Complete control over when you rent your space and to whom

Cons:

• Relatively low earning potential
• Earnings vary widely depending on your location

#27: Open a Coin-Operated Laundromat

[su_note note_color="#dbeafc"] Upfront time investment: Medium-High Upfront financial investment: $200,000+ Passive income potential: High ($24K+ per month) [/su_note] Everyone needs to do their laundry, and not everyone has a machine to do it at home. Everything in a coin-op laundromat is automated, and it’s common for them to operate without employees on-site to supervise. If you hire someone to clean and maintain the machines it’s a completely passive business, and that won’t be much of a time commitment if you handle it yourself.  Like any brick-and-mortar business, a laundromat can be a big investment. Brian Riseland invested $1 million to open Laundry Genius (watch his YouTube interview). [su_youtube url="https://www.youtube.com/watch?v=0aEcWTxnLUI"] Note that his space is larger than most, which means higher revenue potential. While you don’t necessarily need to make a 7-figure investment, it’s common for turnkey laundromat operations to cost between $200,000 and $500,000. If you’re interested in opening a laundromat, the how-to guide on the UpFlip blog is a great place to get more info.  Pros:

• Consistently high demand in well-populated areas
• High revenue potential 
• Fully-automated processes give it a low ongoing time commitment

Cons:

• Needs employees to be completely passive
• High initial investment

#28: Ecommerce Dropshipping

[su_note note_color="#dbeafc"] Upfront time investment: Medium Upfront financial investment: $100-$1,000 Passive income potential: $1,000-$50K+ per month [/su_note] Dropshipping is basically like being a professional middleman. You take orders from customers, then send them along to a wholesaler, manufacturer, or other retailer who sends the ordered item to the customer.  The big advantage of dropshipping is that you never have to worry about inventory. All you have to do is list the items in your store and market to potential customers. There are software and tools you can use to automate many of these tasks. Amazon and Shopify are the two largest platforms for dropshipping businesses. Multi-million dollar Amazon seller Ryan Hogue started his Ryan’s Method Passive Income School based on his success with a dropshipping eCommerce business, and you can hear his advice on how to start in our podcast interview.  Pros:

• Highly scalable with the potential to earn a high income
• Relatively low ongoing time commitment
• Low start-up costs and overhead

Cons:

• Lots of competition means you need strong marketing skills to earn a high income

#29: Create Alexa Skills

[su_note note_color="#dbeafc"] Upfront time investment: High Upfront financial investment: $0 Passive income potential: $100-$10K+ per month [/su_note] Devices that use Alexa voice control have “skills” that allow them to perform different tasks, like playing music or turning connected devices off and on. Anyone can create the skills and get paid for them. While you will need some software development skills to do so, Amazon has partnered with Codeacademy to create free courses that will teach you the basics. Payment for skills is based on user engagement. The more popular the skill, the more you can earn from it. Skills can also be monetized by adding in-skill purchases.  Pros:

• Easy way for developers to make passive income 
• Completely free to get started
• You don’t need to do anything once the skill is developed

Cons:

• It’s up to Amazon which skills get paid, and how much
• Large upfront time investment with no guarantee of a return

#30: Create Mobile Apps

[su_note note_color="#dbeafc"] Upfront time investment: High Upfront financial investment: $100-$5,000 Passive income potential: $100-$500 per app per month on average [/su_note] Everyone who has a smartphone is a potential customer for mobile apps. If you can solve a problem or make an entertaining game it can quickly get thousands of downloads, even if it’s targeted to a very specific niche. You don’t need to be a programmer to write an app, either, thanks to low-code and no-code platforms. NeoITO has a list of the best free platforms for non-coders to develop apps if this is something that interests you. Pros:

• Low time commitment once it’s approved by the app store
• Easily scalable with the potential for high income
• In-app purchases can create income sources beyond the initial purchase

Cons:

• Large initial time investment with no guarantee of a return

#31: Build or Buy a Newsletter

[su_note note_color="#dbeafc"] Upfront time investment: High Upfront financial investment: $0 Passive income potential: $5-$10 per subscriber per month [/su_note] Subscription-based newsletters can be very lucrative if they provide readers with consistent value. You can also monetize your newsletter by including affiliate links or selling advertising space once you have an established audience.  Like other content-based income streams, it can take a lot of time and hard work to create valuable newsletters and build a subscriber base. If you don’t want to start from scratch, you can buy a newsletter from a marketplace like Duuce. Pros:

• Recurring monthly income from your subscriber base
• Scalable with multiple ways to monetize the content
• Can use your newsletter to promote other passive income streams like a blog, YouTube channel, or online course

Cons:

• Can take a lot of time to create valuable content

#32: Invest in Startups

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: $50-$500 minimum investment Passive income potential: 10%-25% of investment [/su_note] Lack of capital is one of the biggest challenges many entrepreneurs face when starting a business. Equity crowdfunding is one way for them to access the funds they need, and you don’t need to be an accredited investor to get in on the action. There are a variety of equity crowdfunding platforms where you can become an angel investor with just a few hundred dollars in capital:

• StartEngine: One of the largest venture crowdfunding platforms, you’ll find everything from coffee shops and clothing stores to wind turbine companies seeking funding on StartEngine. You can also invest in or trade rare collectibles on their site.
• WeFunder: A low minimum investment of $100 makes WeFunder one of the most accessible ways to become an angel investor.
• Republic: Another low-capital option, you can start with as little as $50 on Republic. Their curated list is focused on opportunities with high growth potential.
• MainVest: Focused specifically on small businesses, MainVest lets you support local entrepreneurs while you earn passive income.

Pros:

• Support small businesses you believe in and earn income for doing it
• 100% passive once you’ve invested
• Potentially high long-term returns if the business takes off

Cons:

• You lose your investment if the startup fails
• May take a long time to see a return on your investment

#33: Create Digital Files

[su_note note_color="#dbeafc"] Upfront time investment: Medium-High Upfront financial investment: $0 Passive income potential: $50-$10K+ per month [/su_note] You’ve likely seen the online marketplaces of fonts, website and store themes, and other graphics and illustrations. These are often made by independent artists and designers who can make extra income selling their digital files through a platform like Creative Market.  This isn’t just an option for artists. You can also sell spreadsheet templates, patterns for crafts, PDFs, or templates for business cards, invitations, or greeting cards. If it’s something people need and will search for online, you can sell it for extra income. Some other sites to check out if this seems like something you want to do:

• Easy Digital Downloads: One of the most popular digital download marketplaces, boasting nearly 4 million downloads from their platform. They also have a wide range of third-party integrations and analytic tools helpful for creators. 
• Gumroad: The easy sign-up process and knowledge resources on Gumroad make it ideal for new digital creators, and you can sell just about anything through their platform.
• SamCart: An all-purpose site for courses, membership subscriptions, or digital products, SamCart also has helpful resources and analytic tools. The downside is there is a membership fee to sell through their platform.

Pros:

• Easy way to monetize your unique skills and knowledge
• Little to no up-front financial investment with a low overhead
• Income potential scales as you create more items to sell

Cons:

• Need to sell a lot of files to make a significant income
• Risk of your content being copied or shared illegally

#34: Become a Social Media Influencer

[su_note note_color="#dbeafc"] Upfront time investment: High Upfront financial investment: $0 Passive income potential: $10 (<1,000 followers)-$10K (>500,000 followers) per post [/su_note] If you’re already active with a large following on social media, you can leverage that following into passive income by becoming an influencer. Influencers are paid to promote products, services, and companies through their social media channels using reviews, promotional posts, or ads inserted into their posts, blogs, and videos.  Sites like Heepsy and Upfluence connect influencers with people who need their services and can help you build your reputation as an influencer. While the highest-paid influencers have 100,000 followers or more, you can become a micro-influencer with as few as 1,000 followers. Pros:

• Easy way to monetize a large social media following
• Try new products or services in your niche for free
• Works well in tandem with other passive income sources like courses, blogs, and YouTube channels

Cons:

• Not completely passive since you’ll need to actively post engaging content
• Need a large social media following to attract advertisers and sponsors

#35: Generate Leads

[su_note note_color="#dbeafc"] Upfront time investment: Medium-High Upfront financial investment: Low Passive income potential: $.50-$30 per lead [/su_note] A lead is a potential customer or sales contact. Companies get leads through their website, online ads, and ranking high on search results. Larger companies often have teams devoted to lead generation and management, but smaller businesses don’t have those resources, and instead pay third-party freelancers or agencies to do it for them.  If you have a strong understanding of digital marketing, SEO, and web development, you can use those to gather leads and sell them to businesses. The industries that pay the most for these are home services, insurance, and lending companies, so it can be beneficial to have expertise in those areas.  Pros:

• Can use software and tools to automate lead sourcing and make it more passive
• No need to create and sell your own products or services
• High revenue potential once you’ve established your reputation

Cons:

• Requires a specific skill set 
• Can take a while to grow your reputation and increase earning potential

#36: Use Passive Income Apps

[su_note note_color="#dbeafc"] Upfront time investment: Low-Medium Upfront financial investment: $0 Passive income potential: $10-$100 per month [/su_note] Do you want to get paid for doing things you already enjoy? There are a plethora of apps that let you do just that. While many of the apps you’ll find on passive income earning lists are investment platforms, there are other options. Some of the most popular include:

• Mistplay: A loyalty program for mobile gamers, Mistplay pays users to play promoted games. Earn points for playing and turn them in for gift cards to Amazon and other online sellers.
• Swagbucks: Earn gift cards for doing a variety of online activities, like watching videos, taking surveys, or playing games. 
• InboxDollars: A way to get paid for things you already do online, like shopping, searching the web, or even watching TV.

Pros:

• Get paid to shop or play online games
• Make passive income from things you already do
• Easy to set up with no specific skills or knowledge required

Cons:

• Relatively low income potential

#37: Take Paid Surveys

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: $0 Passive income potential: $.50-$5 per survey [/su_note] Companies need feedback from users and customers to improve their products and services, and they’re willing to pay for that information. Taking online surveys doesn’t generate a ton of money, but if you enjoy doing them, it’s a way to make a bit of extra cash just by sharing your opinions.  The Swagbucks and InboxDollars apps listed above are two places you can do this. Some other popular and reputable survey-for-cash sites include Survey Junkie, Pinecone Research, and MyPoints. Pros:

• Easy and free
• Earn money in your spare time while doing other things
• Provide feedback to improve the products and services you use

Cons:

• You’ll only get paid for surveys you qualify for
• Can take a while to earn a significant amount

#38: Use a Credit Card with Cashback Rewards

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: $0 Passive income potential: 1%-10% of what you spend [/su_note] Getting money back for the things you buy is one of the easiest forms of passive income. The only caveat here is that you’ll need to make sure you only buy what you can pay off right away, before you’re hit with interest that wipes out those savings. Look for a card with no annual fees. Many also offer a sign-up bonus of $200-$300. Nerdwallet’s list of cashback credit cards is a great way to compare your options. Pros:

• No extra effort or investment required
• Many offer bonus savings on specific categories of goods and services
• Improves your credit score while earning cash back

Cons:

• Can get hit with high interest if you don’t pay your balance in full

#39: Get Cashback for Shopping or Dining

[su_note note_color="#dbeafc"] Upfront time investment: Low Upfront financial investment: $0 Passive income potential: 1%-30% of what you spend [/su_note] Another way to get paid for the things you already buy is through discount and reward websites and apps. Like with cashback credit cards, you want to be careful you’re not overspending in your quest for rewards. For the things you already buy, though, you can access them through an app or website to get as much as 20% of your purchase back, which translates to more money in your pocket. Some of the most popular sites for this:

• Rakuten: Shop through the app to get discounts, cash back, and rewards for buying things you already need and use. 
• Earny: This site tracks prices and gives you a refund if it drops after your purchase. You can also win prizes and get other rewards for shopping, and adding the Chrome extension makes the whole process automatic.
• Seated: Book reservations at local restaurants and get up to 30% back in gift card rewards.

Pros:

• Earn money back for the things you already buy
• Easy and free to get started
• Can earn additional bonuses and rewards

Cons:

• Can take some time to accumulate enough rewards to cash out

#40: Buy a Parking Lot, RV Park, or Mobile Home Park

[su_note note_color="#dbeafc"] Upfront time investment: Medium Upfront financial investment: $10,000-$100,000 Passive income potential: High ($10K+ per month) [/su_note] People with vehicles need a place to park them, and the larger the vehicle, the more limited their options. Undeveloped lots are cheaper than commercial property with structures, giving this a lower financial barrier to entry than other brick-and-mortar options on this list. Once you have the lot set up, you can automate the space booking process or hire a few employees to supervise and maintain the space to make it a fully-passive income stream.  Pros:

• In-demand service with a consistent customer base
• Can make a profit from otherwise unusable and undeveloped space
• High long-term revenue potential

Cons:

• Will need employees to make it fully passive
• Requires some initial capital investment

Create a Passive Income Stream

Let's review Graham's simple steps for developing your passive income idea into a thriving source of income: [su_note note_color="#dbeafc"]

1. Explore passive income stream ideas
2. Perform market research
3. Create a customer avatar
4. Build the system
5. Create content or ads
6. Gather emails
7. Convert followers to customers

[/su_note]

Perform Market Research

Once you've chosen a couple of the best passive income ideas that you'd like to investigate, it's time to do some market research. You'll want to understand:

• Industry revenue and profit benchmarks
• The major players and how they make their money
• Trends in the industry
• Gaps in the current offerings

After you understand all this and have decided to enter the industry, it's time to create a customer avatar.

Create a Customer Avatar

Create your own avatar profile with this template. To earn passive income, you'll want to have a customer avatar. There are two ways you can create the customer avatar depending on what kind of passive income streams you pursue:

1. Avatar of your future self
2. Avatar of your future client

Let's look at each.

Avatar of Your Future Self

If you plan to earn passive income from dividend stocks, real estate investment trusts, exchange-traded funds, or other income-producing securities, you may want to create a customer avatar of what your life looks like in the future. You'll want to include aspects like:

• The year
• Where you live
• Your monthly income
• Your family scenario
• Your work schedule

This is just defining what financial freedom looks like to you. With a picture of where you're going, it's easier to commit to the upfront time investment and monthly payments necessary to reach financial independence.

Avatar of Your Future Client

If your passive income streams involve selling a product or service to generate income, you'll want to define your ideal client. You want to know everything you can about them, including:

• How they make money
• Where you can reach them online
• What is important to them
• Your pathway of interactions once you start interacting with them
• How they communicate

The more you know about your client, the better you can prepare a passive income strategy.

Build the System

This is where those who shine at running business ventures or creating passive income differentiate themselves from those who fail. You need a system in place. Otherwise you'll burn out. Graham started his first passive income stream with the following tech stack:

• Cheap WordPress site
• MailChimp
• eJunkie

He told us: [su_quote]I started with $50 using free software as much as possible. Today I use Kajabi because it has everything I need and costs under $200 per month.[/su_quote] Kajabi offers a 30 day free trial.

Create Content or Ads

The next step is to create the content or ads to get your passive income ideas in front of your target market. If you’re creating content, you’ll want to share regularly with your audience. You can use your customer avatar to create ad accounts on the appropriate social media platforms. Graham explained how he spends just five hours each week to earn passive income: [su_quote]I create content for YouTube or the podcast, record a class and Q&A, then check in with my community and answer questions.[/su_quote] You can use programs like Canva to make content generation easy, but Kajabi also has design tools built in.

Gather Emails

You'll want to collect email addresses to communicate with your followers. Kajabi has built-in email collection and is really intuitive. You can even take the Kajabi Academy List Building Course to learn the best ways to build an email list using their platform. If you prefer MailChimp, they also offer educational resources on using their platform. Here are the main things you need to know about any email list:

1. You need real emails. If you have too high a spam rate, you'll be flagged by email operators. If the email addresses don't look real, they probably aren't.
2. Disclose how email addresses will be used before you collect them. People are hesitant to give out their emails to unknown companies.
3. Comply with the strictest laws you fall under. In most cases, this is the GDPR, Europe's privacy regulations.

Convert Followers to Customers

The final step in earning a passive income is converting followers into customers. This requires an automated email funnel. Kajabi has a free training that I linked to earlier. There are a ton of places you can get free or low-cost email templates and edit them to suit your niche. If you wish, you can also use paid ads with retargeting as long as you have the proper tracking codes on your site. Next, we'll answer some commonly asked questions about the best passive income investments.

Passive Income Success: A Case Study

We mentioned him above, but it’d be a shame not to highlight him once more before we wrap this article. Graham Cochrane is a prime example of a wildly successful passive income plan.  He's made $1.6 million dollars this year and only works 5 hours a week. Yes, you read that right. Graham got laid off from his job four months after moving his family to Florida during the Great Recession. He told us: [su_quote]My back was against the wall.[/su_quote] He had some experience recording and mixing for bands, which he thought he'd start doing as a side gig. So he started marketing the business: [su_quote]I started a blog, and [I thought] maybe people would see my blogs, and it would bring in more clients. I didn’t know about passive income and course materials...but within three years I made over a million dollars![/su_quote] Want to know his secrets? Get all the info in our interview.

Passive Income FAQs

People ask a lot of questions about the best ways to invest passively. While I am not in wealth management, nor am I a certified financial planner, I have experience investing and am happy to share my opinions. Make sure to consult with a professional who actively handles wealth management before pursuing any types of income that require an investment.

Passive Income vs Unearned Income Streams

Passive income is from an investment of time or money, while an unearned income comes from sources like gambling, alimony, lotteries, or social security.

How to Generate Passive Income with No Initial Funds

Many of the top streams of passive income are online. In addition, most software offers a free trial. You just have to be willing to trade an upfront time investment for future income. If you are low on cash, consider getting into: [su_note note_color="#dbeafc"]

• Custom products
• Online courses
• E-books
• Stock photos
• Affiliate marketing
• Blogging
• Youtube
• Podcasts

[/su_note]

How to Make Your Money Work for You

To make your money work for you, invest it in passive income ideas that are strictly financial instruments. You can invest money in the following money making ideas:

• Dividend Stocks: Earn dividend income on a monthly, quarterly, or annual basis by playing the stock market.
• Mutual Funds: A fund that holds multiple types of stocks that requires a minimum investment. Mutual fund focused on income will pay out similarly to dividend stocks.
• Retirement Accounts: You’ll pay taxes on either the front end or the back end but not both. If you work with a company with a matching 401K, that is an automatic gain right from the start.
• Peer-to-Peer Lending: These financial instruments lend money to people and businesses in exchange for the repayment of principal and interest payments. You may be required to be an accredited investor on some platforms.
• Real Estate Investment Trust: Make money off real estate investing without buying a property and managing it.

A high-yield savings account or money market fund is another option, but I would recommend going for something that beats inflation. Savings accounts and money market funds normally have horrible interest rates.

How Can I Make Passive Income with Real Estate?

Passive income options in real estate include:

• Buying a rental property: Buying real estate to earn rental income is one of the ways many people earn passive income in 2024.
• Investing in real estate investment trusts: Make money on real estate without owning real estate or managing a rental property. These are some of the highest-yielding stocks.

Have You Figured Out How to Get Rich in 2024?

At this point, you've learned:

1. The passive income definition
2. How to earn passive income
3. How to build passive income using Graham's strategies
4. Some of the best passive income ideas in 2024

Now you just have to put in the upfront time investment or money investment. As you bring in more money, make sure to keep reinvesting it in a mutual fund or other ways to create passive income dividends. Just as a reminder, don’t consider this blog as investment advice. We’re just business owners who are passionate about helping others succeed. Any investment decisions should be made in consultation with a licensed financial advisor. What passive income strategy has made you the most money?

• Real estate
• Online passive income
• Stocks
• Crypto

Do you love painted furniture and crafty furniture makeover videos you’ve seen on social media? If yes, you might enjoy furniture flipping.

Jennifer Beck burned out from being the number one seller in a corporation. She started Saved by Design to escape the rat race and turned her passion into a six-figure furniture flipping business—without taking on any debt.

In this article, you’ll learn about the most profitable furniture to flip and how to use the cool videos you’ve seen to refinish coffee tables, chairs, dressers, and other quality pieces people want to buy.

[su_note note_color="#dbeafc"] Jennifer shares how to start a furniture-flipping business, with information about:

• What is furniture flipping?
• What is the best furniture to flip?
• Is flipping furniture profitable?
• Where to find furniture to flip
• How to start a furniture flipping business
• How much can you make flipping furniture?
• When is the best time to buy furniture?
• What is the best way to find free furniture near me?
• Valuable resources for furniture flippers
• Start flipping furniture yourself[/su_note]

Read all her advice, or click on any of the links above to jump straight to the section that interests you most.

What is furniture flipping?

Flipping furniture is a process where you find old furniture, improve it by fixing any damage and adding new hardware, stain, paint, or fabric, and then resell it for a profit.

Jennifer told us:

[su_quote]I knew I loved DIY, fixing things, and design and saw people doing it, but not focusing on the sales aspect, so I knew I could do it better.[/su_quote]

What is the best furniture to flip?

The best furniture to flip depends on your skill set. A furniture flipper might focus on end tables, dressers, shelves, couches, and chairs. Jennifer shared the simple key to a worthwhile furniture makeover:

[su_quote]It needs to be what your customers want to see.[/su_quote]

Check out our interview with her below.

Is flipping furniture profitable?

According to business research firm IBIS World, the furniture restoration industry makes $1.8 billion per year. The firm estimates furniture restorers spend 42% of their revenue on wages, purchases, and rent; the other 58% of revenue could be comprised of marketing costs, tax payments, and profits.

According to Jennifer, Saved by Design was profitable immediately, and it has remained so every month for five years.

But how profitable is it?

[su_quote][We make] $12K in revenue [annually], and our gross profit margins are 80%. You’ll have to be frugal, and [remodeling the furniture] will take a little more time because you aren’t investing in crazy expensive tools.[/su_quote]

Where to find furniture to flip

Places to find used furniture include thrift stores, garage sales, auctions, yard sales, Craigslist, Facebook Marketplace, and friends and family. You can even grab unwanted furniture from the side of the road.

Be careful when grabbing furniture from the side of the road, though, because it could have bed bugs or other critters in it.

How to start a furniture flipping business

Starting a furniture flipping business can be a creative and profitable venture. Here are steps to help you get started:

1. Research the market.
2. Create your business.
3. Get furniture-flipping supplies.
4. Source furniture.
5. Do a furniture flip.
6. Establish the price.
7. Create a sales strategy.
8. Market your furniture flips.
9. Provide great customer service.
10. Keep detailed records of each furniture flip.
11. Reinvest in the business.

Get ready to learn all about flipping furniture for beginners.

Step #1. Research the market

Before you decide to flip furniture, you should research the market. You’ll want to:

1. Identify the type of furniture to flip.
2. Identify your target audience.
3. Perform competitor analysis.
4. Write a business plan (optional).

Identify the type of furniture to flip

Decide what type of furniture you want to focus on. You might narrow it down by the furniture piece or style.

We discussed standard furniture pieces earlier, but the style might be vintage, modern, Victorian, or custom.

Jennifer explained:

[su_quote]We have two main ways we make money: custom commission work [and] sourcing our pieces … We mainly focus on old pieces.[/su_quote]

Identify your target audience

You’ll want to identify your ideal customer to simplify selling furniture. If you don’t know who might like a piece of furniture, it may be harder to make extra cash on it.

Jennifer explained:

[su_quote]We focus on high-quality clients who value design quality, value the history [of the piece], and are willing to pay a price.[/su_quote]

Perform competitor analysis

Jennifer stressed the importance of paying attention to furniture flipping trends. She researches major retailers and listens to her customers’ demands.

Create a business plan (optional)

When you write a business plan, you’ll want to have at least the following sections:

1. Mission and vision statement
2. Budget and financials
3. Marketing plan
4. Operational plan

Mission and vision statement

Tell people why you do what you do and how you do it. Even though Jennifer never wrote a formal business plan, she still knows her mission clearly:

[su_quote]We provide quality pieces, customer service, and [honesty]. And if I can’t do something, I’ll tell you.[/su_quote]

Budget and financial projections

It helps to estimate your startup costs, ongoing expenses, and projected revenue.

For Jennifer, taking on debt was never a consideration:

[su_quote]I filed bankruptcy at 22 and committed to never taking on debt again. For my small business and lifestyle, taking on debt was never even considered.[/su_quote]

Marketing plan

Outline how you will market your business, including how you’ll create your online presence, use social media, and the software you’ll use to accomplish your goals.

We’ll talk more about marketing later, but Jennifer explained:

[su_quote]I will never downplay the word of mouth. Our very first customer was a coworker of a friend of ours.[/su_quote]

She also explained that much of today’s word of mouth occurs on social media.

Operations plan

You’ll want to detail the day-to-day operations, including sourcing furniture, refurbishing, and sales.

Jennifer had numerous furniture-flipping tips when it came to managing operations. First, you need to:

[su_quote]Educate yourself about everything you can about small business, and then let go and let people better at specific skills take over those.[/su_quote]

Jennifer stressed the importance of setting designated to work on your furniture flipping business—it’s important to have a life outside of your business.

How does she manage her furniture revamps?

[su_quote]Our workdays are Monday through Friday. 8 hours a day. We are doing physical work when we’re in the office. We do all our pickups and deliveries ourselves. We do all our filming ourselves, too.[/su_quote]

Next, you’ll want to create the business.

Step #2. Create your business

You aren’t required to report flipping furniture on your taxes until you make over $600, but if you’re trying to make substantial money reselling furniture, you should probably create a business.

That means you’ll need to:

1. Create a business structure.
2. Register your business.
3. Comply with tax laws.

Create a business structure

Decide whether you want to operate as a sole proprietorship, partnership, limited liability company (LLC), or corporation. Most small businesses opt for an LLC or S-Corp. You can learn more in our guide to business structures.

It’s helpful to consult a legal professional to choose the best option for your situation.

Register your business

You must register your business name and obtain any necessary permits or licenses. You may need state, county, or municipal registrations. Each state is different, so check your secretary of state’s business guide for what you’ll need when selling used furniture.

Comply with tax laws

You must understand tax obligations, including federal and state income, payroll, and sales taxes. There are over 13,000 tax jurisdictions in the U.S., so if you furniture flip in multiple jurisdictions, you might want to use the tax resource Avalara.

Once you’ve created your business, it’s time to flip furniture.

Step #3. Get furniture-flipping supplies

You’ll need tools and materials to perform a furniture makeover. Each piece of furniture is different, so you’ll need to research what is required.

You can choose power tools or hand tools. Hand tools require more elbow grease, and Jennifer doesn’t mind using a little elbow grease. She explained:

[su_quote]We are frugal about what we spend. Our first tools were old hand-me-downs we got from friends and family.[/su_quote]

[su_quote]Start with the basics. Research. Then, decide what you think works. Take $20 and go to a thrift shop. Don’t buy a bunch of expensive tools.[/su_quote]

At a minimum, you’ll probably want the following items for wood furniture:

• Sandpaper
• Paint
• Brushes
• Stain

As for acquiring a physical workspace, Jennifer told us:

[su_quote]My daughter and I work out of our garage, so the space for each furniture flip is free. Where we spend money is on the supplies.[/su_quote]

Step #4. Do a furniture flip

For each furniture flip, you’ll need to:

1. Acquire furniture.
2. Take before and after pictures.
3. Repair the furniture.
4. Find a buyer.

Find furniture

You’ll want to find quality furniture reasonably priced that you can flip. People commonly look for a coffee table, end table, chair, couch, shelving unit, or dresser.

Flippable furniture can often be found at a thrift store, garage sale, Craigslist, OfferUp, Facebook Marketplace, or on the side of the road.

You’ll want to look for relatively good-quality furniture, but you can repair it to create the perfect piece.

Take before and after pictures

Flipping old furniture usually requires some marketing to sell it. That means you need to take some before pictures of the piece to show what it looked like before you gave it new life.

After you finish, you’ll want to take some well-lit pictures that provide a perfect example of how someone might use the new furniture in their house.

You can also record a video of yourself sanding, applying paint, and performing other repairs.

Repair the furniture

You’ll want to develop a style or signature touch that separates your furniture. This could be a particular finish, color palette, or design element.

How to create painted furniture

One of the trends that a lot of people love is painted furniture. You just sand the original finish off the wood, add a little paint, and maybe change the hardware, and it’s ready for a resell.

How to flip a dresser

Dressers are one of the more challenging flips because they have drawers. If the drawers aren’t in working condition, your dresser flip will require replacing hardware, which will add to the cost of your dresser makeover.

Other than that, the procedure is the same as different furniture makeovers and flips.

How to flip couches

Flipping a couch is entirely different than most furniture makeovers. You will most likely be working with fabric or leather instead of (or in addition to) wood. That means you’ll need additional tools.

Most couch-flipping blogs focus on finding sellers, buying the couch cheap, and cleaning it up.

You might also consider reupholstering couches if you can get them for a steal. Check out Family Handyman’s reupholstering guide for couch-flipping tips.

Now that you know how to flip a couch, let's discuss finding a buyer.

Step #5. Establish the price

When you establish your asking price, you’ll want to consider your material costs, time you spent, and desired profit margin.

Jennifer prices her items based on market value, the time the flip takes, and the cost of the materials. Her profit margins tend to be higher when she sources the furniture herself.

She usually does 12 pieces per month, nine of which are her selections, while the other three are commissioned. She makes about $1,000 per piece.

Step #6. Create a sales strategy

Decide where you'll sell your refurbished furniture. Venues could include online marketplaces, your website, local consignment shops, or even your own showroom.

Jennifer mainly uses word of mouth to make money flipping furniture, but she includes social media in the “word of mouth” category. She explained that she didn’t know much about how to make money flipping furniture when she started:

[su_quote]I had no idea what I was doing. During the first year, I didn’t put much energy into it (selling on social media).[/su_quote]

Fortunately, you can learn from her mistakes before you start flipping furniture. Learn how she markets her business now.

Step #7. Market your furniture flips

There are many ways to market your work. Jennifer uses two main methods. To follow her path, you’ll want to develop an online presence and get referrals to sell your work.

Create an online presence

You’ll want to build a website and create profiles on social media platforms. Check out all of Saved by Design’s web assets.

Jennifer’s website uses a simple one-page design, but she also does a lot on social media. She told us:

[su_quote]We utilize Facebook, Instagram, TikTok, and YouTube. Instagram does best for us.[/su_quote]

[su_quote]For those who are wondering how to succeed on social media, she suggests you:
• Find your niche.
• Post consistently. [And I mean] all the time.
• Provide content that your followers want and need to see.[/su_quote]

It should be noted that Jennifer has other streams of revenue, including:

• Consultations: Jennifer advises people on how to flip furniture for a rate of $100 per hour with a 15-minute minimum.
• Affiliate links: She also sells products to paint furniture on Amazon using affiliate links. Learn more about affiliate marketing.
• Etsy: Jennifer also makes additional revenue by selling gallons of paint on Etsy. The colors for painted furniture range from neutral shades to bright yellow and Tuscan red.

Word of mouth requires a great product and excellent customer service, which we’ll discuss next.

Get referrals

You can get referrals by handing out business cards, asking for customer reviews, or running an affiliate program. The goal is to get people who have already benefited from your furniture flip services to spread the word (which means you have to do a good job).

Step #8. Provide excellent customer service

Customer service can make or break companies. Jennifer explained how to flip furniture and provide excellent customer service. She started with a little about her history:

[su_quote]I was trying to figure out what made me such a great salesperson and concluded that follow-through is the difference between what I did and what other salespeople do. … People want to know they can believe what you say. [Which means] always underpromise and overdeliver.[/su_quote]

Jennifer explained that she takes this approach from the first time someone reaches out to her about a project. She’ll use an email or script that says:

[su_quote]Thank you for reaching out to me. I will always be honest with you, and if I can’t do something, I’ll tell you.[/su_quote]

Something as simple as that helps build trust with customers, even if she has to reject certain requests. She explained:

[su_quote]I reject a project mainly because I am too busy. I will (also) reject pieces if it’s so far gone that we can’t, or it’s a piece that so inexpensive we can’t justify working on it.[/su_quote]

In the rare instance that Jennifer has an issue after completing an order, she has an excellent way to handle that, too!

[su_quote]If you did make a mistake, own it and offer to fix it. Alternatively, ask them what can I do to correct this?[/su_quote]

Sometimes, that just isn’t enough, and you must be more creative. Jennifer explained:

[su_quote]When people just want to be angry, offer them solutions. Tell them we’ll have to agree to disagree if they don't accept them, but these solutions are still open if you change your mind.[/su_quote]

Another piece of customer service Jennifer and her daughter employ is personally delivering the furniture themselves, further building a relationship with the customer.

Step #9. Keep detailed records of each furniture flip

As a small business owner, you must track expenses and income. When flipping furniture for profit, make sure to document:

1. The cost of the furniture piece.
2. The mileage to pick up and deliver it.
3. The time it takes you to do the makeover.
4. The cost of paint, varnish, and anything else went into the redesign.

Use accounting software, like QuickBooks, to track income, expenses, and payroll. You might also want an accountant to help you automate your record-keeping and audit your books quarterly.

Step #10. Reinvest in the business

You’ll want to expand your business as you go. This may mean investing in more tools, moving into a store, advertising, hiring employees, or adding new revenue streams.

However you decide to expand your business, Jennifer recommends reinvesting profits. She told us how she handled hers:

[su_quote]It took at least a year for [the company] to fully cover [our living expenses]. … When we started, we reinvested 50% of our profit. As we’ve grown, we reduced our reinvestment down to 10%.[/su_quote]

Pro Tip: You can make a profit, and a business still fails. Imagine your cost of running a business is $2K per month. You make $3K per month, but your living expenses are $5K monthly. Are you paying all your bills? Nope. When calculating the cost of doing business, include your cost of living by adding up all your bills and multiplying by 2.5.

How much can you make flipping furniture?

The sky is the limit. People spend over $243.8 billion annually on furniture, with an average of $767 per person. That means there is plenty of room for you to expand, especially if you focus on living room furniture.

The most significant percentage of the spending is on living room furniture, like coffee tables, end tables, and couches.

When is the best time to buy furniture?

The best time to buy furniture from a store is during the end of the summer or winter seasons because that is when retailers shift their stock the most. During those times, you are likely to save money.

What is the best way to find free furniture near me?

If you hope to find free furniture to make extraordinary profits, you should look at online marketplaces. While you can sometimes find free pieces on the side of the road, people moving will often include words like “sold immediately” in posts that you can find with an easy search.

Valuable resources for furniture flippers

• Furniture Flipping Teacher: Want to take a course on furniture flipping? Blogs typically recommend Furniture Flipping Teacher. We have not audited the course to see if it is applicable. We suggest watching their YouTube videos first.
• Dave Does Carpentry: Check out the YouTube channel on carpentry.
• Home Depot: Home Depot does lots of DIY videos.
• Business book: Try reading Jennifer’s favorite business book, Financial Peace by Dave Ramsey

Start flipping furniture yourself

Now you know how to start furniture flipping. It’s up to you to create creative ideas that will look amazing in people’s homes. Then find people who want the redecorated furniture. What kind of furniture revamps have you done?

Are you skilled at in-home and business repairs? If so, you might want to provide handyman services. Caleb started North Seattle Handyman in 2017 and is making $250k/year with only one employee. He started his handyman business with $5,000 and has never had a month where he didn't break even. He shared how he started his business, and we're going to share his tips with you. We'll walk you through how you can start your own handyman business step-by-step.

What is a handyman?

A handyman is a person who does odd jobs like small repairs, home maintenance, hanging TVs, and other tasks that homeowners and rental property companies require to ensure that their properties stay in good repair. That means most handymen will be working in the client's home or business. Working on someone else's property has special legal requirements that you need to pay attention to during the beginning stages of starting a handyman business. We'll cover them in general terms as each state will have different requirements.

What type of work can a handyman do legally?

Each state has different requirements, but in general, a handyman can typically do jobs under $1,000 without a handyman license. If you plan on taking larger jobs, small business owners should check what their state's requirements are on Next's Handyman License Requirements. Local contracting laws may also impact whether you need handyman licenses for smaller jobs. Go to your city or county's website to establish whether you have local licensing requirements. If you wish to do larger repairs, like home remodeling, or other services like plumbing, HVAC, or major electrical repairs, you may need a contractor's license. As previously mentioned, your city or county will give you the best information about which license is better for you. Caleb told us: [su_quote]I have a general contractors license so that I can manage larger projects than most handyman businesses, but I make more profit on my smaller projects.[/su_quote] Do handymen need to be licensed? I wish I could give you a better answer to this and on how to get a handyman license. Unfortunately, the spectrum of requirements is so dramatic that the best I can tell you is to use Money Lion's links to the proper governing authorities for each state.

Skills required to become a handyman

When starting a handyman business, you should have a variety of skills because your potential customers will want to be able to contact you for any of the tasks they don't have the time or desire to do. Some of the most common client expectations of handyman business owners include:

• Know how to find a stud
• Anchoring bookcases, TVs, and other objects on a stud
• Filling holes in drywall with spackle
• Fixing loose tiles
• Caulking tubs, sinks, and bathtubs
• Fixing leaking faucets
• Unclogging drains (with or without a snake)
• Seal cracks in pavement
• Change showerheads and toilet seats
• Clean gutters
• Change doorknobs, tighten hinges and replace door locks
• Change filters
• Building and replacing window screens
• Painting
• Basic electrical like changing light switches and electrical outlets

If you want to learn about how to do many of the projects a handyman works on, check out The Handyman Youtube Channel. He has a ton of videos on repairs and other work he has done. I found him entertaining too.

Tools required to become a handyman

According to Smart Service, every handyman should have:

• Claw Hammer
• Tape Measure
• Level
• Utility Knife
• Impact Driver
• Drill Driver - Included in the suggestion for Impact Driver
• Drill Bits - This includes drills bits and screwdriver attachments
• Circular Saw
• Recipro Saw
• Flashlight - I'd suggest both a handheld and headlamp
• Charging Kit - Included in other power tools
• Shop-Vac
• Screwdrivers
• Wire Stripper
• Pliers
• Gloves
• A vehicle that can transport everything. Look at work vans and trucks if you don't already have one.

Now that you have a great list of tools you need to provide handyman services, let's look at how much it costs to start a profitable handyman business.

How much does it cost to start a handyman business?

If you have the tools and vehicle to start providing handyman services, the startup costs can be fairly low. Caleb told us: [su_quote]I started my business with $5,000, which was primarily the general contractor's license, a surety bond, and general liability insurance.[/su_quote] If you have to purchase the tools and equipment needed, starting a new business as a handyman may cost as much as $60,000 if you buy a new truck. Depending on the payment terms of a car loan, most of the extra cost could be spread out over 5-7 years. Handyman startup pricing will obviously depend on your area of the country and local regulations. Many handymen will be able to start a business with no special requirements, but places with higher-cost handyman business license requirements may be more expensive places to start small businesses.

How much do handymen charge?

When I researched "How much do handymen charge?", this is what I found:

• Self-employed handyman hourly rate: $50-$125/hour
• Most jobs are between $65-$1200 with an average of $390
• Common jobs may have a flat fee
• Materials are typically in addition to the hourly rate

We asked how much Caleb charges per hour and he told us: [su_quote]I charge $100/hr plus material costs. I found that was the rate that attracted clients that appreciate the work and can afford the service.[/su_quote] You can watch the entire interview here:  [su_youtube url="https://www.youtube.com/watch?v=leUta_q_MPQ"]

How much does a handyman business make?

This is the part of every business that really matters: how much do handymen make a year? Caleb told us: [su_quote]I pay my handymen between $30-35/hr ($62,400-72,800/yr.)[/su_quote] According to the Bureau of Labor Statistics, Repair Workers tend to average around $40k/year.  Because business best practices suggest keeping employee compensation (including benefits) at less than 1/3 of revenue, a handyman business should plan to make at least $120k revenue per handyman. That's consistent with what Caleb told us: [su_quote]I'm making about $250k/year with me and one other handyman. We're about at the limit we can handle without hiring another local handyman.[/su_quote] To further give you an idea of how much money many handyman businesses make, we asked Caleb how many clients he takes a day. He told us "Each handyman can normally handle about 5 calls a day." Now that you know the basics of what you need to become a handyman, let's dig into the process of how to start your own handyman business.

Identify the target market for your handyman business

Every new business will need to establish who its ideal customers are. Caleb was the most informative small business owner we've talked to about who the potential customers are. He gave us a list of potential target markets you may want to pursue when starting a handyman business.

• Property management companies because they create business growth quickly due to the number of properties they manage.
• Real estate agents because the buyers will frequently ask for small repairs that were noted on the pre-sale home inspection.
• Homeowners in wealthy areas who are able to afford service calls that are $500+

He also told us: [su_quote]I talked to a business consultant who recommended including Northern Seattle in my business name. That had 2 benefits, made it easier for my small business to rank on the first page of Google and narrowed down the area I service to between North Seattle and Mukilteo.[/su_quote] For those who don't know the Greater Seattle Metropolitan area, it is approximately a 1.5-hour drive to drive from Olympia to Mukilteo, but only 22 minutes from North Seattle to Mukilteo, reducing the time sitting in traffic by 67% percent. That makes it where each vehicle can take an extra service call or two per day. I'd recommend doing the same if you live in a metropolitan area and constrain your target audience to a much smaller geographic location. Keep reading to learn about writing a business plan.

What to include in your handyman business plan

A business plan will help guide your decisions and strategy if you want to start a profitable handyman business. Exactly what you should include in it depends on whether it is just to guide your decisions, to help employees understand their roles in the business, and whether you are trying to get small business loans. At a minimum, I would recommend including:

• The business’ services
• The business’ goals. Do you just want to make as much money as you can make on your own, or do you want to hire employees?
• Who the ideal clients are. If there is more than one, you should break down each segment separately.
• What you need to achieve before you can begin business operations.
• Budget and funding-startup costs and how you will get the funding. If you need to take out loans, how will you accomplish that?
• Naming the business - This is how companies will know your business.
• Forming a business - All the legal requirements that you will have to meet to start a small business and maintain your handyman licensing.
• Hiring employees (if you plan to) - What roles you will need to fill and how you will fill them.
• Marketing Plan - Guides what marketing strategy you will use, including marketing materials, social media platforms, and a brand style guide
• Operations Plan - Guides how the business will and will not operate, including customer relations, processes, vendor management, and employee management. If you are seeking funding or need the business plan to guide employee decisions, you'll want a more in-depth plan. Here’s some free and low-cost education on business plans:
• UpFlip’s blog on How to Write a Business Plan
• SCORE’s free business plans and startup assistance resources
• The Complete Business Plan Course (Includes 50 Templates)

I'd also suggest checking out our interview with Mike Andes on how to write a business plan. [su_youtube url="https://www.youtube.com/watch?v=Seac5PbUZXk"]

Create a budget and obtain funding for your Handyman Business

Creating a budget requires financial discipline. You'll want to estimate the costs that you will incur before starting your business and during operation, and you’ll want to include a miscellaneous expense amount. Let's look at each of these.

Startup costs for your business

While I have already given you an idea of how much startup costs can run, I feel like we should break it down into more detail. Here are the line items you should probably consider:

• Cost of tools (if you don't already have them): _______
• Cost of work vehicle (if buying): _______
• Cost of DBA in your location: _______
• Small Business Insurance/Handyman Insurance (talk to your insurance company to see if they offer this): _______ How often is the renewal period?
• Local Licensing: _______ Is there a renewal period?
• State Licensing:_______ How often is the renewal period?
• Cost of Commercial drivers insurance: _______ How often is the renewal period? Are you using your personal vehicle? If so, what is the difference between personal insurance and commercial insurance?
• Cost of website and other software: _______ How often is the renewal period?
• At least 1 month of marketing expenses:_______. If Caleb uses paid marketing, it's $600/mo (read marketing section for more details.)

Operational Costs

Operational costs should be broken down monthly. Remember, you should assume best-case revenue is $120k/handyman. If you are just doing this for yourself, I would probably do a one-year analysis and return to it each year. If you are trying to get financing, I would use a 5-year budget.

• Any renewals mentioned above (add 3% each renewal period to protect against inflation):_______
• Vehicle costs:_______ assume $.58/mile
• Loan Payments (if applicable):_______
• Employees: _______ Assume $40k per employee or 30% of revenue attributable to that employee (or more if you are paying higher than average wages.)
• Sales tax: _______ Base it on your location and revenue estimates
• Income Tax: _______ Assume 20% of revenue
• Materials: _______ Assume 10% of revenue according to BPlans.
• Miscellaneous expenses: _______

I created a mock income statement using:

• Data Caleb gave us about his revenue and other expenses.
• Assumptions from the BPlan link above.
• Breaking it down for 1 and 2 trucks.

These were the results: If you can achieve these results (or better), your business bank account should be in good standing. During the first year, meeting the $125k mark may be a challenge. Fortunately, you only have to make around $30k to break even, which should be completely achievable.

Funding your business

In the previous section, the interest expense was based on 10% of the total operating expenses. If you seek funding, you'd want to use either total operating expenses or (Total operating expenses + Direct cost of sales = Funding needed). Common funding paths include:

• Personal funds/personal assets
• A loan from family or friends
• Funds from a business partner
• Government programs

The SBA offers free courses on financing options and funding programs. For info on using personal funds to start a business, check out this article from The Hartford. Alternative sources of funding include:

• Crowdfunding 
• Credit cards
• Home equity loan
• Business loan - check out our partners
• Rollover for business startups (ROBS)

Keep reading for tips on naming your business.

Select a Business Name for your Handyman Company

Next, you need to name your handyman company. Consider these questions while naming your company:

• Does it describe what you do?
• Is it easy to remember?
• Does it prevent weird acronyms?
• Is it available as a domain name? Check that the domain name and social media accounts are available with namechk.
• Include your location/area you serve, as Caleb suggested.

Try the business name generator from Shopify and make sure it is available with the Business Name Search from Better Legal.

Get a domain name

You can buy domain names from the platform you set up your online store on, but if you want to spend money on it elsewhere, you can find domain names for as low as $0.88 at NameCheap. Other providers include:

• Google Domains
• GoDaddy
• HostGator

You can't learn how to become a handyman without learning about the legal requirements. Keep reading to learn more about becoming a legal entity.

Become a Legal Handyman Business

Before you can legally work as a handyman, you’ll need to meet the legal obligations of your area. Depending on your location, you may require all of these, but the insurance and bonds are most commonly associated with major cities that have special contractors licensing requirements.

• Business License/Contractors License
• Business Insurance
• Bonds
• Business Formation
• Apply for an EIN
• Sales Tax Permits
• Tax Filing and Withholding
• Federal employment and labor law posters
• Unemployment Insurance

I'd like to remind you that earlier in the blog, Caleb told us that his startup costs were $5,000, most of which involved this process. Keep reading to learn more about each of these requirements.

Business License/Contractors License

The business license may be required on a state, city, or county level. The requirements will be different for each location. I provided information on the state level earlier in the blog.  Unfortunately, there's not a definitive source for local levels. Just to give you an idea though, for jobs over $1,000 in Nevada (and jobs less than $1,000 that are part of a larger project, or involve HVAC, plumbing, or electrical work), the state Contractors Board requires:

• Submittal of resume and references
• Disclosure of financial records
• Disclosure of criminal background (if any)
• A commercial bond of up to $500k
• Passing an exam on business law AND trade practices
• $300 application fee
• $600 license
• Up to $1,000 annual payments to the consumer recovery fund

That means most of the jobs a handyman will do would need a contractor's license in Nevada. In NV, you'd want to go for a general contractor license so you can handle any projects you want. It might be tempting to run the business without a license, but that risks criminal penalties of up to 4 years in prison for operating as a contractor without a license. Make sure to do online research on the following topics to make sure you follow the proper procedures:

• Do I need a contractor license in (Insert your state)?
• Do I need a contractor license in (insert your city)?
• Do I need a contractor license in (insert your county)?

Business Insurance

Business insurance can be purchased from most insurance companies. I'd reach out to your current car and home insurance first as you may be able to get the insurance through them. You'll want a commercial liability policy, which will typically be $1 million occurence/$2m lifetime coverage, but some areas or clients may require more. For instance, in my hometown of Las Vegas, MGM casino properties require $3m per occurrence. They also require $1m automobile coverage for contracts. If you have a client that needs work done very occasionally that has these requirements, you can often change it for the length of the time it takes to do the job and reduce it again upon completion.

Bonds

If you need a bond for a handyman business, you will need to get the details from the governing agency that approves the contractor licenses. In NV, they require a bond agency with long-term debts that are A grade or a cash bond of up to $500k. I strongly suggest going with the bond agency.

Business Formation

Now is the time to establish the legal structure. For best results, hire legal representation that has experience starting a business, like an attorney, accountant, or tax specialist. Each location has different licenses, permits, or tax forms required. Use the SBA License and Permits page to identify what your handyman company needs. We have partnered with Better Legal to help you with the business formation process. Better Legal will set up an LLC or Corporation for you. Their services include:

• LLC or Corporation Filing
• Employee Identification Number
• Operating Agreement
• Banking Resolution Document
• Free Website with Inventory Management
• Free Business Checking Account
• Free Tax Analysis
• Business Specific Insurance Suggestions
• Suggested Payroll, Benefits, and HR Platforms

They’ll help you get your business started quickly so you can focus on how to start getting clients for your handyman business. Keep reading for information on different legal structures.

Limited Liability Corporation (LLC)

An LLC is the most common business structure used in the United States because the company protects the owner’s assets. It’s similar to partnerships and corporations but can be a single-member LLC in most states. An LLC requires a document called an operating agreement. Each state has different requirements. Here’s a link to find your state’s requirements. People may register in specific states due to the cost of doing business. Delaware and Nevada are common states to file an LLC because of their business-friendly laws. Here’s a post on the top 10 states to get an LLC.

Sole proprietorship

A sole proprietorship is the easiest way to become a handyman, but the structure doesn’t protect the owner’s assets from legal issues. This structure should not be used because the handyman work includes work and materials that can cause injuries to employees, customers, or physical property. To start a sole proprietorship, fill out a special tax form called a Schedule C. Sole proprietors can also join the American Independent Business Alliance.

Partnerships and corporations

Partnerships and corporations are typically for massive organizations or legal firms. Unless there is a specific reason you need a partnership, it is better to do a multi-person LLC. Investopedia has good information about partnerships and corporations.

Apply for an EIN

Every business operating in the United States needs an employer identification number. It’s like a social security number for your business. Apply for it on the IRS website. It’s used on tax forms when filing taxes and to tie employees’ pay to the proper employer.

Sales Tax Permit

Most states have a sales tax, and you need to adhere to their requirements. This blog isn't the place to discuss the permits for all 50 states, but Avalara has a guide on Sales Taxes. Check it out. While you are learning about sales taxes, consider using AvaTax with Shopify Plus to make your tax compliance super easy.

Tax filing and withholding

Federal and state tax filing requirements apply to new employers. You must keep records of employment taxes for at least four years, including special forms and accounting for state taxes. Don’t worry! We’ve got you covered! Check out the IRS guide for employers here.

Federal employment and labor law posters

All employers must display Workplace Posters, which you can download from the website. Other requirements include:

• Employment Eligibility Verification (Form I-9)
• State’s New Hire - This is required so that people who owe child support remain in compliance
• Worker’s Compensation Insurance- Insurance for when employees get hurt on the job. Check out this guide to state laws
• Disability insurance - California, Hawaii, New Jersey, New York, and Rhode Island, and Puerto Rico have requirements. Learn more about disability insurance
• Occupational Safety and Health Administration (OSHA) - Federal and state laws govern what are safe working conditions. Fines can be up to $136,532/violation or up to $13,653/day. Make sure you understand your area’s laws at OSHA.gov.

Unemployment Insurance

The U.S. Chamber of Commerce has a ton of information on unemployment and also offers links to each state agency that handles state unemployment. You’ll have to pay $420 per employee on a federal level plus any state UI. Let's look at some tips on hiring employees to run a more profitable handyman business (measured in total dollars).

Hiring Employees

Hiring employees is primarily focused on hiring people who are skilled at the type of services you provide. Caleb told us: [su_quote]If your employees aren’t making you money, then it’s not worth having them. In the Seattle area, you are going to pay each employee around 6k a month in wages and also have LNI and insurance for them.[/su_quote] When hiring a handyman, you’ll need to:

• Post Open Jobs
• Conduct Interviews
• Establish Compensation
• Manage Tax Filings and withholdings
• Comply with federal and local labor laws

Keep reading for more info on each step.

Job Posting 

Hiring people requires posting “now hiring” signs and posting on prominent job boards. Some places you can start posting job requirements are:

• Facebook
• Indeed
• Zip Recruiter
• LinkedIn
• Craigslist

Make sure to include the tools you expect them to have as well as the most common jobs they need to be able to do without guidance. If you have to train them, you'll be spending more time on each job as opposed to taking on more jobs.

Interviews

Having a prepared list of questions for interviews can make hiring the right people easier. Indeed offers a variety of resources to help you make better hiring decisions. Read their guide on how to hire your first employee. Some questions you should ask during the interview process include:

• What handyman work are you most comfortable with? Least comfortable with?
• If you have to use a tool you have not used before, what would you do to make sure you handle it safely?
• How do you respond to a customer when you don’t know the answer to your question?
• I intentionally left (something in the shop that needs to be repaired) needing repairs for this interview, can you walk me through how to repair it?
• What are your compensation expectations?
• Do you have any ongoing commitments that impact your availability? If so, what dates and times will it impact?
• Do you have any points or DUIs on your driver's license?

Check out Indeed's list of questions to ask for more interview questions.

Compensation

Employees are typically a company’s biggest expense. There are three common pay structures in business. Each fits different scenarios. Let’s take a closer look.

Salary

Flat weekly/monthly rate based on a person working a specific number of hours. This is typically reserved for owners, managers, and some admin roles. You might want to assign this to yourself for budgeting purposes.

Hourly

This pay structure just tracks the hours an employee works and pays them a set hourly rate. This pay structure is solely based on time, not performance.

Commission

Typically used in sales to give employees a percentage of revenue. It is a strictly performance-based compensation model.

Hybrid Models

Hybrid models combine two pay structures: for instance, hourly and commission to compensate for time and performance. The hourly rate will typically be lower than an hourly rate without commission, but the commission should make it where good performing employees make more than they would without commission. These structures also help reduce the variability of pay from week to week. Paying employees an hourly wage works for most positions for clothing lines, but depending on your business structure, a commission or hybrid payment model might make sense. The article, “How to Create a Pay Structure That Promotes Team and Company Growth” offers some insights into thinking about pay structure.

Outsourcing

If you don't need a full-time employee, you can consider outsourcing or hiring a freelancer on sites like Upwork.com. You may pay more per unit hour, but it saves you time in hiring, training, and other time-consuming activities. Accounting and payroll are often prime targets for outsourcing because they can be done remotely on a weekly or biweekly basis.

Marketing a Successful Handyman Business

Caleb gave us a lot of great advice when it comes to marketing the fact that you provide handyman work. He emphasized: [su_quote]If you start a handyman business right now, you will immediately get real estate agents or people managing condominiums. I do direct-to-customer, that way, I can charge $100 an hour. I’m not using a 3rd party customer.[/su_quote] In other words, avoid using companies like Homeadvisor, Thumbtack, and other services that take a large cut for marketing. [su_quote]You have to market your skills, define your skills. Anything from hanging TVs, installing faucets, to lifelong carpentry.[/su_quote] Share pictures of projects on social media and Google My Business. [su_quote]Having a website is what has made the difference in my business. Having somewhere people can see me virtually increases my customer base about 1000 fold. We use branding on the side of the van, the website, and by doing a good job for the customers. I use Squarespace for my website. We have an online portal where the customer puts a bunch of information in for us. Our system is created to accurately quote based on emails and pictures.[/su_quote] In other words, create an awesome site using Squarespace or other platforms and integrate it with other software to make life easy. If you are going to build your own website, check out our blog on how to create a website. [su_quote]We do a lot of things to stay relevant on Google. First, the website name. Our Yelp ads help keep it ranked. Second, we ask people to include the name North Seattle Handyman if they leave reviews on Google or other places.[/su_quote]

Useful Software for Handyman Businesses

[su_quote]When a client is gets directed to my website, they fill out the info that gets put into a Google Form, and then we have a 3rd party software called Zapier that connects other parts of the business. It sends me an email, and then it also sends it to my customer management system, and that keeps everything in one place. So I can invoice, I can talk to the customers, I can schedule through that system which is Field Pulse. Those systems run around $100 a month. We use HomeWyse, it’s like having an estimating book in your car.[/su_quote] If Field Pulse doesn't seem like the best CRM for you, there are a ton of Customer Relationship Management tools for handyman businesses. Jobber and Housecall Pro seem to be two that have high usage and good ratings.

Operating Your Own Handyman Business

Caleb gave so much advice on operating your own handyman business that I think it is best to let his words do the talking. Caleb on learning business skills: [su_quote]Online tutorials are great, but I found having a business coach beneficial. You do have to spend some money on them, but they will help you make decisions you avoid making. (He uses Rebecca Ellison.)[/su_quote] Caleb on the early stages of business: [su_quote]Freedom is the best part of being a business owner. You can make being a handyman into whatever you want it to be, I made it into a professional service. When you first start out, you can definitely do this with a pickup truck and a set of tools. Eventually, I think it’s a good idea to buy a sweet van. When I first started, I was going to charge $60-70 an hour, but friends in the business said I needed to charge more, so I did. I charge around $100 an hour. $100 an hour is perfect for middle to upper-middle-class clientele. When you first start, you are going to overbook yourself. You have to pay attention and revise your decision-making.[/su_quote] I hope you have found this information about starting a handyman service company as informative as I have. If you found this walkthrough useful, subscribe to our mailing list to keep up to date on how to start different types of businesses. I want to leave you with the best three pieces of advice that Caleb can give you: [su_quote]Get started, treat your customers like people, and systemize, systemize, systemize.[/su_quote]