April 7, 2025 • 22 mins
Your side hustle might be breaking the law without you even realizing it. From hair styling in your living room to weekend handyman projects, what starts as innocent extra income can quickly cross invisible legal boundaries—with serious consequences.
Attorney Marshall Hunt returns to dissect the hidden legal risks lurking beneath today's booming side gig economy. While everyone seems obsessed with developing that perfect income stream, few understand when these activities trigger legal requirements. Hunt reveals how licensing requirements now affect 30% of American careers, up from just 5% fifty years ago, creating a minefield for unsuspecting entrepreneurs.
The conversation dives deep into unlicensed contracting—a particular danger zone where well-meaning handymen can find themselves facing criminal charges, unable to collect payment for their work, and personally liable for any damages. We explore real-world examples of entrepreneurs who started small in residential neighborhoods only to face angry neighbors, zoning violations, and HOA restrictions that threatened their livelihoods. One mechanic's journey from fixing cars in his yard to running a legitimate multi-bay shop demonstrates both the promise and peril of growing side businesses.
As your side hustle expands, so do the risks. Hunt explains when it's time to consider professional insurance and form an LLC to protect your personal assets. The good news? That LLC is easier to set up and maintain than you might think—and could save you from financial disaster if something goes wrong. Whether you're moonlighting as an electrician, selling crafts online, or renting out property, this episode provides the essential legal framework to protect yourself while pursuing your entrepreneurial dreams.
Ready to make sure your side hustle stays on the right side of the law? Subscribe now and learn how to transform your passion project into a legitimate business without the legal headaches.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Bob Sewell (00:04):
Is that even legal?
It's a question we askourselves on a daily basis.
We ask it about our neighbors,we ask it about our elected
officials, we ask it about ourfamily and sometimes we ask it
to ourselves.
The law is complex and itimpacts everyone all the time,
and that's why we are here.
I'm attorney Bob Sewell andthis is season five of the
(00:26):
Worldwide Podcast that exploresthat one burning question.
Is that even legal?
Let's go.
Today's guest on Is that EvenLegal?
Is Marshall Hunt.
Marshall Hunt is a return guest.
Welcome to the show.
Marshall Hunt (00:43):
Hey Bob, Thanks for having me.
Bob Sewell (00:45):
So the reason why I wanted to have you on today is
you're a commercial and civillitigator and you help people
who are in trouble on civilmatters, typically business
matters.
Other matters too, and you'reseeing something out there.
(01:06):
I've heard with side hustlesand we're seeing a lot of people
engaging in side hustles.
My wife thinks she needs tohave a side hustle.
She wants to have a sidebusiness.
My best friend across thestreet he thinks he needs to
have a side hustle.
No one's relaxing anymore.
They want to have that sidebusiness that's going to make
(01:27):
them the money they feel theyneed to have the lifestyle they
want.
Marshall Hunt (01:33):
Right, right, yeah, some of the high side
hustles get crazy too.
I was just reading the New YorkTimes had a piece a couple
months ago about all thesestruggling underemployed actors
that are, you know, understudiesfor off-broadway productions
that need to pay the rent.
And so apparently what theseguys did is they're gaming the
algorithm for the lyft bikeshare system in new york.
(01:55):
And you know, the lyft payspeople basically to move bikes
from, uh, overcrowded stationswith too many bikes to
underserved stations with notenough bikes.
And so these guys realize if wemove all the bikes to one
station and then take all thebikes away from a station nearby
, we can move them back andforth and make up to I think
(02:19):
it's at $6,000 a month on a goodmonth.
You know game in the system, soI thought that was a heck on a
good month.
Uh, you know game in the system, so I thought that was a heck
of a heck of a side hustle yeah,that I mean that's that blows
my mind, because we're talkingabout 70.
Bob Sewell (02:33):
you know that's a 70 plus thousand dollar a year
salary for moving bikes around,and I, and, and you know that is
not a lot of money in new YorkCity, but that's well above
average income for an averageAmerican, and so that's blowing
my mind.
But what I'm seeing and whatI'm hearing about are people who
(02:56):
are their side.
Hustle is no longer a hustle,it's a business.
What am I looking for whensomething like that happens?
Marshall Hunt (03:08):
Yeah, that's when you got to start watching out.
I mean, obviously the point ofthe side hustle is to make money
, so in some ways you're happywhen it makes enough money to
require you to actually payattention to some of the
business risks of a side hustle,but you do got to pay attention
(03:29):
to them.
So here's a few that I've beenthinking about.
The first one is professionallicensing.
So I looked it up.
Brookings Institute says thatabout 30% of careers these days
in the United States require alicense.
So 50 years ago that was 5%.
Anyone could start a businessand chances were they weren't
(03:53):
going to have to get some typeof professional license from
their state.
But these days, 3 in 10 chanceyour side hustle might require a
license.
So it's something to thinkabout, depending on your state.
Let's say you're just doinghair or makeup in your living
room or you're moonlighting as alocksmith or you're doing
interior design for your friends.
(04:14):
All of those in some states arelicensed professions at this
point.
You know some cities evenrequire a local business license
to do business in the city, andso it can be sort of a
minefield for someone that justwants to earn a little bit of
extra cash to watch out and getone of those licenses.
Bob Sewell (04:38):
Yeah, I mean you end up people end up breaking the
law and they don't even know itright.
They just want to be a goodcitizen and make some money and
support their family, and thenwe have this minefield of laws
we're looking at.
Marshall Hunt (04:56):
Yeah, I mean, reasonable, minds could differ
whether these licenses are justeconomic protectionism by the
people in those professions thatyou know want to create their
own little guild, or whetherthis is actually a good use of
state resources.
But that's a podcast foranother day.
The one that I think people getpeople in the most trouble, in
Arizona at least, is contracting.
(05:18):
You know it's not theall-important driver of our
economy in Arizona these dayslike it was maybe 20 years ago,
but it's still a huge part ofour economy and in Arizona you
can do basically simple handymanwork for under $1,000 without a
license, but above that youneed to be a licensed contractor
(05:39):
.
In Arizona, and especiallythese days, $1,000 doesn't go
very far and you know,especially these days, $1,000
doesn't go very far.
And so anyone that is handy witha hammer and is out there
swinging it on the nights andweekends trying to make a little
extra money is, if they're notlicensed, they're probably
licensed contracting without alicense and that can get you in
(06:03):
some trouble.
So the things you got to watchout for, for instance, in
Arizona and I think probablymost States if you do unlicensed
contracting and then the personyou're working for doesn't pay
you, you can't sue them inArizona to get your money.
You know it's a decision by thestate that says we want to
discourage unlicensedcontracting and so we're not
(06:23):
going to let you sue in ourcourts to get paid for
unlicensed contracting.
And so you know, I've seen itbe.
You know six figure issues.
A guy builds a house but doesit without a license or maybe
the not the correct license, andif he gets stiff, stiffed on
the bill he's really out of luck.
(06:44):
You know contracting.
Bob Sewell (06:46):
Yeah.
Marshall Hunt (06:47):
Yeah.
Bob Sewell (06:48):
Yeah, that's it.
You know I got a great idea,marshall.
I mean, you, you, you, you, uh,you said I think I could be a
thousand dollars.
My job can be a thousanddollars, right, right.
And so, basically, I thinkthat's like the handyman
exception or something, right,right?
So what I'm going to do is, onmy side, hustle is, I'm going to
(07:15):
paint your house, Marshall, andI'll paint half of it for
$1,000 and the other half for$1,000.
Marshall Hunt (07:24):
The state doesn't want you to know this.
One easy trick to get aroundthe licensing statute that's
going to work right.
I think probably they wouldview that as an attempt to get
around the licensure statute andprobably still throw the book
at you there.
But I like the inventivethinking you know, kind of
painting one brick at a time.
Bob Sewell (07:44):
Exactly there's a time.
Exactly there's a thousanddollar brick.
Now I'm going to contract withit.
But the problem is people dothis.
Marshall Hunt (07:53):
They do it.
And if they do it, they'replaying with fire.
I mean, Arizona, unlicensedcontracting is a class one
misdemeanor.
Unlicensed contracting is aclass one misdemeanor.
It's a crime as well aspotentially, as you know,
(08:14):
exposing you to civil penalties.
Class one misdemeanor ismaximum six months in jail and
$1,000 fine.
I mean I think it's unlikelythat the state's spending much
time prosecuting criminally andsending people to jail for
unlicensed contracting, but ifyou get caught once and you get
caught twice and you get caughtthree times, I mean you're
really playing with fire withsomething like that.
Bob Sewell (08:34):
But here, marshall, it's my side hustle.
And you telling me I mean, whenI go and I get licensed, I have
to produce a bond right, it'snot a huge bond, but it's some
sort of bond and I have to gothrough and jump through the
hoops to pass their test orwhatever it is.
(08:55):
And now what you're telling meis don't do my side hustle,
because if I do a kitchen everythree months, because I'm a hell
of a cabinetmaker, I now amrunning afoul of the law.
So don't do my side hustle.
Marshall Hunt (09:18):
Yeah, and I would say don't do your side hustle
if you listen to the attorneys,because we're the real risk
averse guys, but at least at thevery least be aware of the
risks If you are contractingwithout've personally
experienced in some of my casesis when your side hustle runs
afoul of zoning and deedrestrictions.
Yeah, so you know, you and Iboth are living the suburban
(09:58):
dream.
We live in our quaint suburbanneighborhoods.
I don't know about you.
I don't have an HOA.
You probably do right, You'rein a bit of know about you.
I don't have an HOA.
You probably do right, You'rein a bit of an HOA.
Bob Sewell (10:07):
Yeah, I got an HOA.
Marshall Hunt (10:08):
All right, you've got an HOA, you've got CC&Rs.
You know, I think yourneighborhood's like Edward
Scissorhands, basically right,everyone's in nice colorful
outfits and matching lawns andthe whole thing, whole thing.
But um, so in most CCNRs,sometimes even in um places that
(10:29):
don't have an HOA but do haveprivate deed restrictions
written on your deed.
Sometimes in your city zoningthere are going to be
restrictions on commercial useof especially suburban homes.
But you know, anywhere that'szoned for residential or has
people living there, there'sgoing to be, you know,
restrictions on what you can useyour house for as far as a
(10:53):
commercial enterprise.
So a couple of examples that Ipersonally have seen.
You know, I had a case where awoman just did hair out of her
home and she got into this bigdispute with her neighbors.
It wasn't really about the hair, but when they got into a
dispute and they got into court,this comes out and the other
side starts using this as acudgel to try to get leverage
(11:16):
against her to say you know,we're going to shut down your
hair business because it'sagainst this deed restriction
that says no commercial use.
I had another mechanic friendwho had some acreage.
He decided he's going to workon friends and family's car in
the back workshop and all of asudden again he's getting into
(11:38):
disputes with his neighbors whodon't like the cars coming in
all the time and sitting outside, and so they got this sort of
unsightly mechanic shop going intheir nice horse property out
in the Southeast Valley.
Bob Sewell (11:52):
So you know that happened in my neighborhood.
There was a guy, and it wasduring the downturn of the
economy and he ends up losinghis gig at the Toyota dealership
and so he's like, well, what amI gonna do?
And so he starts fixing cars inhis front yard in a, in a well
manicured hoa situation, and youknow, and, and most people
(12:21):
understood and didn't thinkanything of it, and he would fix
a car or two a week and thennext thing, you know, he's got a
lineup of cars, yeah, and itonly takes one angry neighbor.
And I liked the guy and so Inever said anything and I also
(12:42):
knew that someone else wouldright.
And next thing, you know hishouse and the street looks like
it's a used car lot and prettysoon he had to go find another
place to do his business andfrom a very practical
(13:03):
perspective that's not a badthing, right?
I mean, he went from workingfor someone to working out of
his house and when his placewasn't working anymore for him
he went out and found somecommercial space and it was
trash commercial space and heworked on his car some more.
(13:26):
And then he has a big garage,now you know where.
He's got three or four bays andhe's got you know a dozen
employees that are coming in andhe's selling his services and
he's got a line of cars alwayshis services and he's got a line
(13:50):
of cars, always it's.
It's a uh, you know, I meanthat's the the hope of every
side hustle, but you're you'regoing to step on a few landmines
when you're doing it my parentsuh neighborhood.
Marshall Hunt (13:57):
They had someone in the neighborhood that
basically turned their yardsales into us, maybe beyond side
hustle.
They were almost like runningan auction house, but they were
running these huge garage salesevery weekend and it made the
neighbors mad and they sort ofrevolted.
And I don't think my parentshave an HOA, but they found some
way to shut the guys down.
(14:18):
I think under commercial, youknow residential zoning rules.
So yeah, you, you gotta watchout.
I mean, even if you're justselling t-shirts out of your
house or something and you think, oh, it's no big deal, it's
just within the four corners ofmy house, maybe you have
delivery trucks coming all thetime, there's going to be
someone on your street thatisn't happy about it too, and
(14:40):
it's another thing to thinkabout.
At what point does your sidehustle start to get you in hot
water with your neighbors?
Bob Sewell (14:49):
What do I?
At some point, my side hustleis too big and I'm going to
start looking at some potentialliability here.
What am I going to be thinkingabout?
Marshall Hunt (15:00):
What am I looking for?
It's a good way to think aboutit, because you're not in most
cases doing the side hustle.
What am I looking for terms oftraditional ways that
(15:22):
traditional businesses try tomitigate risk and potential
liabilities?
You know, and it's not hard tosee, how quickly something like
that could come up.
You know, if a guy ismoonlighting as an electrician,
let's say he's a greatelectrician and let's say he's
even staying under that thousanddollar limit we talked about
(15:42):
and he's just doing $500 jobs toinstall, you know, recessed
lighting or change outlets oryou know whatever else, and he
gets a little extra cash forChristmas.
But you know, electrician, it'snot hard to see that you carry
some real, significant potentialliability there.
God forbid, something goeswrong, house burns down,
(16:04):
homeowners looking at you tocompensate them, and if you're
just doing this in your own nameas your side hustle on a
handshake, you haven't reallydone anything to mitigate your
risk.
So you know a traditionalbusiness, for instance, is going
to look at you know insurance.
You know it's a classic way tomitigate your risk.
(16:24):
You say, look, I pay theinsurance premiums and if
something goes wrong, theinsurance ostensibly comes in
and covers it.
So you know if you're doing aside hustle and it's really
successful and it's starting totake more of your time, it's
worth thinking about.
You know what insurable risksdo I have?
Uh, what do the premiums forthose types of risks cost?
(16:46):
Do the profits on the one handof my side hustle and the you
know, do they justify payingthose premiums and insuring
against those risks?
You know it's a sort of aheuristic you can use to think
through those potential risks.
Bob Sewell (17:09):
What about corporate form?
When should I?
Start thinking about you know,I had a small business.
That's how I put myself through.
School was my small business.
I ran it out of my name.
I didn't have corporate form.
I didn't feel like I needed it,but at some point your
(17:30):
corporate form should beconsidered right.
And what should I be thinkingof?
Marshall Hunt (17:39):
Yeah, you like to give me a hard time about my
rock and roll days when I was ina band in college and after
college some.
But even the band that I playedin was, you know, rock and roll
is truly dead because our bandwas operated as an LLC and, uh,
the sort of singer songwriterthat ran the band would, you
(18:02):
know, uh, have people pay hisLLC and you know, I think he
used it for, you know, taxpurposes and things like that.
But, um, so, yeah, you know,even even your, even your side
hustle band can, can, uh, takeon the uh corporate formation.
But yeah, that uh, uh, limitedliability company is sort of the
(18:24):
, the form du jour.
For a lot of reasons.
It's easy to form, doesn'trequire as many formalities as a
traditional corporation, um,and I think that thinking about
those same types of things withrespect to insurance are
incurred as part of thatbusiness, but doesn't expose the
(19:01):
individual to those same debts.
But to actually make an LLCuseful, you've got to, in most
instances, have the LLC, haveits own bank account.
It's not necessarily alwaysgoing to do its own taxes, but
you're going to have to accountfor it on your taxes in one way
or another.
Um, you know it's, you're goingto have to have some sorts of
(19:22):
formalities.
You're likely going to have toform contracts in the name of
the business, things like that.
And so, again, depending onyour side hustle and the nature
of it, you probably want tothink about at what point again,
is the extra time and expensewhich, with an LLC, is not very
great Once you get it formed,for a few hundred bucks, in most
(19:46):
instances it doesn't take a lotof extra work and, again, in
the context of something likeour electrician, I think the
potential benefits are very,very great.
And so I think, forming an LLC,anything beyond a babysitter or
a lemonade stand you probablystart thinking about some type
(20:09):
of corporate formation.
Bob Sewell (20:11):
Yeah, yeah, I think you're right.
And the thing is they're soeasy to manage LLCs compared to
the day and the age when you'dhave your choice for corporate
form was a corporation withshares and all this type of
stuff.
No, an LLC is a lot easier tomanage and it gives you a lot of
(20:33):
benefits for creditorprotection and, yeah, it's
really worth thinking about.
And, by the way, I only teaseyou about the band because I'm
jealous, Because I've always thething is and you've heard me
say this before, Marshall I'vealways wanted to be in the band.
So when someone asked me, whatare you doing with your life
(20:55):
right now?
I could say I'm getting theband.
So when someone asked me, whatare you doing with your life
right now, I could say I'mgetting the band back together,
yes, and like get you.
And you could say that we'regetting the band back together.
Marshall Hunt (21:04):
we're gonna do one more run at it yeah, I mean
you gotta start the band, gosomewhere with the band, have
the band break up, have the bandbe broken up for a while all
before you're ready to get theband back together.
That's where I am now.
The band's long up for a whileall before you're ready to get
the band back together.
That's where I am now.
The band's long, you know in mypast.
I'm ready to get the band backtogether.
It's time.
Bob Sewell (21:24):
Yeah, all right, marshall, you've given me a lot
to think about.
Thanks for coming on.
If I need to get a hold of you,my side hustle is becoming
unwieldy.
What should I do?
How do I get a hold of you?
Marshall Hunt (21:41):
Yeah, marshall Hunt.
I work at Davis Miles inArizona.
Our website is davismilescom.
Email mhunt at davismiles, bestway to reach me.
Bob Sewell (21:51):
Thanks, thanks for coming on.
Thanks for listening to thepodcast, thanks, thanks for
(22:11):
coming on and, as lovable as weare, we are not your lawyers and
we are not giving you legaladvice, but if you need some
legal advice, get some.
There are some great lawyersout there and we are always
ready to help.
See you next time.
Is that even legal?
It's a question we askourselves on a daily basis.
We ask it about our neighbors,we ask it about our elected
officials, we ask it about ourfamily and sometimes we ask it
to ourselves.
The law is complex and itimpacts everyone all the time,
and that's why we are here.
I'm attorney Bob Sewell andthis is season five of the
(00:26):
Worldwide Podcast that exploresthat one burning question.
Is that even legal?
Let's go.
Today's guest on Is that EvenLegal?
Is Marshall Hunt.
Marshall Hunt is a return guest.
Welcome to the show.
Marshall Hunt (00:43):
Hey Bob, Thanks for having me.
Bob Sewell (00:45):
So the reason why I wanted to have you on today is
you're a commercial and civillitigator and you help people
who are in trouble on civilmatters, typically business
matters.
Other matters too, and you'reseeing something out there.
(01:06):
I've heard with side hustlesand we're seeing a lot of people
engaging in side hustles.
My wife thinks she needs tohave a side hustle.
She wants to have a sidebusiness.
My best friend across thestreet he thinks he needs to
have a side hustle.
No one's relaxing anymore.
They want to have that sidebusiness that's going to make
(01:27):
them the money they feel theyneed to have the lifestyle they
want.
Marshall Hunt (01:33):
Right, right, yeah, some of the high side
hustles get crazy too.
I was just reading the New YorkTimes had a piece a couple
months ago about all thesestruggling underemployed actors
that are, you know, understudiesfor off-broadway productions
that need to pay the rent.
And so apparently what theseguys did is they're gaming the
algorithm for the lyft bikeshare system in new york.
(01:55):
And you know, the lyft payspeople basically to move bikes
from, uh, overcrowded stationswith too many bikes to
underserved stations with notenough bikes.
And so these guys realize if wemove all the bikes to one
station and then take all thebikes away from a station nearby
, we can move them back andforth and make up to I think
(02:19):
it's at $6,000 a month on a goodmonth.
You know game in the system, soI thought that was a heck on a
good month.
Uh, you know game in the system, so I thought that was a heck
of a heck of a side hustle yeah,that I mean that's that blows
my mind, because we're talkingabout 70.
Bob Sewell (02:33):
you know that's a 70 plus thousand dollar a year
salary for moving bikes around,and I, and, and you know that is
not a lot of money in new YorkCity, but that's well above
average income for an averageAmerican, and so that's blowing
my mind.
But what I'm seeing and whatI'm hearing about are people who
(02:56):
are their side.
Hustle is no longer a hustle,it's a business.
What am I looking for whensomething like that happens?
Marshall Hunt (03:08):
Yeah, that's when you got to start watching out.
I mean, obviously the point ofthe side hustle is to make money
, so in some ways you're happywhen it makes enough money to
require you to actually payattention to some of the
business risks of a side hustle,but you do got to pay attention
(03:29):
to them.
So here's a few that I've beenthinking about.
The first one is professionallicensing.
So I looked it up.
Brookings Institute says thatabout 30% of careers these days
in the United States require alicense.
So 50 years ago that was 5%.
Anyone could start a businessand chances were they weren't
(03:53):
going to have to get some typeof professional license from
their state.
But these days, 3 in 10 chanceyour side hustle might require a
license.
So it's something to thinkabout, depending on your state.
Let's say you're just doinghair or makeup in your living
room or you're moonlighting as alocksmith or you're doing
interior design for your friends.
(04:14):
All of those in some states arelicensed professions at this
point.
You know some cities evenrequire a local business license
to do business in the city, andso it can be sort of a
minefield for someone that justwants to earn a little bit of
extra cash to watch out and getone of those licenses.
Bob Sewell (04:38):
Yeah, I mean you end up people end up breaking the
law and they don't even know itright.
They just want to be a goodcitizen and make some money and
support their family, and thenwe have this minefield of laws
we're looking at.
Marshall Hunt (04:56):
Yeah, I mean, reasonable, minds could differ
whether these licenses are justeconomic protectionism by the
people in those professions thatyou know want to create their
own little guild, or whetherthis is actually a good use of
state resources.
But that's a podcast foranother day.
The one that I think people getpeople in the most trouble, in
Arizona at least, is contracting.
(05:18):
You know it's not theall-important driver of our
economy in Arizona these dayslike it was maybe 20 years ago,
but it's still a huge part ofour economy and in Arizona you
can do basically simple handymanwork for under $1,000 without a
license, but above that youneed to be a licensed contractor
(05:39):
.
In Arizona, and especiallythese days, $1,000 doesn't go
very far and you know,especially these days, $1,000
doesn't go very far.
And so anyone that is handy witha hammer and is out there
swinging it on the nights andweekends trying to make a little
extra money is, if they're notlicensed, they're probably
licensed contracting without alicense and that can get you in
(06:03):
some trouble.
So the things you got to watchout for, for instance, in
Arizona and I think probablymost States if you do unlicensed
contracting and then the personyou're working for doesn't pay
you, you can't sue them inArizona to get your money.
You know it's a decision by thestate that says we want to
discourage unlicensedcontracting and so we're not
(06:23):
going to let you sue in ourcourts to get paid for
unlicensed contracting.
And so you know, I've seen itbe.
You know six figure issues.
A guy builds a house but doesit without a license or maybe
the not the correct license, andif he gets stiff, stiffed on
the bill he's really out of luck.
(06:44):
You know contracting.
Bob Sewell (06:46):
Yeah.
Marshall Hunt (06:47):
Yeah.
Bob Sewell (06:48):
Yeah, that's it.
You know I got a great idea,marshall.
I mean, you, you, you, you, uh,you said I think I could be a
thousand dollars.
My job can be a thousanddollars, right, right.
And so, basically, I thinkthat's like the handyman
exception or something, right,right?
So what I'm going to do is, onmy side, hustle is, I'm going to
(07:15):
paint your house, Marshall, andI'll paint half of it for
$1,000 and the other half for$1,000.
Marshall Hunt (07:24):
The state doesn't want you to know this.
One easy trick to get aroundthe licensing statute that's
going to work right.
I think probably they wouldview that as an attempt to get
around the licensure statute andprobably still throw the book
at you there.
But I like the inventivethinking you know, kind of
painting one brick at a time.
Bob Sewell (07:44):
Exactly there's a time.
Exactly there's a thousanddollar brick.
Now I'm going to contract withit.
But the problem is people dothis.
Marshall Hunt (07:53):
They do it.
And if they do it, they'replaying with fire.
I mean, Arizona, unlicensedcontracting is a class one
misdemeanor.
Unlicensed contracting is aclass one misdemeanor.
It's a crime as well aspotentially, as you know,
(08:14):
exposing you to civil penalties.
Class one misdemeanor ismaximum six months in jail and
$1,000 fine.
I mean I think it's unlikelythat the state's spending much
time prosecuting criminally andsending people to jail for
unlicensed contracting, but ifyou get caught once and you get
caught twice and you get caughtthree times, I mean you're
really playing with fire withsomething like that.
Bob Sewell (08:34):
But here, marshall, it's my side hustle.
And you telling me I mean, whenI go and I get licensed, I have
to produce a bond right, it'snot a huge bond, but it's some
sort of bond and I have to gothrough and jump through the
hoops to pass their test orwhatever it is.
(08:55):
And now what you're telling meis don't do my side hustle,
because if I do a kitchen everythree months, because I'm a hell
of a cabinetmaker, I now amrunning afoul of the law.
So don't do my side hustle.
Marshall Hunt (09:18):
Yeah, and I would say don't do your side hustle
if you listen to the attorneys,because we're the real risk
averse guys, but at least at thevery least be aware of the
risks If you are contractingwithout've personally
experienced in some of my casesis when your side hustle runs
afoul of zoning and deedrestrictions.
Yeah, so you know, you and Iboth are living the suburban
(09:58):
dream.
We live in our quaint suburbanneighborhoods.
I don't know about you.
I don't have an HOA.
You probably do right, You'rein a bit of know about you.
I don't have an HOA.
You probably do right, You'rein a bit of an HOA.
Bob Sewell (10:07):
Yeah, I got an HOA.
Marshall Hunt (10:08):
All right, you've got an HOA, you've got CC&Rs.
You know, I think yourneighborhood's like Edward
Scissorhands, basically right,everyone's in nice colorful
outfits and matching lawns andthe whole thing, whole thing.
But um, so in most CCNRs,sometimes even in um places that
(10:29):
don't have an HOA but do haveprivate deed restrictions
written on your deed.
Sometimes in your city zoningthere are going to be
restrictions on commercial useof especially suburban homes.
But you know, anywhere that'szoned for residential or has
people living there, there'sgoing to be, you know,
restrictions on what you can useyour house for as far as a
(10:53):
commercial enterprise.
So a couple of examples that Ipersonally have seen.
You know, I had a case where awoman just did hair out of her
home and she got into this bigdispute with her neighbors.
It wasn't really about the hair, but when they got into a
dispute and they got into court,this comes out and the other
side starts using this as acudgel to try to get leverage
(11:16):
against her to say you know,we're going to shut down your
hair business because it'sagainst this deed restriction
that says no commercial use.
I had another mechanic friendwho had some acreage.
He decided he's going to workon friends and family's car in
the back workshop and all of asudden again he's getting into
(11:38):
disputes with his neighbors whodon't like the cars coming in
all the time and sitting outside, and so they got this sort of
unsightly mechanic shop going intheir nice horse property out
in the Southeast Valley.
Bob Sewell (11:52):
So you know that happened in my neighborhood.
There was a guy, and it wasduring the downturn of the
economy and he ends up losinghis gig at the Toyota dealership
and so he's like, well, what amI gonna do?
And so he starts fixing cars inhis front yard in a, in a well
manicured hoa situation, and youknow, and, and most people
(12:21):
understood and didn't thinkanything of it, and he would fix
a car or two a week and thennext thing, you know, he's got a
lineup of cars, yeah, and itonly takes one angry neighbor.
And I liked the guy and so Inever said anything and I also
(12:42):
knew that someone else wouldright.
And next thing, you know hishouse and the street looks like
it's a used car lot and prettysoon he had to go find another
place to do his business andfrom a very practical
(13:03):
perspective that's not a badthing, right?
I mean, he went from workingfor someone to working out of
his house and when his placewasn't working anymore for him
he went out and found somecommercial space and it was
trash commercial space and heworked on his car some more.
(13:26):
And then he has a big garage,now you know where.
He's got three or four bays andhe's got you know a dozen
employees that are coming in andhe's selling his services and
he's got a line of cars alwayshis services and he's got a line
(13:50):
of cars, always it's.
It's a uh, you know, I meanthat's the the hope of every
side hustle, but you're you'regoing to step on a few landmines
when you're doing it my parentsuh neighborhood.
Marshall Hunt (13:57):
They had someone in the neighborhood that
basically turned their yardsales into us, maybe beyond side
hustle.
They were almost like runningan auction house, but they were
running these huge garage salesevery weekend and it made the
neighbors mad and they sort ofrevolted.
And I don't think my parentshave an HOA, but they found some
way to shut the guys down.
(14:18):
I think under commercial, youknow residential zoning rules.
So yeah, you, you gotta watchout.
I mean, even if you're justselling t-shirts out of your
house or something and you think, oh, it's no big deal, it's
just within the four corners ofmy house, maybe you have
delivery trucks coming all thetime, there's going to be
someone on your street thatisn't happy about it too, and
(14:40):
it's another thing to thinkabout.
At what point does your sidehustle start to get you in hot
water with your neighbors?
Bob Sewell (14:49):
What do I?
At some point, my side hustleis too big and I'm going to
start looking at some potentialliability here.
What am I going to be thinkingabout?
Marshall Hunt (15:00):
What am I looking for?
It's a good way to think aboutit, because you're not in most
cases doing the side hustle.
What am I looking for terms oftraditional ways that
(15:22):
traditional businesses try tomitigate risk and potential
liabilities?
You know, and it's not hard tosee, how quickly something like
that could come up.
You know, if a guy ismoonlighting as an electrician,
let's say he's a greatelectrician and let's say he's
even staying under that thousanddollar limit we talked about
(15:42):
and he's just doing $500 jobs toinstall, you know, recessed
lighting or change outlets oryou know whatever else, and he
gets a little extra cash forChristmas.
But you know, electrician, it'snot hard to see that you carry
some real, significant potentialliability there.
God forbid, something goeswrong, house burns down,
(16:04):
homeowners looking at you tocompensate them, and if you're
just doing this in your own nameas your side hustle on a
handshake, you haven't reallydone anything to mitigate your
risk.
So you know a traditionalbusiness, for instance, is going
to look at you know insurance.
You know it's a classic way tomitigate your risk.
(16:24):
You say, look, I pay theinsurance premiums and if
something goes wrong, theinsurance ostensibly comes in
and covers it.
So you know if you're doing aside hustle and it's really
successful and it's starting totake more of your time, it's
worth thinking about.
You know what insurable risksdo I have?
Uh, what do the premiums forthose types of risks cost?
(16:46):
Do the profits on the one handof my side hustle and the you
know, do they justify payingthose premiums and insuring
against those risks?
You know it's a sort of aheuristic you can use to think
through those potential risks.
Bob Sewell (17:09):
What about corporate form?
When should I?
Start thinking about you know,I had a small business.
That's how I put myself through.
School was my small business.
I ran it out of my name.
I didn't have corporate form.
I didn't feel like I needed it,but at some point your
(17:30):
corporate form should beconsidered right.
And what should I be thinkingof?
Marshall Hunt (17:39):
Yeah, you like to give me a hard time about my
rock and roll days when I was ina band in college and after
college some.
But even the band that I playedin was, you know, rock and roll
is truly dead because our bandwas operated as an LLC and, uh,
the sort of singer songwriterthat ran the band would, you
(18:02):
know, uh, have people pay hisLLC and you know, I think he
used it for, you know, taxpurposes and things like that.
But, um, so, yeah, you know,even even your, even your side
hustle band can, can, uh, takeon the uh corporate formation.
But yeah, that uh, uh, limitedliability company is sort of the
(18:24):
, the form du jour.
For a lot of reasons.
It's easy to form, doesn'trequire as many formalities as a
traditional corporation, um,and I think that thinking about
those same types of things withrespect to insurance are
incurred as part of thatbusiness, but doesn't expose the
(19:01):
individual to those same debts.
But to actually make an LLCuseful, you've got to, in most
instances, have the LLC, haveits own bank account.
It's not necessarily alwaysgoing to do its own taxes, but
you're going to have to accountfor it on your taxes in one way
or another.
Um, you know it's, you're goingto have to have some sorts of
(19:22):
formalities.
You're likely going to have toform contracts in the name of
the business, things like that.
And so, again, depending onyour side hustle and the nature
of it, you probably want tothink about at what point again,
is the extra time and expensewhich, with an LLC, is not very
great Once you get it formed,for a few hundred bucks, in most
(19:46):
instances it doesn't take a lotof extra work and, again, in
the context of something likeour electrician, I think the
potential benefits are very,very great.
And so I think, forming an LLC,anything beyond a babysitter or
a lemonade stand you probablystart thinking about some type
(20:09):
of corporate formation.
Bob Sewell (20:11):
Yeah, yeah, I think you're right.
And the thing is they're soeasy to manage LLCs compared to
the day and the age when you'dhave your choice for corporate
form was a corporation withshares and all this type of
stuff.
No, an LLC is a lot easier tomanage and it gives you a lot of
(20:33):
benefits for creditorprotection and, yeah, it's
really worth thinking about.
And, by the way, I only teaseyou about the band because I'm
jealous, Because I've always thething is and you've heard me
say this before, Marshall I'vealways wanted to be in the band.
So when someone asked me, whatare you doing with your life
(20:55):
right now?
I could say I'm getting theband.
So when someone asked me, whatare you doing with your life
right now, I could say I'mgetting the band back together,
yes, and like get you.
And you could say that we'regetting the band back together.
Marshall Hunt (21:04):
we're gonna do one more run at it yeah, I mean
you gotta start the band, gosomewhere with the band, have
the band break up, have the bandbe broken up for a while all
before you're ready to get theband back together.
That's where I am now.
The band's long up for a whileall before you're ready to get
the band back together.
That's where I am now.
The band's long, you know in mypast.
I'm ready to get the band backtogether.
It's time.
Bob Sewell (21:24):
Yeah, all right, marshall, you've given me a lot
to think about.
Thanks for coming on.
If I need to get a hold of you,my side hustle is becoming
unwieldy.
What should I do?
How do I get a hold of you?
Marshall Hunt (21:41):
Yeah, marshall Hunt.
I work at Davis Miles inArizona.
Our website is davismilescom.
Email mhunt at davismiles, bestway to reach me.
Bob Sewell (21:51):
Thanks, thanks for coming on.
Thanks for listening to thepodcast, thanks, thanks for
(22:11):
coming on and, as lovable as weare, we are not your lawyers and
we are not giving you legaladvice, but if you need some
legal advice, get some.
There are some great lawyersout there and we are always
ready to help.
See you next time.
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