The Right Way to Have a Side Business if You’re a Federal Employee

You may have considered starting a side business to go along with your federal job. The author provides some important considerations for running your own business as a federal employee.

A paycheck that doesn’t cover the bills often motivates a person to start a side business. However, it doesn’t always mean the main job doesn’t pay enough. Sometimes a person needs a second income to afford something special, like an extravagant cruise or a second home. Sometimes it isn’t about the money at all, but the primary job isn’t satisfying or challenging enough.

Branching out can be about acquiring new skills or trying out a different career path. It can be a way to work through trauma when free time is not welcome and the worker wants to stay busy. Whatever the reason, there are right ways and wrong ways to go about it.

This is particularly true if you are a federal employee. Servicing the public puts you in a different realm, so you have to be careful about how your side business reflects on you and the government. You must follow the rules about moonlighting to avoid risking your position.

Step 1: Talk to Your Supervisor

It is never advisable to start a side business without fully disclosing your plans. Approach the subject by saying that you are in the planning stages and explain why you are considering starting a business. Be sure to put the supervisor’s mind at ease that you are not planning to leave your current position and don’t want to do anything to jeopardize your job.

Certain agencies and positions forbid earning outside income, so be prepared to drop your idea if you are in this category. If your position doesn’t ban earning an outside income, be sure to address any concerns your supervisor may have and identify the business you are considering to be sure there isn’t a conflict.

You may also need to have permission from an ethics committee. Many agencies, such as the Department of Defense, have printed resources regarding outside work. In any case, you should try to obtain a written document that shows approval of your plans and any conditions or limitations on your plans before proceeding.

Step 2: Decide on a Business

There are a few things as a federal employee that you won’t be able to do. First, you will not be able to sell products or services to the government. You cannot be both employee and government contractor, as all agencies forbid that conflict of interest.

While you can be a consultant, you cannot use your official duties in that capacity. An example would be an IRS agent teaching a class on tax loopholes. Preparing tax returns would be acceptable, however, except that you would need to advise your clients that you could not represent them in front of the IRS in a tax matter.

As with any moonlighting situation, you must completely avoid any conflict of interest. Just because there technically isn’t a competitor to the government, that doesn’t mean you can operate a business that is contrary to your position. You must stringently avoid any interference with your official duties, including using nonpublic information.

Ideally, choose a business that will boost your career by moving you up the ranks in your current agency, another agency, or in the private sector. Lots of people choose to join an MLM company because they’re easy to operate in your spare time. Avon, Primerica, inCruises, and Kannaway all allow you to sell products that you already use and trust as a consumer.

Step 3: Make an Action Plan

Any business venture stands a better chance if a business plan is prepared first. You should put together an action plan that outlines how you will keep the jobs separate, manage your time, and set goals for your business.

Starting any business takes a lot of effort. Plan the way you will split your time between the two so that your business can grow but you don’t endanger your federal employment in the process. Without a concrete plan, you may be tempted to handle a few small things while on the clock, which can create a real problem.

Be sure to talk with your family and give them a clear picture of the time you will need to get your business going and to continue running it. Share the benefits with them as well. They are making a sacrifice too, so they need to know what’s in it for them.

Finally, have an exit plan. Decide when and how you will stop your side business. Set a date, amount saved, or other criteria. This is not to say that your side business can’t be a lifetime plan. Just be sure you know what your goals are.

Step 4: The Business Plan

That business plan mentioned in Step 3 is vital too. The last thing you need is the stress of a failing business. You won’t reach your financial goals and could endanger your government job.

Assess your finances, find the best funding options, set a budget, devise your online marketing plan, define the legal structure of the business, obtain a license, permit, insurance or other regulatory requirements, and create a website.

Step 5: Keep Them Separate

Do not utilize any government supplies or property, such as paper, pens, copiers, phones, or vehicles for your own business venture. Do not combine your business numbers with your federal position contact information on one business card. Do not use your federal email for business correspondence.

To put it simply, give 100 percent to your job when at work and 100 percent to your business later. Don’t mix the two. It may be best not to discuss your business with associates at work, even when not on the clock. In some cases, work associates can harbor resentment or jealousy.

Alternatively, let them gain something from your business or involve those that are interested. However, you should not make sales pitches to those who are junior in position, grade, or rank, or to their family members.

The Joys of Entrepreneurship

It can be extremely rewarding to serve the public both as a federal employee and as an entrepreneur. The benefits of each are limitless in their own ways. You have stability, decent pay, health benefits, and structure with a government position. With your own business, you’ll enjoy unlimited income potential, freedom to do things your way, and flexibility.

You will never regret taking the chance on your own business as long as you do it the right way. At best, you’ll shore up your retirement plans and achieve financial freedom. At worst, you’ll learn some valuable lessons that will aid you in future endeavors. Either way, you’ll have a lot of fun doing something new!

About the Author

Jason Kay is a professional resume writer and regular contributor to, a professional federal resume service and repository of sample KSA statements.