With the advent of the so-called “sharing economy,” a world of fun and profit has opened up to consumers. You might be driving for Uber or Lyft, renting out your home on Airbnb, or doing odd jobs on TaskRabbit, all in hopes of making a little cash. While a side job can be a great way to earn extra money, there are also tax implications to consider.

Consumers experimenting with these opportunities may sometimes overlook the fact that they are actually running a business. People who dabble in the sharing economy may never earn more than a couple hundred dollars, but once income exceeds $600 (before expenses) or $400 (after expenses), federal and state taxes, in addition to local licensing laws, take effect.

Local Issues
Running a business out of your home might require special permits or a business license. Check with your city clerk or other local official in charge of such things to verify what you might need.

Here are two resources that may help address questions about licensing:

Specialized Registration Rules
There may be specialized registration rules for your business. For instance, regularly renting out all or part of your home may require you to register it as a hotel—and to pay the local taxes that hotels or bed and breakfasts do. However, if you rent your home only once or twice a year while you’re on vacation, you might be exempt.

Tax Implications
All of the licensing costs, related insurance, advertising, and hard costs invested to generate income are deductible. But as for the use of vehicles and homes, depreciation, and home office space, all the rules apply that relate to any business.

That means you must keep detailed records, logs of personal and business mileage, and receipts of all expenses. IRS Publication 334 is a must-read—all the way through—before you start your side job.

When it comes to renting your home or property to vacationers, there are different ways of reporting the income, depending on whether you treat the rentals as a business or a hobby. When you are renting the property out to several short-term visitors (with an average stay of seven days or less), you might be considered a hotel for income tax purposes. This means that the rental must be reported on Schedule C and all profits will be subject to self-employment taxes.

However, there’s good news for people who only rent out their property for a total of 14 days or less per year: all of that rental income is generally tax-free. Incidentally, if you rent your property to a tenant for 14 days or fewer, not only is the income tax-free but any repairs and remodeling the tenant does during that time is as well.

Taking on a side job to make some extra cash can be a financial boon, but it’s not without tax implications. It’s important to consult a tax professional before diving into the sharing economy. A professional will be able to advise you on your individual situation and help you avoid any costly mistakes with your taxes.

Eva Rosenberg, EA, is the publisher of TaxMama.com®, where your tax questions are answered. She teaches tax professionals how to represent you when you have tax problems. She is the author of several books and e-books, including Small Business Taxes Made Easy. Follow her on Twitter: @TaxMama