To many Americans, having a side hustle is indispensable. A recent Bankrate survey found that nearly a third of working Americans with a side hustle could not cover living expenses without it.

Whether you make money in your spare time writing, walking dogs, delivering food or groceries, driving passengers, or some other way, you’re not alone. You might also consider a side hustle to make some extra cash through passive income. Americans with a side hustle earned $1,122 a month on average from it, according to the Bankrate survey, which means a year-round side hustle could bring in more than $13,000 in additional income.

Launching a side hustle can help you achieve your financial goals, such as paying down debt or saving for a down payment on a home. But if you’re not careful, it can cause you problems later on, especially at tax time. That’s where a business bank account can help.

Most people don’t realize that their side gig is more than something they do in their extra time. Things like taxes and reporting your extra income can come as a real surprise. However, your side hustle might be a real business, requiring additional work on your part and a separate business bank account.

But how do you know when it’s time to open an account for your side gig? Here are six signs that you need a dedicated business account.

1. It’s more than a hobby

One of the biggest indicators you need to separate your finances is when your side gig becomes more than just a hobby.

If you’re consistently making money, that’s a sign you have a business, says Joshua Zimmelman, managing partner of Westwood Tax & Consulting. But, that’s not the only factor, since many businesses aren’t profitable until after a few years of operation.

To tell a business apart from a hobby, the IRS recommends asking these questions:

  • Is the activity carried on in a businesslike manner?
  • Is your side gig profitable, or do you intend the activity to be profitable and do you possess the expertise to make it so?
  • Are you dependent on income from the hobby for any part of your livelihood?
  • Are losses due to circumstances outside your control, or are they normal business startup expenses?
  • Do your methods vary to increase profitability?
  • Have you previously made a profit from a similar activity?
  • Can you expect to make a profit in the future from the appreciation of assets used for your side gig?

Example: If you knit and occasionally sell the items you create — recouping just enough to break even when you consider the cost of materials — you likely have a hobby, not a business, because you don’t bring in a profit and don’t expect to in the future. But if you are completing several transactions a month and are actually making money, you may need to take extra steps.

“If your side hustle is actually making any considerable amount of money, you should open a business bank account,” Zimmelman says.

2. You want to protect yourself in an audit

One of the biggest benefits of opening a separate business account is the protection it can give you in case of a tax audit.

“A business account is helpful if you ever get audited because there’s a clear line between your business and personal expenses,” Zimmelman says.

If you get audited for your business profits and losses, the IRS can view only your business bank statements. The IRS would have to specifically request access to your personal accounts to review them, giving you an additional layer of defense.

3. Filing taxes would benefit from streamlining

Those consistently bringing in income from a side hustle will likely need to pay estimated taxes. Paying your quarterly taxes can be a hassle if all of your income and expenses go through your personal account. That’s because it can be difficult to figure out exactly how much you earned or spent. A business account helps to streamline things.

“A separate business account makes tracking income and expenses so much easier,” Zimmelman says.

When it comes time to pay your taxes, you can just look at your business bank account statements for a snapshot of your earnings and expenses.

4. You want to earn rewards for business expenses

In your side hustle, you’re probably always looking for ways to cut costs and boost your earnings. A business credit card can help you snag discounts and rewards that you wouldn’t otherwise get with a personal credit card. For example, business cards often offer discounts on office supplies, shipping expenses and even travel.

Having a designated business bank account and credit card can help you take advantage of those rewards, while keeping your personal finances separate.

Bankrate has reviewed hundreds of small-business credit cards to help you find the right one.

5. You’re ready to accept debit and credit card transactions

More and more people are solely using debit or credit cards to purchase items, rather than cash or check. If you don’t have the ability to accept plastic, you could lose out on sales.

There are tools you can use that sync to your personal account, but they often take out a hefty fee for the privilege.

Many banks and credit unions offer discounts on credit or debit card processing fees to account holders with business checking accounts. For sales-based side hustles, the ability to accept credit and debit cards can help boost your sales and profits.

6. You want to look more professional

Having a separate bank account with checks specifically designed for your business creates a more polished and professional image than writing checks from your personal account and can help your business to be taken seriously.

Maximizing your side hustle

Having a side gig is a great way to increase your income in your spare time. With the extra income, you can eliminate credit card debt, boost your emergency fund or even save for a great vacation. Just remember that your side hustle is likely a business and needs to be treated like one.

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Note: Kat Tretina contributed to a previous version of this story.