According to Brad Smith, CEO of Intuit (the company that owns TurboTax), “gig economy” workers currently comprise about 34% of the U.S. workforce, based on their customers’ tax return information. There are some obvious benefits to being self employed – You can take time off when you want it, make your own schedule, and turn down work when you simply aren’t interested in doing it. Disadvantages include no health insurance or retirement benefits.
Before embarking on a career in the gig economy you can take some steps to help increase your chances for long-term success.
When you work for yourself, the liability for any mistakes you make falls completely upon you. Disgruntled clients do not have a large company to sue; they only have you. If you are involved in an accident while on the job, you are responsible. You can protect your personal assets by setting up a corporation or LLC as the entity under which you do business. Talk to a business attorney in your area about the different options for business entities and which would work best for you.
Set up a Tax Account
As a self employed person, of course, there is no employer to withhold income tax from your weekly paycheck. Although you can deduct bona fide business expenses from your annual income, you are still required to pay self employment tax, approximately 15% of your self-employed income. You are also required to made quarterly estimated tax payments based on your projected earnings. If you pay too little in estimated taxes you may be subject to penalties and interest at the end of the tax year. In order to make tax payments easier, set up a separate tax account with your bank. Get in the habit of depositing a portion of each payment you receive into the account, and pay estimated taxes to the IRS and your state each quarter.
Keep a Database
When you successfully complete a project, ask your client for a testimonial, or send a prepared evaluation sheet. The feedback will help you improve your services, and, with permission, can be used to promote your business to potential customers.
Learn About SEO
Do some research on SEO marketing, or hire an SEO expert to advise you. Some of your business may come from referrals and word-of-mouth, but you want your name to appear when potential customers search for the service you offer. If a customer wants a Broken Arrow Chiropractor, a Worcester product liability attorney, a Syracuse pet-sitter, or a Boston area virtual assistant, he will most likely go to Google and select one of the first entries that pops up when he does a search. The importance of SEO marketing cannot be overestimated in the gig economy.
Finally, you must be willing to take criticism and to adapt to your customers’ and potential customers’ needs. If you can learn from past mistakes and build on past successes, your part time gig can turn into a fulfilling, lucrative enterprise.