(Guest post by Lucy Reed.)
Whether you’re tired of the office grind or looking to earn extra income on the side, entering the gig economy is an attractive option. But what defines a gig economy worker and what does it take to thrive in the world of self-employment? Here’s what you need to know before booking your first gig.
You might hear people who work in the gig economy referred to as side giggers or solopreneurs, but what’s the difference between these terms? Not much, actually. Both terms refer to workers outside of the traditional employer-employee dynamic. However, while side gigs are usually for extra income in addition to a regular job, solopreneurs make their primary income from gigs or freelance work. Entrepreneur.com uses time to distinguish solopreneurs from side giggers: According to them, if you spend 15 hours or less working gigs, it’s a side hustle. But if you’re spending more than 15 hours a week working solo, you’re a solopreneur.
Whether you’re a side gigger or a solopreneur, you value perks like deciding how much you earn, setting your own schedule, and being your own boss. But unless you can make it work in the gig economy, it won’t be long before you’re tethered to a desk again. If you want to grow your business and meet your income goals, this is what you need to do:
Wait to Quit Your Job
Running a business costs money, even if it’s a side hustle. But when you’re starting out, you don’t have the cash flow to fund startup expenses. That’s why it’s so important to keep your day job until you’re earning enough from gigs that you can afford to quit. By maintaining a secure income in the beginning, you have the money you need to get your gig-based business off the ground.
Find the Right Gig
There are a lot of ways to earn money in the gig economy, but not every gig is the right fit. Assess your skills, schedule, and goals when choosing a gig-based business. If you have a newer car, open evenings, and zen in traffic, ridesharing might be a good fit. Or perhaps you have a creative skill like graphic design or photography, and you want to build your portfolio and your bank account. If you have experience with dogs and midday availability, dog walking is a great way to earn extra income (and you can add to your business by offering dog boarding or in-home pet sitting). No matter what you choose, make it something you genuinely enjoy. Clients can tell when you have passion for your work.
Let Someone Else Scout Clients for You
Unless you’re a full-time solopreneur, you don’t have a lot of time to spend identifying and recruiting clients. After all, that’s time you’re not making money. Instead of hanging flyers on light poles and shouting into the void that is Craigslist, make use of platforms that bring interested clients to you. Lyft, Fiverr, Rover, Instacart, and Taskrabbit are just a few of the popular platforms catering to gig economy workers. While you still have to stand out from the competition, you’ll have greater success because everyone you interact with on these platforms is already seeking your services.
Know the Tax Rules
As a solopreneur or side gigger, your taxes are a little more complicated than the standard office worker’s. Most gig economy workers are considered independent contractors for tax purposes, which means you’re responsible for reporting income and paying self-employment taxes. You can deduct business expenses from your income, but you must keep diligent records throughout the year. If you’re a full-time solopreneur, you should also be setting aside money for retirement. For information on retirement plan options for independent contractors, read Nerdwallet’s guide.
More money, more freedom, more time: These are all very attractive things to anyone stuck in an unfulfilling office job for 40-plus hours a week. But cutting it in the gig economy requires more than a can-do attitude. If you’re going to shine in the gig economy, you need to know your skills, have a plan for connecting with clients, and understand how the back-end of being a side gigger or solopreneur works.
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