Small Business Advice

7 tips for new gig workers

How does a new gig worker make a decent income? Check out our list of 7 tips for new gig workers to help your new business take off.

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Have you recently started dipping your toes into the world of gig jobs? Well, that makes you one of the 59 million Americans earning a living from the gig economy1. With these many people participating in it, it’s no surprise that gig work contributes about $1.2 trillion to the U.S. economy.

31% of these gig workers do it as a full-time job2. This simply goes to show that you can earn a decent living out of the gig economy. And if the numbers are anything to go by, things will only get better for gig workers as the gig economy is expanding 8.25 times faster than the U.S. economy3.

In short, the gig world is a good place to be now and in the future. That said, you do need a handful of skills to thrive in the gig economy. Whether you offer ridesharing services with Uber and Lyft, or freelance as a web developer, or anything in between, we have put together these 7 tips for gig workers to help you hit the ground running.

  1. Set realistic goals and expectations

Working in the gig economy essentially makes you self-employed. While that comes with the freedom and independence of freelancing, it also means that you have to set your own targets. These may be financial or perhaps the number of clients you intend to serve per day/week/month. Either way, there won’t be a manager to come up with organizational goals.

Setting goals is important because it channels your focus and improves motivation. Just make sure that the goals are realistic. This will help you maximize your time and resources.

If, for example, you’re a new freelance graphic designer, you’d probably be off the mark if your target was to get 20 repeat clients within the first month. But getting two to five clients sounds realistic.

Keep your qualifications in mind when setting goals so that you’re not over-expectant. According to a Freelancermap research, gig workers with at least a university education earn on average 17% more than those who have not attended university4. Therefore, your expectations in terms of pay and the number of clients you can get should also take into account your overall qualifications.

This is where proper groundwork may help. By researching the market you’re freelancing in, you will get to know the kind of entry-level jobs to expect with your qualifications.

  1. Organize the business end of your gig work

A gig job is a real job; treat it as such. One way of doing that is by setting yourself up as a business. You can either work as a sole proprietor or incorporate a single-member limited liability company (LLC). Some gig works – like ridesharing and food delivery – allow you to work as an independent contractor. These too provide an excellent opportunity to register yourself as a business.

That’s something you want to do because if you’re a business, you can enjoy things like:

  • Limited personal liability – your personal assets will be protected from creditors.
  • Business credibility – you’ll have a favorable impression on clients if you’re a business.
  • Tax benefits – as the sole business owner, you’ll be taxed on the income you get from the business. The business itself won’t be taxed. Plus, you’ll be entitled to small business deductions, which can lower your tax burden. More on tax benefits later.
  • Easier access to capital – lenders are often more willing to grant businesses credit compared to individuals. That’s because businesses have better continuity and are less volatile than individuals.

As you organize the business side of freelancing, don’t forget to set yourself up with a dedicated checking account. It will help you keep your finances in one place. This is important, not just for the purpose of record keeping, but also for a simpler process when filing tax returns.

  1. Set your schedule

One of the most important tips for gig workers involves mastering time management. You’ll find this incredibly easy if you structure your day.

Start by creating a work schedule. Take into account the time you need for yourself and for short breaks. For example, depending on the kind of gig work you do, you can clock in at 9 AM, take a lunch break from 12 to 1 PM and clock out at 5 PM. Any time before 9 and past 5 is for family, friends, personal activities, and destressing. Whether it’s hitting the gym or bonding with your pups, you have to separate from work.

Creating a schedule is important because it instills the routine of going to work. Oftentimes, a good structure and habits will beat determination and motivation. And as a self-employed person, you just have to put in place mechanisms that can drive you to put in the work. Remember, if you don’t work, you don’t earn.

That said, do not burn yourself out. Know your limits and always take a breather when you need one.

  1. Track your expenses

Even before you track them, it’s important to identify your main expenses as a gig worker. They may vary greatly from other people’s expenses. For example, if you offer rideshare and food delivery services, your car insurance may be totally different. For one, you’ll certainly pay higher premiums5.

Secondly, the fine print in your insurance policy will be different from the agreement in an ordinary car insurance policy. A good number of providers include coverage for the “on-app” period, which essentially covers accidents and incidents that may occur as you wait for customers or food delivery. But they typically exclude coverage if your car is damaged or passengers are injured while you’re driving6. That’s something you may have to slot in your budget separately.

Overall, every freelance field has its own set of unique expenses. Tracking them will help you anticipate your daily, weekly, monthly and even annual costs. This can help you plan your finances better. Beyond that, tracking expenses will help you pinpoint the ones you can deduct when tax time comes around. Again, this underscores the importance of having a checking account where your expenses can pass through. Otherwise, you may find it hard to separate personal and business finances. This can make it hard to prove your expenses and claim deductions from the Internal Revenue Service (IRS).

  1. Understand tax

Tax management is up there with the most essential tips for gig workers. When done properly, tax filing can be simple and straightforward. On the other hand, inaccurate or missing tax returns can lead to hefty fines and more financial problems.

Remember that as a gig worker, you are a small business to the IRS. This means you’re entirely responsible for calculating and filing all the taxes that you owe. You generally have to file an annual tax return and pay estimated quarterly tax.

As a rule of thumb, set aside 30% of your revenue for taxes. This will go towards your income tax as well as self-employment tax. That’s the one downside of being self-employed; you pay more taxes. On the upside, you can deduct all eligible small business expenses. These include vehicle costs such as mileage and parking fees – both of which are usually high for rideshare and delivery drivers.

If you freelance from home, you can deduct some rent expenses since you’re using your house as an office. Similarly, expenses on certain professional software like QuickBooks and Xero are deductible. Combine all these deductions and you stand to save several hundred – if not thousand – dollars.

  1. Prepare for the unknown

Working as a freelancer comes with a level of uncertainty. You may apply all the tips for gig workers, but at the end of the day it’s the lack of job security that makes many people hesitant to join the gig economy.

Income will fluctuate; more so if your line of work is seasonal. Make sure to have an emergency fund for the weeks and months when there’s little to no work. Creating and sticking to a budget will help keep your expenses in check. And from there, you can have more money to put in the emergency kitty.

Market your skills thoroughly so that you get several high-value clients. This will ensure that you don’t just depend on one client. Over-relying on a single client means that you’ll have to start from scratch if your working relationship ends.

Finally, have a backup plan. A fallback is anything that can bring in income should your gig work fail to reach sky-high levels. Whether it’s passive income from investments or a 9 to 5 job that you can take up, it’s always a good idea to have a plan B.

  1. Use as many resources as you need

There are many resources that can help gig workers to excel in their freelance work. Platforms that offer freelancer apps (such as Uber and Lyft) have built-in support that you can use to get help whenever you need it. Beyond that, you can always join associations like Big Results Academy that offer educational resources for gig workers.

Some social media like Reddit, Discord and Leapers have dedicated groups for freelancers in specific fields. By joining such groups, you not only get the feeling of belonging, but you can also learn from the experiences of similar gig workers. Plus, such platforms help with networking, which can ultimately help you find clients who pay more for the kind of services you offer. And of course, there’s always the option to seek a mentor and/or professional counselor should you feel overwhelmed.

Final thoughts

The gig economy is a great place to be if you’re looking for the independence, flexibility and control of workload that comes with freelancing. If you make a leap into the world of gigs, make sure to set yourself up for success from the outset. The above tips for gig workers may help.

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