Everything You Need to Know for Being Successful in the Gig Economy

Everything You Need to Know for Being Successful in the Gig Economy

In 2018, 15 million Americans worked as full-time freelancers or independent contractors, according to the Upwork—a figure which is expected to increase as the gig economy expands.

If you’re thinking about self-employment, you may feel intimidated by the process of getting started down that path. However, as someone who’s been a freelancer turned business owner, I know that with the right knowledge, preparation, and hard work, you can be successfully and happily self-employed.

Feel the Empowerment: You Are Your Own Business

When you’re self-employed, you’re the boss, as well as HR, marketing and accounting—and paychecks aren’t guaranteed. You are your business. While on the one hand, that can be a lot of pressure, on the other hand, it can be liberating. You determine how much money you make, no longer held back by fighting for a promotion or hoping for a raise, while enjoying a flexible schedule that allows you to enjoy things like travel and sleeping in.

In a recent gig economy study by Harvard Business Review, one contractor compared the work to that of a trapeze artist: “The void between assignments, the exhilaration of landing the next engagement, the discipline, concentration, and grace [required] to master your profession.” She explains that “a safety system—including nets, equipment, and fellow performers—supports them. They appear to be on their own, but they’re not.”

As such, empowering yourself is as much about mindset as it is about surrounding yourself with that support system. Network to meet other entrepreneurs, get help when you need it—like a CPA or bookkeeper—and take on great clients that are worth your time and energy.

Market Yourself on the Appropriate Platform

Once you make the decision to join the gig economy, the first step is securing gigs. To attract clients, you’ll need to market yourself with the right platforms. While traditional job-seeking websites like LinkedIn and Glassdoor promote contract or freelance work, you might have better luck attracting a more niche audience.

Look to freelance-specific platforms like Upwork, Freelancer or Toptal to connect with potential clients that are specifically looking for contract talent. For even more options, check out this exhaustive list of freelance websites, sorted by category.

Don’t forget that you need to build and market your personal brand to start driving clients without the help of a third-party website. This means diving into why you do what you do, what your mission is, and how you help clients better than your competition. Build this into your website messaging and what you talk about and share social media. Ask yourself: what do I want to be known for? Then build that into everything you do.

Set Your Rates

Before you accept work, you should set the rate you plan to charge customers, whether it be hourly or project-based. This allows you to say no to clients who aren’t willing to pay what you’re worth and yes to the ones who are—without agonizing over your response.

Something many contractors struggle with is knowing the true value of their work and time. To get some help, check out this helpful you need help with this, To help figure out your rate, check out this rate guide from the Muse and have some fun with this calculator from YourRate.co.

Understand Self-Employed Tax Rates and Rules  

As an independent contractor, you’re responsible for paying a self-employed tax rate, which is 15.3 percent plus employee tax (since you are both owner and employee), which is 7.65 percent, according to the 2019 Self Employment Tax Guide. As such, it’s always helpful to start working with a CPA or accountant right away. This ensures that you’re planning ahead to avoid any big surprises come tax time, including paying quarterly taxes.

Track Expenses and Income

While taxes can be a drawback to working as part of the gig economy, as a business owner, you can deduct more of your expenses come tax time. To make the most of this opportunity, track both income and expenses throughout the year. Use an accounting software that allows you to record expenses as you pay them out (which is easier than doing them at the end of the year or quarterly), as well as create and send invoices to clients. Software like Wave, Freshbooks, or Quickbooks Self-Employed offer robust accounting capability, are inexpensive or free, and easy to use.

Purchase a Health Insurance Plan

As a self-employed professional, you’re also responsible for purchasing your own health insurance plan. Each state has a marketplace with available plans to shop, find yours on Healthcare.gov. If you’re overwhelmed, consider consulting a health insurance agent, especially if you have specific healthcare needs, or need to purchase a family plan.

The good news is your health or dental plan is likely another deductible expenses. According to HealthMarkets, you can deduct your premium if you made a profit from a single business, and you’re not eligible to be covered under anyone else’s health plan, like a parent or significant other. Again, this is one more reason why it’s helpful to work with a tax professional—you don’t want to miss any opportunity to deduct expenses.

Practice Transparent Communication with Clients

Once you set up the business basics and find clients, focus on client relations. Effective communication is one of the most important soft skills you can have as a freelancer. Communication will not only land you clients but help you forge a strong working relationship.

Start projects with clear and explicit details, make sure you understand what’s expected of you, and be truthful about what you can deliver. This may require a contract that outlines these details in ink, ensuring everyone is clear on the project, work and plans moving forward.

In the end, great communication can help you keep clients and earn referrals.

Be Successful in The Gig Economy While Still Maintaining Balance

To be successful and happy, focus on maintaining balance with your work and personal life. As a business owner, especially when doing something you love, it’s easy to work too hard and burn out. Remember to take dedicated time off, and give yourself space to enjoy both your success and the flexibility that comes with the gig economy. When you can get all of these pieces in place, you’ll never want a regular, full-time job again.

Guest post by Jessica Thiefels.