At least one in every three U.S. workers now freelances or contracts. By 2020, that number is projected to rise to 43%. Many of these jobs are considered “side hustles” to earn extra income. Participating in the gig economy in this way can be empowering…or, if you don’t approach it with good business sense, it can quickly rob what’s left of your time and money instead.
Here are some ways to make a side hustle work:
- Be creative. There are endless ways to earn extra cash. If you’re looking for just a little spending money or to not pay for things you already purchase, check out The Penny Hoarder. The site offers hundreds of ways to earn money taking quizzes, reading books, and even being a craft beer secret shopper (honestly, we know someone who does it!). Want to earn a more impressive side income? Consider your strengths. If you’re an artist, maybe you can design t-shirts for sites like Redbubble and TeePublic. If you don’t mind driving around town, then maybe offering rideshare or delivery services for companies like Rideshare Austin or Instacart would be fun. If you have a hobby like baking cookies, playing an instrument or woodworking, consider turning it into a business.
- Don’t forget your taxes. One of the major drawbacks of freelancing your services is that you’re responsible for paying your own taxes if you make more than $600 annually. For most gigs, including the t-shirt design, ridesharing and delivery options listed above, you’re considered an independent contractor and will be expected to pay estimated quarterly taxes, including the “other” half of payroll taxes that an employer usually pays for you. If you sell goods or taxable services, you may need to pay sales tax.
- Read agreements carefully. Another drawback to gig work is that you’ll need to read a lot of fine print on contracts and agreements. For instance, if you’re a creative professional like a writer, photographer or graphic designer, be careful about contract language as it pertains to copyrights, and liability/indemnity. It’s easy to have creative work borrowed without pay or to be held responsible for what you say or show if you unknowingly sign off those rights. It’s also important to know your rights as an independent contractor because even large, well-respected companies like Amazon have gotten in trouble misclassifying workers as contractors (leaving you with both the restraints of an employee plus the taxes and other expenses of a freelancer).
- Understand how it affects your insurance. Most car, home, and health insurance plans include clauses that exclude injuries or property damage that happens while offering services like ridesharing or renting property. If you use your property to make money, be sure you’re fully covered in other ways. Companies like Uber offer minimal coverage to fill in the gap while you’re on the clock, but it may not be enough.
Temporary employment offers an alternative to side gigs, especially if the idea of paying all taxes yourself, drawing up your own agreements, or searching for gigs are deal breakers. And, if you temp fulltime, you may be eligible for health insurance, paid vacation and sick days, and other benefits through your staffing firm. That means three of the top barriers to freelancing—income predictability, finding work, and benefits—are avoided. If you want more flexibility with less stress, contact The HT Group to discuss temping as a way to side hustle smarter.
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