The growth of the gig economy is a big change-maker for lots of businesses across all industries. Why is Gig Work Growing? The gig economy is taking off for several reasons. Brodmin has an insightful case study about gig work. Though COVID-19 spurred a big wave of workers into the gig economy, favor with the freelance and independent contractor style of work has been growing for a number of years. The pros: flexible schedule, the ability to control your workload, extra income outside your traditional. All of these things align with the work-life balance and benefits that Millennials and Gen Z are looking for in their “dream job” scenarios. Some industries are growing their gig worker base because of new trends. Things like Uber and Airbnb have seen record growth recently, and that trajectory will continue in the coming years. Technology is Leading the Way Other growth areas in the gig economy are being led by technology. Web and graphic design, programming, and IT are at the top of the list of fields experiencing prominent growth in the number of freelancers and independent contractors making up the workforce. Also, with the rise in company use of collaboration tools and other remote-friendly technology, gig work has become more accessible. Computer work can be done from anywhere, and more people are taking advantage of that. What Gig Work Means for Your Taxes Gig economy growth means that your business will be more likely to interface with freelancers and independent contractors on a regular basis. Because gig workers aren’t classified as employees, the taxes associated with your business also differ. According to JustWorks.com, more than 3 million employees are misclassified as 1099 contractors every year. You can only classify the people you hire as gig workers if: They control when and how they do their work They use their own supplies and equipment to carry out the job They get paid directly by varying clients If the person …
What Is a Contingent Worker and Why Should You Care?
There has been a shift from using language surrounding the “contracted worker,” because the explosion in freelance and independent work has meant a shift away from formal contracts and the emergence of freelance-promoting digital platforms, websites, and apps. What Is a Contingent Worker? According to the US Department of Labor, a contingent worker is an independent contractor or freelancer. Contingent workers are responsible for the business side of their taxes, whereas a full employee is not, the business which employs them is going to take care of those. The most common form of contingent workers includes freelance writers and editors, for example. But many companies hire contingent workers to round out their sales force. Contingent workers hold a lot more power and autonomy than regular employees. They can’t be told how to complete a project, because hiring a contingent worker means the business is more concentrated on achieving results than controlling the process. Pros of Hiring Contingent Workers The biggest advantage of hiring a contingent worker is that your company will not be responsible for collecting or paying quarterly taxes through paystubs. That saves your accounting team time and resources. All you need to do for contingent workers is to create and file 1099 forms, most often the 1099-NEC for non-employee compensation. You only need to do this for contingent workers who you have paid $600 or more in a calendar year. The other big pro of hiring contingent workers is the huge talent pool available. A survey from Glassdoor found that 63% of recruiters say talent shortage is their biggest problem, and gig work is becoming more and more popular. Another benefit of hiring contingent workers is the fact that many of them possess more specialized skills. Since they have more control over their business, the demand for specific products and services means each gig worker has to focus on specialization and differentiation in the …
Continue Reading about What Is a Contingent Worker and Why Should You Care? →