Many people are recognizing the benefits of joining the gig economy, working as a freelancer or independent contractor in a temporary, part-time, full-time, or even business venture.  As the name implies, working in a gig economy means taking on “gigs,” or one-time, occasional work opportunities. A gig might be as simple as delivering a couple of packages a week or as expansive as providing a regular service for a company or individual on a regular basis – for example, trimming trees at a business park twice a month.

To be part of this dynamic requires a dedicated, independent nature. But you don’t have to face all the challenges alone, thanks to these tips and resources from Dr. Dro!d.

Benefits of joining the Gig Economy

One of the most attractive elements of working in a gig economy is the flexibility it provides. According to BuckleUp, you don’t have set work hours, and you can generally take on work as you need it, or as your schedule permits. This makes it highly attractive for students, single parents, retirees, and those looking to earn a little extra money on the side. It can also be a great way to support yourself when you’re in-between jobs, have moved to a new area and are just starting a full-time job search, or if you’re still exploring different career paths and need to generate an income in the interim.

Downside to Working Gigs

Gig jobs are not secure, guaranteed roles, and according to the Washington Post, your income has the potential to fluctuate widely. You’re also an independent contractor, working for yourself, and as such, you’re responsible for paying your own income taxes, Social Security, and you’ll need to secure your own health benefits and retirement plans. You also won’t earn any paid vacation time, and if you’re sick, and you can’t work, you lose pay for that day. You may also have to invest in equipment like a smartphone, a vehicle, and pay your own way to and from gigs. Unfortunately, an inconsistent income stream of this nature can make it tricky to qualify for credit cards, mortgages, and auto loans.

Is the Gig Economy for You?

It takes a certain type of personality to earn a living in the gig economy, so it’s important to make an honest and introspective look at your abilities. Unlike a traditional job where you work certain days and hours on specific tasks, in the gig economy, the work doesn’t come to you – you go to it. You also have to be committed to putting in the hours necessary to meet your debt obligations or reach your personal financial goals. While you probably wouldn’t leave a 9-5 work job at 2:30 because you’re bored, you can absolutely do that in the gig economy with no repercussions, other than to your wallet. If you’re the type of person who needs to be prodded out of bed in the morning, and you find it difficult to stay on task, gig work might not be for you.

Freelancing Options

Freelancing is similar to working in a gig economy, though freelancers may take longer-term contract work with different customers and clients. Most freelancers are also skilled professionals who specialize in a particular field or area. For example, if you’re a graphic designer, you might work on a retainer basis with a marketing or web design firm, and if you’re a freelance writer, you may write a regular column for your local newspaper, have your own income-generating blog, or work with a creative services agency that regularly sends you assignments. Freelancing is a bit more formal than the gig economy, and you’re likely to have repeat business and an ongoing client list rather than one-off opportunities.

Getting Started

There’s an ever-growing number of gig opportunities nationwide. Some of the top gigs at this time include driving rideshare, being a personal shopper or grocery store delivery person, providing meal delivery, house sitting or pet sitting, or even working as a mover or handyman. You’ll want to evaluate the availability and access to options in your vicinity, research local earning figures, and find one or more opportunities that meet your individual preferences and skillsets. Gig provider companies typically have information on their websites about how you can get involved with their particular organization. Online job boards also feature gig categories where you can search for opportunities of interest.

You also need to plan ahead in case you encounter customers who fail to provide payment on time. There are several tactics that can help you in this circumstance, like assigning late fees and helping to set up payment plans. You can also streamline the payment process and keep your records updated by using this free invoice maker.

Bookkeeping in a Gig Economy

As a gig worker, you’re an independent contractor. This means you need to keep good records, especially around your earnings and your expenses. This will be important to have on hand when you file your taxes. Unlike a traditional job where an employer handles “withholding” to pay taxes, unemployment, and disability insurance, you’ll need to calculate these things yourself, or use an accounting software program, tax expert, or bookkeeper to help you. Keep in mind there are a lot of expenses you can deduct from your taxes as an independent contractor. For example, if you drive rideshare, you can deduct some costs associated with owning, operating, and maintaining your vehicle.

Turning Your Gig Into a Business

Many people find they enjoy the freedom and flexibility working in a gig economy provides them. In fact, some enjoy it so much that they decide to turn their efforts into a full-time business venture. You might opt to string together a number of ongoing gigs or even venture into your own provision of service. For example, if you work for a company that provides meal delivery from restaurants, you might be able to start your own niche industry-specific to a particular restaurant category or create a service that provides slightly different offerings. While it can be difficult to compete with big names, if you establish a clientele while you’re working in a “gig” capacity, it can be easier to attract a following, learn about the business model from the inside, and put your own plan into motion.

Establishing Your Business Model

If you decide to take your gig roles and/or freelancing work and turn it into an actual business, there are a couple of steps you’ll want to put in place. The first is to write your business plan. This allows you to strategize all elements of operational functions ranging from finding customers, setting prices, advertising, and promoting yourself, to hiring staffers and providing high-quality products or services. You’ll also want a business license, and it’s beneficial to become a limited liability company or LLC. This provides protection from some forms of liability, gives your tax advantages and less paperwork, and enhances your flexibility. You can avoid paying lawyer fees by filing the paperwork yourself, or your best bet, use a formation service. LLC formation rules vary from one state to another, so learn about yours in advance.

Becoming your own boss is appealing on a number of fronts. However, to be successful, it’s important to have good time management skills, be a well-organized self-starter, and have the ability to hustle and build your business.