Frequently Asked Questions

 
 

Working in the Gig Economy can be confusing.  Here is a place to get started. 

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Okay, so what is the gig economy?

Good question.   This can cover lots of other great words you have heard, like Sharing Economy.   A gig used to mean a small short duration job. or a single performance by a performer.  The Gig Economy is basically all of the non-employee workers.  This means the Uber or Lyft Drivers, dog walkers, freelancers, independent contractors, individual etsy sellers, AirBNB Renters, etc. that exist in the economy.   

It is really an old concept to tell the truth, just a new name and enhanced by technology and opportunity.  

This is a really big question, and I will have a whole section talking about it up here soon. 

can't I just figure this all out at the end of the year doing my taxes online?

Waiting until you either have to file taxes, or the IRS reaches out to you for not filing taxes is surprisingly common for Gig Economy workers and people starting new small businesses.  This makes doing taxes a scary, and unpleasant experience...Okay, well, scarier, more unpleasant, and truthfully more expensive.

It is much easier, cheaper, ana d less painful to keep track of this throughout the year.  Additionally, there may be estimated taxes, sales tax, and other fees that you need to pay throughout the year to  avoid late fees and be in compliance.  Keeping an eye on your earnings and potential tax liability can also make sure that you don't get any unpleasant surprises at the end of the year.   

how much do I have to report to the irs?

Quick answer - All of it. The IRS really does try not to be scary.  They want to know about all sources of income unless it is precisely excluded by them.

Really they explain it pretty well here - https://www.irs.gov/uac/reporting-miscellaneous-income

Reporting all  of your income makes it even more important to track all of your expenses.   If reading that IRS web page, or talking about tracking income and expenses made you feel like falling asleep, bored, nervous or stop reading - I get it.  That is exactly why people like us are here.   To help you take care of it- Not to make you fall asleep, bored or nervous we hope!

am I an employee or an independent contractor?

The answer to this can vary from state to state, and is a pretty hotly contested topic.   My guess is if you are here,  really participating in the Gig Economy, at least a part of what you do is as an independent contractor. 

Doesn't the service I use(Uber, lyft, airbnb, freelancer, upwork, taskrabbit etc.) send me all the information I need?

The platforms you can use to get work in the Gig Economy are incredibly useful.  They will provide the date, source, and amount of money that you made.  Many of them also will provide resources to help you improve your job and marketing skills.  They also may have some great links to articles or 3rd party sites explaining what you should track.  
What they don't do is accounting.  Accounting is the language of business.  While you may be bringing in $80k, how much of that are you keeping?  How much is it costing you to land each client?  What other expenses should you be tracking?  Thyou you spend on your business is as important to track as the money you earn.  We can help you learn to how earn more efficiently.

All of the platforms out there for the Gig Economy are great, but any platform has limitations.   You may find that you really love what you are doing, and look at ways to either work in multiple platforms, industries, or just on your own.  Knowing how to track your own information and have a strong accounting partner can help you do that. 

what is a 1099?  do I need to issue them?

There are a lot of 1099' s our there, but you probably mean a 1099-MISC.  Quick version - These is how miscellaneous income is reported to the IRS.  If you pay an individual $600 or more you need file this.   The long version from the official source - 

https://www.irs.gov/uac/reporting-miscellaneous-income

 Also, if you received a 1099, that means the IRS has a report of that income as well. 

I can write off just about anything if I can say it is for business, right?

No!  This is a really dangerous line of thinking.  While we strongly encourage and support deducting any valid business expense, we want to make sure you are doing everything legally and correctly.   Ordinary and necessary are the words used by the IRS.  Interpreting and finding support for what is ordinary and necessary for your business is what we can help you figure out. 

What do I actually need to keep track of?

This answer is really way to big to answer in a general way.  What a valid business expense is for you really depends on what your business is.  There may be giant expenses that you don't even think about and don't track and others that you are meticulous about that really don't matter.

Sometimes the issue is how to keep track of it as well.  With all the great technology in the world today there is no reason to keep a box of receipts.  We can help you learn not only what to track, but the most efficient way to track it. 

isn't this what all that tax software I see advertised is for?

Tax software is really great.  It does a lot of thing's really well.  Most of the companies that make it do an excellent job of explaining tax topics, providing support, and giving a friendly interface.   Additionally many of them provide discounts on ways to track your taxes during the year. 

Properly understanding mildly complicated tax issues, even through a friendly interface can take a lot of time and brain power.  While I am sure that many of you COULD figure out the answer to your problem and how to really properly record tax and accounting information, it might not be the most efficient use of your time. 

Computer software and some of the answers it will come up with is amazing.  However, just like autocorrect, sometimes it just gets the wrong idea.   

And of course there is the golden rule of data entry  and coding - Garbage In Garbage Out.  We can help make sure that you have the correct information.

which accounting software should I use?

The best accounting software is the one that you will actually use.  There are  quite a few options out there, and each one does something a little different.   At the bare minimum you should have a double-entry accounting system.   If what you are thinking of using does not offer that, please keep thinking!

Personally we are big fans of QuickBooks Online,  Wave HQ, and Xero (listed these alphabetically, NOT in order of preference).  While there are some customers that would be perfectly fine in any of these systems, we want to find the best fit for you and your business. 

Why shouldn't I just do this myself?

Hey, we think you are smart.  We think you are pretty brave too.  Taking that leap out there to start making a little, or a lot of money in the Gig Economy is amazing.  We just think you might not be an accountant.  Or you just might not like it.  

For some reason, we do.  No, really.  We love the work we do in accounting.  One of the biggest reasons we love it is that we get to help people succeed and thrive at these leaps that they take in the world.

 You might be doing this because you have found your calling and you believe you can make a living doing it.  We think you might be able to as well, but have a better chance if you know if you are actually making money.

You might hate  what you are doing for for extra money, but love why you are doing it.  This could be to buy a house, support your family, go on vacation, or almost anything else.  You may get there a little quicker if you make the most of the money you make.

We believe that you should either love what you do, or why you do it.  Hopefully for you, it is both.  We know for us it is.