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