Get Educated on the Dos and Donts of a Side Gig

•    Work tools and office supplies,
•    Required uniforms not suitable for ordinary wear,
•    Dues and subscriptions,
•    Job search expenses,
•    Unreimbursed travel and mileage, and
•    The home office deduction.

Fortunately Congress did NOT take these expense deductions away from business owners filing on a Schedule C, Profit or Loss from Business or Sole Proprietorship. That means there are tax planning opportunities out there for self employed taxpayers or independent contractors with an entrepreneurial spirit. You may freelance as a consultant, sell candles out of your home, start a pool cleaning company or become a caregiver. You don’t have to have a full time business – just a regular one that you engage in for profit or income.

The explosion of the gig economy has proved to be a benefit for the self-employed, but not the IRS. There is much unreported income due to poor understanding of income-reporting and payment obligations. Be sure you understand how much you will owe and what tax records must be kept. Ask your Fuoco Group Accountant about filing quarterly estimated tax payments, so that you don’t get hit with a big tax bill next year. Keep good records of both income and expenses, and pro-rate costs when applicable, so that you don’t pay more in tax than you have to. Keep your business and your personal accounts separate, do not comingle funds. You don’t want trouble if audited by the IRS.

What’s fueling freelancers? Besides tax reform the top trends are:

•    Many small businesses today like a fluid workforce and are using independent contractors. They can scale up or down based on demand and remain flexible, while saving on costs associated with full time employees. And part time gigs during off hours or weekends fit nicely with a full time position.

•    Whether you moonlight as a professional services consultant, tutor math students or musicians, or a sell cosmetics and oils, it is easy to build a web presence and use social media to acquire clients and accounts outside of your immediate area.
•    There is a workforce trend towards valuing flexibility over stability.
•    Many self-employed professionals and gig economy workers want control over their careers, or are eventually looking for a career change.
•    A side gig is a great way to pick up new skills and more cash.
•    The senior workforce does not want to fully retire at 65.
•    The gig economy is an easy entry point for many immigrants. Think UBER.
•    Transferrable skills like a sales background can have a powerful impact when you are selling nutrition supplements part time on the side.
•    Part-time entrepreneurs and solo-preneurs are successfully building businesses through side gigs that they can eventually transition to full time entities.

Many people are actively fitting a side business into their busy schedule, whether it’s to create more cash flow in their budget, pay down their credit card faster, or hone skills they don’t get to use at their day job. So, if self-employment trends are here to stay, start shaping your strategies for success, but please remember you may owe Uncle Sam some tax $$$ from that side biz!

Contact Us: Balancing a full time job and the finances of a side business isn’t easy, even if you are passionate about the service you provide or the product line you sell. Make a budget and stick to it, even when things in your side gig are slow. Being organized will increase your productivity, and keeping good financial records will increase your profitability. If you need help managing your personal finances as well as your business finances, your Fuoco Group professional can get you on the right track. We can even help you plan for retirement from your 9 to 5 job as well as your 5 to 9 job! Call toll free for more information: 855-534-2727.