For some time, e-commerce has opened opportunities for people of varied backgrounds and skills. This includes short and long-term prospects that offer direct and indirect compensation, or a combination of revenue types. Modern technology allows people like you to create a product or service to earn ongoing revenue.
However, there are some blurred lines when it comes to legal titles. While most companies have positions as 1099 employees, things like a flexible schedule may confuse some. People who work when they want to consider themselves self-employed, but the Internal Revenue Service (IRS) has the final say.
Defining Roles Outside of a Traditional Paycheck
People take on outside work for several reasons. This ranges from having extra income for necessities to working in a field that’s not always financially stable, like the arts. There’s also the opportunity for you to have a second career, as many are now working well into their golden years.
Finding opportunities online has become the norm for individuals ranging from teens to middle-aged adults. What separates some roles is whether you work for yourself or another company. When you sign a 1099 tax form, you’re likely to earn at least $600 in taxable income. Some short-term projects don’t require this form but you may consult your tax professional if unsure. Self-employed people are also responsible for paying taxes on net sales over $600 as well.
Pros and Cons of Self-Employment
While this mostly depends on the chosen industry, professional experience, and resources, many people want to be their boss. There’s flexibility, you’ve got a say in how things are run, and the profits are yours. You also enjoy the accolades and benefits of calling an entity yours.
Most business ideas need start-up capital to launch. While some owners may build their small operations through social media or word-of-mouth, it takes a while to earn money. Self-employment also requires planning, in case of a sudden boost in business or need restructuring.
Pros and Cons of Being a 1099 Employee
Working for an established company usually means working when you please and getting paid once the job is complete. You can also get paid by the project, at a fixed rate, or hourly salary. A few companies offer 1099 employees benefits like performance bonuses or paid time off after working with them for a while.
In some cases, a 1099 worker may do the same job as a regular (W-2) employee but won’t receive any W-2 employee benefits. Long-run projects often equal steady pay but without medical insurance or paid time off, it may cost you out-of-pocket expenses. Also, projects can end without notice or explanation, which is usually noted in a contract or non-disclosure agreement (NDA).
Creating or Finding Self-Employment Opportunities
Most people choose self-employment opportunities based on their interests or knowledge. The best option is usually a service that’s in demand and quickly generates revenue when combined with a good marketing strategy. However, some people like to go with something that’s innovative or reflects the times.
For instance, if you see many people walking dogs in your neighborhood, this may generate a few ideas. One possibility is a subscription box service for dog care. Start by looking up the type of dogs seen in the area and note things like diet or possible health concerns. This service eliminates a trip to a specialty store or saves travel time.
The internet has a ton of resources for finding unique opportunities, which may also include niche or popular franchises. The Small Business Administration’s (SBA) website offers several resources for launching and managing your business.
Learning about Marketing Facts
If you’re creative, you may enjoy doing some marketing duties for your business but there’s more to it than creating an ad. This also involves comparing ad performance, learning about your customers, and promotions. When you’re a 1099 employee the clients are already in place but when you’re self-employed, finding and marketing is an ongoing process.
Staying on Top of Taxes and Other Legal Matters
As stated before, self-employed individuals pay taxes after making at least $600 in revenue, in most cases. However, if you also work a salaried job where taxes are already deducted from your paycheck, this will reduce your tax bill. It’s also worth noting that most employers request salaried workers reveal their outside business ventures. This protects the company in case there’s a conflict of interest.
Sometimes, 1099 employees must use their resources, such as a personal computer, to work for a company. A good idea is to talk to a tax specialist who can detail legal tax deductions when you file taxes. Overall, 1099 employees and self-employed individuals should have a tax person on their team. These are the best people to ensure you pay taxes on time so you’ll avoid government penalties and interest charges.
Finding a Work-Life Balance
The best way to find out if self-employment is for you is to create a plan that works. You may become one of the few with a knack for launching your business idea and becoming a success. At the same time, there’s nothing wrong with getting a little help in areas like accounting or digital marketing. Although some people may take classes to help them get a better understanding, some online resources need less time and money.
One path to success is being open to professional advice, reading up on industry changes, and getting plenty of rest. Rest also includes quality time with family and enjoying yourself, even when things hit a slump. While working nonstop seems logical, distractions allow you to recharge with fresh solutions. Some famous entrepreneurs made mistakes early in their ventures but tried until they got it right.