Aug 17, 2022

What is the gig economy?

The gig economy differs from the world of traditional full-time jobs that consist of the basic 9 to 5 schedule to employees who prefer temporary and flexible jobs. Gig workers are individuals who pursue these types of jobs, often applying for a temporary independent contractor or freelance position. Many of these employees prefer to work on their own flexible schedules in various environments. 

How the gig economy works 

Jobs in the gig economy primarily focus on smaller tasks that aren’t as high-level as what many full-time employees complete. Employers may hire gig workers to fill shifts for a certain number of hours or work on individual projects as needed. The gig economy encompasses various fields from physical labor, freelance content writers, industry consultants, and delivery drivers. 

There are numerous ways workers can balance their gigs. Some have a full-time role where they work traditional hours in the office. Once that shift is over, they’ll work their gig for a few hours in the evening to earn extra cash. Some workers complete multiple gigs that are equal to a full-time role. Most companies that hire these workers don’t often employ them full-time, so company benefits and perks aren’t typically offered to them. 

Pros and cons of hiring gig workers 

Potential advantages to hiring gig workers: 

• Hiring flexible workers:  Some workers pursue your role as a side gig, so they’re available to work nights and weekends when your full-time staff is unwilling or unable to.  
• Reducing costs: Hiring gig workers means you don’t have to pay full-time wages, paid time off, health insurance coverage, or onboarding costs. 
• Scaling up quickly: If your business is still growing and you don’t yet have the office space or budget to hire full-time employees, gig workers are a great way to scale your business, finish tasks and meet goals while saving time, money, equipment and office space. 

Potential disadvantages to hiring gig workers: 

• Requires complex contractor paperwork: Each state has different rules and regulations regarding gig and contract workers. Many require specific types of paperwork to be filed for contract and freelance workers. This is primarily due to the classification o these workers as independent contractors.
• Unreliable workers: Since gig workers are completing responsibilities for your company temporarily, they aren’t often contractually obligated to your company
• Less advanced skills: Though it could mean they have many skills, these skills could be less advanced than most, so they’re usually only able to complete basic responsibilities.  

Remote Workers

Technology and IT 

Many companies in the technology and IT field hire gig workers to perform internet security and computer repair tasks. 

Content creation and writing 

Many writers connect with businesses through online communication. They’ll typically be asked to complete certain content projects and are paid on an hourly or project-by-project basis. 

Software engineering and development 

Some gig workers design a company’s software and computer programs. They can do this either from home on a flexible schedule or come into the office to build and test various computer programs and applications. 

On-site Workers

Administrative and clerical work 

Many Gig employees come into the office a few times a week to file documents, schedule meetings, or make travel arrangements. 

Transportation and delivery

Many businesses in the food industry hire gig workers to deliver food on their own time. Workers can decide to work certain shifts whenever they need extra money and will make deliveries for as long as their schedule allows. 

1099’s and e-Verify a Must

Virtually all gig employees are independent contractors. Although this may simplify payroll, as employers are not required to withhold income tax and Medicare taxes, it requires close attention to the requirements of contract workers.

First, make certain that they are correctly classified as a contract worker.

Second, complete the appropriate 1099 requirements. The most common issue that may cause a rejection of your 1099 filing and potential fines is mismatched Social Security Numbers (SSN) or Tax Identification Numbers (TIN). To avoid this risk, TINs and SSNs should be verified at the time of hiring. Aatrix supports this service as part of its unlimited eFile package.

Some content is sourced from Indeed or employers.