The Gig Economy (1/4)

Today, we’re going to talk about the gig economy
and how to create a niche practice serving the gig economy. I am Janet Barry Johnson, I am a CPA and I’ll
start by telling everyone a little bit about me. I worked in public accounting for about 10
years and in firms in Nevada in Arizona, and I worked in both tax and audit working with
individuals and small businesses. Since everybody asks how I went from public
accounting to being a writer, I’ll tell you that story. The last firm I worked for required all of
their professionals to write blogs for their website and I really enjoyed the writing. I got a lot of good feedback from inside and
outside the firm, so I thought it might be fun to do a little freelance writing on the
side, totally thinking this would just be a fun hobby. I guess it’s hard to find an accountant who
can also write in a way that’s accessible to the average reader, because a month later
I got asked to become a contributor at Forbes, and within a year I had really more writing
jobs than I knew what to do with. In August of 2016 I decide to leave the firm
I was working for to focus on writing. That worked out really well for me at the
time because my son, who’s now six, was about to start pre-school, and I was wondering how
I was going to juggle the long hours in the office with his schedule. Now I just work from home and my work schedule
depends on what our family has going on at any given week. Today I still write for Forbes and I also
write for FreshBooks, LendingTree, Credit Karma and Discover. I also do some ghost writing of blogs, articles
and white papers for accounting firms and also for consultants to the profession. I pretty much write about anything from taxes,
accounting, small business, hiring, technology anything having to do with personal finance
accounting. [chuckles] It’s all over the board, but as
a result I am a gig economy worker myself. So, our topic today really hits pretty close
to home for me. Today we’re going to cover why the gig economy
matters for a profession, the challenges faced by gig workers and how we can help them solve
them, and how to find and serve gig economy workers. Why should practitioners care about the gig
economy? First, I’ll give you a definition of the gig
economy. I’ve been hearing and writing about the gig
economy for years, but I’ve heard from a few CPAs recently that said they had to look up
a definition. Investopedia defines the gig economy as one
where temporary flexible jobs are commonplace, and companies trend toward hiring independent
contractors and freelancers instead of full-time staff. The gig economy is big. Size estimates vary, but according to Harvard
Business Review, there are around 150 Million workers in North America and Western Europe
who’ve left the standard employee role, sometimes by choice, sometimes not, to work as independent
contractors. The next thing we may need to make really
clear is the gig economy is not just rideshare drivers and people using task oriented platforms
like Airtasker, or Fiverr. Knowledge intensive industries and creative
occupations are some of the largest and fastest growing segments of the freelance economy. You may already know some freelance CPAs or
accountants working in the gig economy. Intuit recently launched a service to connect
TurboTax customers with independent contractors, CPAs and enrolled agents. The customer can schedule a call with a tax
pro to answer questions or review issues on a return. I recently wrote an article for the executive
search firm, Parker + Lynch, on companies that are filling C-Suite roles with independent
consultants. These are highly educated and experienced
CEOs and CFOs who are choosing project based work, because they can often make the same
or even more money while working fewer hours and enjoying more flexibility. Employers often like this arrangements because
they can access high level talent on an as needed basis, while managing costs and remaining
agile. A study from Intuit predicted that by 2020,
40% of American workers will be independent contractors. Next, let’s talk about some of the factors
behind this growth. First, technology has made it easier for companies
to work with independent contractors because they can standardize processes, and monitor
the work being performed in ways that just weren’t possible a few years ago. Think of project management apps like Asana,
Trello or Basecamp, communication apps like Slack, Zoom and Skype. File management apps like Google Drive and
Box. These are just a few of the options available
now that let remote teams collaborate from anywhere. You might even use some of them in your firm. Second, more workers are pursing project-based
work instead of full-time or even part-time employment, because they want more flexibility,
freedom and control over when and where they work, and the projects they work on. For example, in your own firm you might have
some employees or co-workers who are just amazing in one area, but maybe not so great
in another. Maybe they’re the go-to person when it comes
to international tax issues but you don’t have enough international work to keep them
busy year round. So they’re working on other things that they
just aren’t as passionate about or maybe just not as good at. With the gig economy, that international tax
expert might spend more time doing the work that they really love across several firms,
instead of spending part of their time on work they’re just not that interested in. In short, the gig economy allows people to
become more specialized in their work, which in turn leads to greater career satisfaction. Finally, the proliferation of gig economy
platforms has made it easier to connect supply and demand. Just in case you’re not quite convinced that
the gig economy can be a profitable niche, I did a little research on the highest paid
jobs in the gig economy. This information came from entrepreneur earlier
this year. They analyzed data from several platforms
to uncover the highest paying gigs. Let’s take a look at the top five. Here you’ll see a lot of the top jobs include
some buzzwords that we’ve been hearing a lot about in the accounting profession. First is deep learning jobs. Deep learning is a category of machine learning
that entails developing neural networks in computers that are similar to those in the
human brain. Deep learning freelancers have skills in algorithms
and programming, and they can make around $115 per hour. Next is blockchain. Of course, blockchain is a technology originally
built to power the Bitcoin cryptocurrency, but its potential is far greater. It’s being tested or used in shipping, copyright
and royalty protection, real estate transfers and voting just to name a few. Blockchain freelancers’ work is digital architects. They design and develop blockchain for new
cryptocurrencies and other applications. They earn on average about $87 an hour. Then there is robotics. We’re hearing more about robots and artificial
intelligence taking over a lot of manual repetitive tasks. Robotics freelancers build and design the
mechanical elements and they know how to use mechanical engineering software. They make around $77 an hour. Next is penetration testers. These workers are known as ethical hackers. When a company wants to know if their systems
are vulnerable to a cyber attack, they hire penetration testers to hack into their systems
and expose potential vulnerabilities. These freelancers know coding, programming
and security and they make on average around $66 an hour. Fifth on that list is Bitcoin testing. If you follow the crypto market at all, you
know that Bitcoin is a very volatile currency. Bitcoin freelancers build automated tools
for trading and exchanges, they develop market charts and set up Bitcoin payments on apps
and websites. They make around $65 an hour. But how big is it, really? You’ve probably heard of the big platforms
in the gig economy like Uber, Lyft and Airbnb, but there are hundreds more. For example, you can earn a living delivering
packages for Amazon through Amazon Flex. Those drivers earn about 18 to $25 an hour. You can sign up to help people move with the
platform called Bellhops. Their movers earn around $21 an hour. Caviar is an app that delivers food from local
restaurants to people’s homes. Their drivers earn about $25 an hour. If you have a bunch of designer clothes and
accessories that are just collecting dust in the back of your closet, you can use Closet
Collective to rent them out and receive about $40 per item. Here’s a few more. One of my favorites, personally, is Handy. When I am too busy to keep up with housework
or I need someone to assemble furniture, set up a home theater, or do other small projects
around the house, I can find a local cleaner, contractor or handyman through the app. House cleaners make about $22 an hour, and
in general, handyman services bring in $45 an hour. Then there’s tech support. Who doesn’t need tech support on occasion? You can get a professional at your home or
office to help with troubleshooting a printer, installing new software, setting up Wi-Fi
network and more. These workers through HelloTech earn 30 to
$90 per service. Another fun one I found is HopSkipDrive. It’s like Uber for your kids. If you need help shuttling the kids to school
or practice, you can find a driver who’s been background checked and you can track your
child’s ride live through the app. Right now I believe this service is only in
LA, San Francisco and Denver but as a parent myself I can see this growing quickly. Their drivers earn up to $30 an hour. That’s just a few. There are hundreds of platforms for connecting
gig economy workers to the people and businesses that need them. There’s more popping up all the time. It’s growing so fast that PWC projects that
transactional value in these platforms will reach $335 billion dollars globally by 2025,
and that’s just through apps. Of course, not all gig workers use apps to
find work. More and more online job boards like Indeed
and LinkedIn are advertising project based work, and many freelancers and gig workers
find new clients through social media or word of mouth. It’s really difficult to put a number on the
total volume of work being done by gig workers, but needless to say it’s a pretty big number. That’s the good news, but there’s also a downside
to all of these freelancers and gig workers. They’re very underserved when it comes to
getting sound tax advice. In 2016, the Kogod Tax Policy Center delivered
a report to Congress detailing the failure of our tax system to keep up with the growing
on-demand economy. Researchers spoke to gig workers, tax practitioners,
representatives from on demand platforms like Airbnb, Uber and Lyft, and they surveyed members
of the National Association for the Self-Employed to find out how well workers understand the
tax implications of their work. Some of their findings are summarized here. One third didn’t know whether they were required
to file quarterly estimated tax payments. 36% weren’t familiar with the kinds of records
they needed to maintain to substantiate their income and expenses. 43% had no idea how much they would owe on
tax for their on-demand work, and hadn’t set aside any money for taxes. Half were unfamiliar with deductions and credits
that could be used to offset their self employment income. Now, the IRS is trying to fill the gap with
their small business and self-employed tax center on their website, but it’s just really
not enough. As you know, tax advice is so highly personalized. Ask any tax question and the first answer
is usually, it depends. Expecting a tax novice to come through an
incredible amount of information on their IRS website, understand it and apply it to
their unique situation, is really asking a lot from professionals who are already busy
running their own businesses. The bottom line is this creates a huge opportunity
for tax professionals to serve these clients.

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