Gig Economy - Keeping The Risks In Check

Gig economy: Keeping the risks in check

The gig economy is on the rise in today’s world. For those who want to avoid corporate hoopla and be their own boss, taking up individual projects would be the most lucrative option. 

Today, with the ongoing pandemic, people are looking at freelancing options more than ever. 

The term freelancer is used for individuals who are self-employed. In one way, freelancing is a dream come true for many with benefits such as flexible working hours, remote work options, and, most importantly, no superior authority.

In September 2020, Upwork released a study of the U.S. independent workforce, showing that around 36% of the U.S. workforce started freelancing during the pandemic—which was a 22% increase since 2019. 

Moreover, the gig economy in the UAE also witnessed considerable growth. The content industry experienced a sharp rise in demand for digital content freelancers, according to the LinkedIn Emerging Jobs report. This category witnessed a 197% rise.

The gig economy has multiple advantages and disadvantages. Apart from the fact that, as a freelancer, you will have to undertake various roles at a time (accounting, marketing, coordinator, etc.), it does come with one significant risk—having a steady income stream. 

The one significant disadvantage of the gig economy could cause you to become apprehensive about whether and when you will get your next project. However, if you do choose to start freelancing, figuring out how to tackle and overcome the associated risks could be beneficial in the long run. To help you in this regard, the following factors need to be considered when navigating the gig economy while keeping risks in check.

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Gig economy: Finding freelance projects 

• There is no fixed inflow of projects when it comes to freelancing in today’s gig economy, so it is imperative that you continually be on the lookout for new assignments. Fortunately, there are a plethora of websites available to help you do exactly that! No matter what your profession is, there are freelancing platforms available in every gig economy for almost every domain ranging from designing and tech-based work to content creation. Websites such as Indeed.com, Fiverr, Upwork, Upstart, and Freelancer.com are some of the popular choices.
• Due to the ongoing pandemic and the social distancing norms in place, many companies have shifted their businesses online. This has led to an increase in the demand for freelancers around the world. This can also help increase your chances of securing reliable gigs.

Navigating the gig economy: Keeping risks in check

• Although becoming a freelancer is beneficial in many ways, there are certain risks that should be kept in check. 

Losing money

• When you are working as a full-time employee, even if your employer’s business is slow, they are required to pay you on time. However, as a freelancer, there is no such guarantee offered. The inflow of your income would solely depend on how many projects you work on for that particular month. This could, in turn, become frightening, especially for beginners who are just starting out.
• One way you can try mitigating this risk is by enhancing your negotiation skills while focusing on upgrading your skill set so as to maintain the demand for your services. The way in which you negotiate with your clients can help you price your services well and ensure timely payments. However, before starting a freelance career, you should have a financial safety net to bank on because it will be a slow but steady climb to building a profitable business.

Lawsuits

• Freelancers may not always be immune to lawsuits. There are quite a few ways in which a freelancer could get sued in today’s gig economy. Liabilities including contract, infringement, employer, payroll tax, product, and so on could put your freelance business at risk. As a lawsuit could threaten your business and financial assets, it is important to work towards reducing the risk of losses. 
• One of the ways you can go about doing this is by forming a legal entity for your freelance business. Although you may start your journey as a sole proprietor, you can later establish an LLC (limited liability company) or a corporation. Establishing an LLC or corporation would help protect you from being held personally liable for wrongdoings by others, including co-owners, subcontractors, or employees. Another great way to mitigate this risk is to obtain liability insurance; this could help you defend yourself in the case of a lawsuit. 

Debt

• When a business incurs debt from its expenses, a business creditor can go after its assets. On the other hand, when a person goes into debt from personal expenses, a personal creditor can go after their personal assets. Again, as a sole proprietor, these assets are largely one and the same. Therefore, venturing into the gig economy would require you to significantly reduce your risk of debt. 

Conclusion

The gig economy offers a variety of jobs for professionals across various fields. However, before you sign up to become a freelancer, do your research well, select your niche, look for other examples set by successful freelancers in today’s gig economy.

Frequently asked questions

1. Why is it called a gig economy?

• The meaning of a gig economy lists any piece of work that is akin to an individual gig. However, such work could fall under many names.

2. What is a gig economy example?

• The gig economy is based on flexible, temporary, or freelance jobs, often involving connecting with clients or customers through an online platform. 

3. What is a gig economy worker?

• The gig economy involves people who balance a range of income streams and work independently, job-by-job.

4. Is a gig worker self-employed?

• If you are an independent contractor making money from gig work you are considered self-employed. You may be required to make estimated tax payments; however, this would differ according to the country you are employed in.

5. What are three downsides for workers in a gig economy?

Some downsides related to the gig economy include the following:

• ‍High stress: With no fixed income, the gig economy can be stressful.
• No safety net: Without things like healthcare benefits and fixed contracts, it can be difficult to feel safe in the gig economy.
• Taxes: Depending on the country you are working as a freelancer in, you would be required to pay taxes on the income earned from gigs.