Owning It – 3 Ways to be Self-Employed
by Susannah McQuitty
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Even if only dabbling in the occasional lemonade stand, you’ve probably had some experience with what everyone’s calling “the hustle,” which is basically any sort of freelance work outside of your main job. There’s been a huge shift over the last few years toward using hobbies to make a few extra bucks, since the internet makes self-employment easier than ever. But there’s a big difference between proofing other students’ papers for $20 every once in a while and making a living selling antique spoon bracelets, right? Where does the line fall between making a buck or two off a hobby and being self-employed?
Self-employment can be boiled down to three basic levels: the hustlers, the freelancers, and the small business owners.
It seems like everyone and their brother is jumping into the side-hustle game, from Uber driving to repurposing flea market finds for the eBay crowd. Usually, people who work a side hustle aren’t looking to get into the business as a standalone job (though you might be able to turn those repainted picture frames into a career). Hustlers are usually looking for a way to make a few bucks on the side or just making sure their hobby is able to sustain itself.
When it comes to taxes, your side hustle may not actually need to be reported, but watch out: the rumor that odd jobs are never taxable is a myth. The rule of thumb is that if you make more than $400 in profit over the course of the year, you have to report the income. That’s good news for people who are only earning enough money to buy supplies, because your profit is the money you gain above and beyond expenses (Income – Expenses = Profit).
Freelancers are the next level up on the self-employment chain. While you can do freelance work on the side of another job, most freelancers get their income by working on a specific task or product for multiple different employers. Freelancers usually run their entire show too: branding and marketing, production logistics, and, where applicable, delivery – usually all from home.
Taxes can be a bit more complicated for freelancers, but they’re by no means impossible. Freelancers have to run the whole enterprise themselves, which includes the accounting work and record-keeping, tracking business-related expenses (because they can still be deducted!), and paying taxes quarterly instead of once a year in April.
Running a small business
A post about being self-employed couldn’t be complete without mentioning the big dogs of the game: the small business owners. These people have expanded past freelancing to actually establish a business, usually in a building separate from their house that requires hiring employees to help run the show.
Taxes are probably not your average small business owner’s favorite subject, since they have to pay taxes as both an employer and an employee, in addition to offering health insurance for full-time employees. But there are a lot of great tax breaks for you American entrepreneurs, believe it or not.
Breaking down the self-employed crowd
This month, we’re going to look at doing taxes for the side-hustlers, the freelancers, and the small business owners. We’ll walk through what they’ll look like for different kinds of self-employed situations. What you do is unique, so your taxes will naturally follow suit: time to crack the code on the self-employment mystery.
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