Who doesn’t love some extra cash lying around? Picking up odd jobs, like rideshare driving and walking dogs, gives you the flexibility to make money on your own time. Whether you do these odd jobs on the side or full-time, you may need to start managing your finances as an independent contractor.
It’s easy to get into odd jobs, but don’t overlook the necessary financial management to avoid playing catch-up when tax season rolls around. Here are five odd jobs for freelancers that could qualify for independent contractor status — meaning, they may need some relevant financial attention.
Odd Jobs for Freelancers
1. Walking Dogs
Are you a dog walker, but not quite ready to incorporate as a business owner? You may naturally group your earnings in the same savings account as your other income sources. But, if you exceed the yearly minimum of $600 to qualify for independent contractor status, you may have a hard time separating your earnings in the absence of a formal payment process. Avoid this havoc by creating a separate savings account to monitor what you make.
2. Fixing Appliances
If you regularly fix household appliances, you may want to open a business bank account to formalize payment acceptance. You’ll need to establish a Doing Business As (DBA) name, and possibly an Employer Identification Number (EIN). On the upside, an official name on your 1099 form will increase your company’s legitimacy. Don’t forget about the independent contractor work differentiators, though, which can include the need to use your own tools.
3. Grooming Lawns
Another key consideration independent contractors have to remember is the potential for inconsistent earnings. Those involved in lawn care could see business dry up during seasonal changes. You’ll likely account for this with additional income sources, but building up a solid savings buffer can help you handle fluctuations in business. Common practice is to save about 20 percent of your income to rely on if your finances get tight.
4. Rideshare Driving
Making money from the comfort of your car? Technically, you’re an independent contractor when you drive for a rideshare service. You should receive a 1099 form around tax season to file your earnings. You can also get tax deductions for using your car as a business, including gas, oil, repairs and other maintenance needs. Don’t forget that you can receive the standard IRS mileage deduction, currently 53.5 cents per mile.
5. Tailoring Clothes
Mending, altering or sewing clothing is a stable source of income for the crafty. Once you create a steady stream of business, you may want to incorporate as a Limited Liability Company (LLC). This brings tax benefits through clear business ownership, like avoiding corporate income tax, since any earnings go directly to you as the owner.
There are many odd jobs like these that unexpectedly qualify for independent contractor status. Don’t let too much time pass before streamlining your finances and saving efficiently to get the benefits. It might seem daunting to get started, but it’s fairly straightforward — and will make your life much easier when it comes to tax season.