Cisco's tepid forecast clouds quarterly beat, shares fall
Network gear maker Cisco Systems Inc reported a 4.4 percent rise in quarterly revenue on Wednesday, its second straight quarterly rise, driven by strong growth in its newer businesses such as cyber security.
Being your own boss can be a tempting proposition and, in the “gig economy,” there are plenty of opportunities to do so. From using platforms like Lyft, TaskRabbit, and Upwork to find work to finding clients on your own as a freelancer or consultant, in a few simple steps, it’s possible to free yourself from open floor plans and fluorescent lights. After all, if you make $62,000 per year working 40 hours a week, you’re earning roughly $30 per hour. Why not try to do that on your own?
However, the costs of doing business–both overt and hidden–may mean you’re getting paid a lot less than you think you are as a self-employed person. In fact, Fast Company’s Ruth Reader recently wrote about a report finding that nearly a third of Uber drivers lose money driving for the ride sharing service. In fact, a 2017 PayPal report on freelancers found that their mean income is just north of $30,000 per year.
So, before you go solo, be sure you’ve run the numbers to make sure you can earn what you need to earn to make a living as a gig economy worker.
No more PTO
Even if your employer’s work week is defined as 9 to 5, Monday through Friday, let’s face it: You’re not always working during that time. You may take time for lunch. If you’re a salaried worker, you may be paid for holidays when the business is closed and get paid vacation, sick days, and personal time off, as well. As a freelancer, you will likely need time off, as well, so it’s important to set your hourly rate on how many hours you work on billable tasks, says marketing and strategy consultant Dorie Clark, author of Entrepreneurial You: Monetize Your Expertise, Create Multiple Income Streams, and Thrive.
Let’s say you’re planning on that 40-hour work week. Over the course of a year (52 weeks), that’s 2,040 hours. But you’re not going to be able to bill all of those hours to clients. Let’s say you take off:
Lunch: Average of one hour per day five days per week (260 hours)
Vacation: Five days (40 hours)
Sick days: Three days (24 hours)
Typical paid holidays (New Year’s Day, Presidents Day, Memorial Day, Independence Day, Labor Day, Thanksgiving and the following day, Christmas): Five days (40 hours)
Just those basics eliminate roughly 364 hours from your annual billable hours.
Then, let’s say you take about three days off to head to a conference or to tend to household emergencies or doctor’s appointments. That’s another 24 hours. And then there’s a matter of nonbillable time. You can’t invoice your customers for the time you spend on marketing or administrative tasks. You’re not getting your gig fees when you’re filling up the car or en route to the gig. Just one hour each day where you’re not doing billable work–where you may be answering email messages, figuring out your taxes, invoicing, or simply not have client work to do–is another 260 hours of time taken away from your earning power.
Suddenly, you’re not selling 2,040 hours per year–it’s more like 1,392. Going back to the $30 per hour example, suddenly your gross income has fallen to $41,760 before any taxes or expenses. Even the most productive freelancers have down time.
In February, Clark tracked her time in half-hour increments to determine how much time each business task was taking her. Doing so helped her create an accurate ratio for her business. “You might realize, ‘For every billable hour of work that I’m doing for a client on average I’m spending two or three hours marketing or doing administration or performing other necessary functions that are not being compensated and so I need to bundle that into an hourly rate that I might charge,’ ” she says.
For as painful as it is when Uncle Sam takes a bite out of your paycheck, it’s even more so when you’re self-employed, says Matthew Deaner, CPA, tax supervisor at NYBKW, a Melville, New York, accounting firm. As an employee, you pay your share of Federal Insurance Contributions Act (FICA), which is 6.2 percent for Social Security on the first $128,700 of your earnings in 2018, and 1.45 percent on all earnings for Medicare, and your employer picks up the tab for the other half. When you’re self-employed, you’re responsible for the entire amount–12.4 percent for Social Security and 2.9 percent for Medicare.
“A lot of independent contractors aren’t really aware of this double tax for the FICA and Medicare, they really get thrown off by it when they file their tax returns,” he says.
As a salaried employee, you may be entitled to benefits that will now come out of your own pocket, says Robert McGuire, publisher of Nation 1099, an information resource for experienced freelancers. Health insurance is a big one, which may cost several thousand dollars per year, depending on where you live and the plan you choose. No longer will an employer make a matching contribution to your 401(k) plan. Any employer-sponsored disability or life insurance policies will end, and you’ll be left footing the bill for those protections if you choose to keep them.
“You have two personas, you are the labor in your business and you’re the employer in your business or the owner in your business. And all those employer or owner costs are now passed on to you,” McGuire says.
Some gig workers like using platforms like TaskRabbit, Upwork, or others to find paying work. But it’s a trade-off, says Hugh Glazer, CPA, founder of WinterView Group, a Marblehead, Massachusetts, business consultancy for private companies. “They’re doing all the sales and marketing, they’re creating, probably, all the legal contracts. I would imagine some of them may or may not actually control the work, and they’re taking care of collecting the money, so you pay for that,” he says.
This may mean that fees through these platforms are far lower than what you might be able to score for yourself. However, if you are going to truly go it alone, you’re also going to absorb all of the cost of marketing, as well as the time and expense it takes to negotiate contracts, estimates, collect money, and perform other activities that go into landing new business and selling your time.
Costs of doing business
When you’re in business for yourself, you typically provide the equipment, supplies, transportation, and other costs of doing business. So, whether it’s a computer and printer or gas and maintenance of your car, these expenses are coming out of your pocket. These are usually tax deductions, but they also draw from the gross earnings you bring into your business, Deaner says.
Of course, one of the costs of doing business is paying yourself a salary, which many gig workers overlook, McGuire says. If you’re not earning enough to cover your taxes, needs, and business expenses and earn enough money to support yourself and save a little for the future, then you’re not creating a sustainable business, he says.
Setting Yourself Apart
Clark says it’s important to conduct some market research and determine what the competition is charging for similar services. There are even differences in pay rates on some of the gig platforms. Look for high earners in your preferred sector and how they go about getting paid what they’re worth. This research will help you understand where you fall on the experience and pay rate scale–and whether that’s enough for you to earn a living. Even if you’re not there yet, you can look for ways to set yourself apart and earn more, she says.
“If you’re coming in with a lot of experience or unique skills that are desirable in the marketplace–maybe you have expertise in automated online funnel creation or maybe you’re a fantastic high-end website developer–then you can safely charge premium rates because you know that people will desire an experienced practitioner and you can position yourself successfully there,” she says.
BERLIN: German companies are concerned that U.S. President Donald Trump is increasingly thinking only of America rather than just putting his country first, the head of Germany's DIHK Chambers of Commerce told media.
The United States has pulled out of the 2015 Iran nuclear deal and Germany has ...
Wall Street was set to open higher on Monday after the United States and China put a potential trade war "on hold" to work on a wider agreement, and as the announcement of US$27.6 billion worth of merger deals lifted sentiment.