Getting Ahead in the Gig Economy

Nov 12, 2018

Are you your own boss? A growing portion of the working population is now part of what’s called the “gig economy,” people who make a living doing freelance or contract work and who don’t have one full-time employer. The Pennsylvania Institute of Certified Public Accountants (PICPA) offers these tips on how to navigate this way of working. 

Consider the Advantages

Working as an independent contractor or in a similar situation has many benefits, including the ability to set your own hours, choose the assignments you want, and possibly increase your income, depending on how much work you’re willing or able to take on. It can be a boon for those who need flexibility in their lives due to personal obligations or who relish the chance to run their own show or take on new opportunities. 

Prepare for Income Uncertainty

You should be aware, however, of the risks and challenges that the gig economy poses for workers. Most importantly, it can be difficult to accurately estimate how much you will make, especially as you get started. Your income may fluctuate unpredictably, making it tough at times to make ends meet. To offset this risk, build up an emergency fund equal to six months or more of expenses before you leave a staff job or early on in your freelance career. That way you’ll be able to pay your bills during lean times. Make a realistic budget and stick to it. If you’re stretched one month, find ways to cut back. You can dip into your emergency fund if absolutely necessary, but be sure to replenish it as soon as possible so that the money is there when you need it.

Factor in the Cost of Benefits

When you’re budgeting for life as an independent contractor, don’t forget the cost of health insurance and retirement fund contributions. While an employer might have covered some or all of these expenses in the past, you will now have to foot the bill alone. The price may be significant. Also, remember that there will be no more paid vacations or other paid time off. To maintain a steady income, you may have to blur the lines between work and downtime.  

Get Your Taxes in Order

Companies withhold and submit income tax payments for their workers, but when you’re independent you must pay your own estimated federal and state taxes once a quarter. Figuring out how much you owe each quarter involves calculating what you’ve earned, assessing any deductions you might have against that income, and determining how much you need to pay to cover income taxes as well as any Social Security and Medicare taxes that are also due. To ensure you’ll be able to cover your tax bill each quarter, set up your own withholding system by which you set aside tax money from each check you receive for work you’ve done. Your CPA can help you calculate your estimated payments and plan how to save for them.

Make New Connections

Working on your own can isolate you from the kinds of social or business connections that are typical in a more traditional work environment. Possible solutions include creating a networking group made up of other independent workers in your field or using coworking spaces that offer shared office areas for use by freelancers.  

Your CPA Can Help

No matter what your employment situation, your local CPA can offer the tax and financial planning advice you need to make the most of your hard-earned income. Turn to him or her for all your financial questions. To find a CPA in your area or for more financial tips, visit


The Pennsylvania Institute of Certified Public Accountants (PICPA) is a premiere statewide association of more than 22,000 members working in public accounting, industry, government, and education. Founded in 1897, the PICPA is the second-oldest state CPA organization in the United States.

Money & Life Tips are a joint effort of the AICPA and the Pennsylvania Institute of Certified Public Accountants (PICPA), as part of the profession’s nationwide 360 Degrees of Financial Literacy program.