I went to a very interesting panel at SXSW 2017. (10)99 Problems and W-2s Ain’t One was all about a topic near and dear to Almost Millions’ heart: The 1099 economy and how self-employed workers can prosper when they’re working on their own.
The panel focuses on two areas:
- How the on-demand economy creates new moneymaking opportunities for workers beyond traditional jobs.
- Why employers like hiring independent contractors in order to avoid paying for benefits and health insurance.
Needless to say, the panelists discussed things that matter to a lot of self-employed people. Here are Almost Millions’ biggest takeaways:
SXSW On 1099s And W-2s: Startups Optimize The Labor Pool
According to one speaker, the rise of smartphones and mobile apps makes it easier for independent contractors to know how much different services pay them–and puts more pressure on companies to offer incentives to independent contractors. Isaac Madan, an investor at Venrock, also notes that “Having a stable full-time job also means exposing yourself to the opportunity cost of both things you know and things you don’t know.”
SXSW On 1099s And W-2s: Uber Lets Drivers Get Customers
Tad Milbourn of Payable, a payments site for independent contractor, says services like Uber and Fasten (An Uber competitor which is popular in Austin) connect workers with customers they’d have a hard time finding otherwise.
“Uber, Fasten, and other services help contractors who are really small businesses get customers, which is typically the hardest thing any company has to do,” Milbourn says. “They create liquidity in a market, and let drivers or hairdressers or dogwalkers for a day plug into a brand and get customers.”
SXSW On 1099s And W-2s: Contractors Need Dashboards Of Their Own
Sheel Mohnot of 500 Startups says that there is a need for software that lets contractors balance their work hours and schedules for services like Instacart, Sprig, and Uber, and optimize them. Several of these apps exist, Mohnot adds; they benefit independent contractors who work for more than one service by letting them optimize their hours.
SXSW On 1099s And W-2s: Independent Contractors Think Of Themselves As Individuals, And Not Businesses
“People think of themselves as individuals, not businesses,” Milbourn said when explaining how independent contractors don’t think of themselves as businesses–”Not as Steve LLC or John LLC.”
He also notes that, as a result, many independent contractors owe too much on taxes. “People contact us asking how come taxes weren’t taken out of payments,” Milbourn adds. “You may have only earned $8000 as an independent contractor and owe a $2000 tax bill–and these are people who can’t afford $400 in taxes.”
SXSW On 1099s And W-2s: New Health Insurance Tools For The Self-Employed Will Evolve
Madan says that one of his portfolio companies, Stride Health, “Works with contractors and independents and folks not receiving insurance through employers.” The company offers health insurance products to independent contractors through insurance partnerships with companies like Uber, Postmates, and TaskRabbit.
SXSW On 1099s And W-2s: Resources
If you’re curious about the finances of being an independent contractor, we recommend reading through Almost Millions’ archives and the following books: Working for Yourself: Law & Taxes for Independent Contractors, Freelancers & Consultants and The Money Book for Freelancers, Part-Timers, and the Self-Employed: The Only Personal Finance System for People with Not-So-Regular Jobs.
Have advice to share? Let us know in the comments!