Gig economy | TaxConnections

05 Nov 2019

What Is The IRS 20-Factor Test?

In these days of the gig economy, more business owners are leveraging the affordability and convenience of hiring freelancers (independent contractors) instead of regular employees. It makes sense. There are some tremendous benefits to hiring independent contractors (ICs), including not having to pay for insurance and payroll taxes. Another huge benefit to hiring ICs is that business owners can’t always predict busy times and down times. When seasonal shifts in business necessitate extra help, the business owner can bring on more staff without making any long-term commitments. As business slows down, the owner can simply let the ICs know their help isn’t needed anymore at this time. It seems like a dream come true from an employer standpoint.

However, there are strict IRS rules regarding classification of ICs. If you mistakenly or intentionally classify a worker as an IC when they should be classified as employee, you and/or your business would be held financially liable to the IRS and to the worker. The IRS isn’t setting you up just so they can catch you out. They have established a 20-Factor Test for employers to determine if a worker is classified as an IC or an employee.

Written by Kazim Qasim | Posted in IRS 20 Factor Test

23 Oct 2019

Gig Economy Update: California Law AB5

Governor Gavin Newsom’s signature made it official. California’s Assembly Bill 5 (AB5) is now law. In case you missed the news leading up to this, AB5 is the law that can turn a freelancer into an employee. Under the law, which takes effect on January 1, 2020, a freelancer will be designated an employee of a company if they perform job duties as part of the core business offerings of the company, OR if the way they work is directed by a company boss, OR if the worker doesn’t have their own independent business. How does that sound to you?

In a letter, Governor. Newsom said, “Assembly Bill 5 is a landmark legislation for workers and our economy…a next step is creating pathways for more workers to form a union, collectively bargain to earn more, and have a stronger voice at work.” Obviously, the focus is on helping workers. But do freelancers see themselves as workers? Do they want to? One thing we know is they want more pay as well as some benefits and protections.

Written by William Rogers | Posted in California Law AB5 • TaxConnections

17 Nov 2017

Caring about “Sharing”: Why The IRS Should Do More for Participants in the Gig Economy

In this blog post, I will discuss how the IRS has been dealing with a growing sector of our economy called the “sharing” economy (also known as the gig economy). Proponents of the sharing economy believe it promotes marketplace efficiency by enabling individuals to generate revenue from assets while the assets are not being used personally. For example, a vacation home owner may rent out her home while she is not using it. Airbnb (short-term home rentals) and Uber (shared car services) are two of the more prominent companies that facilitate a sharing economy.

Written by Nina Olson | Posted in IRS • Sharing Economy

19 Oct 2016

Running A Gig Or Two? What You Need to Know!

A Gig, I thought, always had a kind of 1950’s/ 1960’s hipster vibe. This was something you did on the side while waiting for real life to catch up! The Gig is gaining more legitimacy these days, I believe. It means a free-lance or a side job you hold down out of interest or necessity. It is also called a “Gig Economy,” or a “Shared Economy,” and sometimes people hold down more than one or two gigs.