You’ve likely been managing your own personal finances for years, so it might be tempting to just apply the same principles you use for your personal finances to your business. But there are important differences to consider.
The term “gig” is jargon for “temporary job.” You’ve likely heard it used conversationally, especially when freelancers say, “I’ve booked a gig.” Additionally, you’ve probably heard of a “gig economy,” which means a free market system in which businesses use independent contractors—for short periods of time—to handle their various needs.
But what exactly is a gig worker? What’s the difference between gig workers vs freelancers? Beyond this, what are types of gig workers? Below, we’ll answer all of these questions and more.
What is a gig worker?
Essentially, a gig worker is an independent contractor (also known as a freelancer). These three titles are, in fact, interchangeable. Essentially, a gig worker is someone that does short-term work for one or more clients.
One of the biggest differences between a gig worker and an employee is the way they’re classified by the government.
An employee, for instance, gets benefits like workers’ compensation, health and retirement plans, and will have their taxes deducted automatically. Their employer will then send them a W-2 tax form and they won’t have to pay self-employment taxes.
Gig workers, on the other hand, are under short-term or long-term contracts, but don’t receive the benefits, retirement structures, or their taxes automatically withheld. .This means, after each year passes, they receive a 1099 tax form. While contingent workers can choose to withhold a certain amount of taxes on each paycheck, they rarely do. Thus, gig workers typically have to pay a higher percentage in taxes at the end of the year—and their various employers rarely offer to cover the cost of their health insurance.
Note: a “permalance” worker may be classified under W-9 filling, yet have an annual contract in place. This is commonly known as a full-time freelancer.
Basically, a gig worker is someone that works independently, choosing to opt in and out of different jobs.
What are the different types of gig workers?
At the end of the day, a gig worker is a professional who can offer their on-demand services for stints at a time. Often associated with tech companies, today the type of gig workers and the services provide vary in scope. For instance, a few types of gig workers include:
- Production Assistant
- Event Planner
- Set Worker
- Face Painter
- Dog Trainer
- Video Editor
Learn more: Thimble 2019 Gig Economy report
All of these professions can include short-term and independent work, as well as full-time employees. For example, a dog trainer could have their own clients, or they could work for a dog training company (or both).
A photographer, for instance, is hired for all different types of gigs, from weddings to professional headshots, they may be brought on to work for specific periods of time, so they are a part of the on-demand workforce.
It becomes a bit more complicated when you consider certain professions like general contractors. While “gig” is usually jargon used for industries that are creative or tech based, it’s expanded to be much more. After all, if you don’t have a business with employees, you’re an independent contractor. As a freelancer, clients may hire you to work on their project(s) for specific periods of time.
At the end of the day the modern workforce is evolving and changing how people are working. As a result of the rapidly evolving convenience and growing number of convenience-based jobs, there are more and more opportunities for gig workers.
What do I need to be a gig worker?
The life of a gig worker—when the work is lucrative—is quite attractive. Gig workers have the freedom to choose their own hours, move between jobs, and keep an open schedule whenever they want. They can plan for taxes on their own accord and create a work life that suits their lifestyle down to the time of day when they like to wake up.
But what do you need to be a gig worker? How do you start?
A skill set
Most every lucrative and successful gig worker has a distinct skill set. For those that work jobs that don’t require any specific skill, the pay is usually minimum wage. In which case, it’s best to focus on a specific industry. For instance, having a skill such as photography, video editing, writing, working on set (across any department in film), and so forth will ensure that you can get paid based on the value and quality of your work. In business, this is what’s often called a ‘knowledge worker.’
A business structure
Many successful gig workers start their own small businesses and LLCs to become even more legitimate. This means that they can separate themselves from their services, shielded by the entity, in the event of a legal dispute. Others, however, are paid only as independent contractors, rather than starting their own sole proprietorship.
With an LLC, a gig worker can create a business bank account, separate their finances, and split their credit away from their company—meaning if something happens to the business, they’ve got a safety against personal damages.
Lastly, no gig worker is ever going to be able to make it if they don’t have, well, gigs. In which case, a gig worker needs to have a network of clients or a way to find more clients. These clients—companies or individuals—will then pay them (typically) on a per-project basis. Often, the mark of a successful gig worker lies in the volume and quality of clients they have.
Being that gig workers hop from project to project, they are constantly exposed to new environments, workflows, and people. And, being that they are not employees, rarely do the businesses or people employing them have an insurance policy that covers their subcontractors.
In which case, every gig worker needs a general liability insurance and professional liability insurance policy. A general liability policy helps protect gig workers from third-party claims of bodily injury, personal injury, and property damage. Professional liability insurance, on the other hand, helps protect against claims made by their clients—accusing the gig worker of being negligent in their work (which is why it’s also called errors and omissions insurance).
Gig worker insurance
As a gig worker, you probably don’t need to have insurance every day, and no one wants to pay for something when they’re not using it. It’d be a waste of money—especially if you’re just starting out. What you need is an insurance policy you pay for only when you’re working, never when you’re not.
What you need is Thimble.
Here, we make insurance simple. With our pay-as-you-work structure, you only ever need to pay for insurance when you’re on the job. It’s a plan tailored specifically to you and your industry.
Need a policy only for an hour, day, week or month? No problem. What about a policy for the next day? We’ve got you covered. With Thimble On Demand, you can purchase a business insurance policy in less than 60 seconds. And we get it; jobs fall through. If this happens, one of the many benefits of using Thimble is that you can cancel your coverage up to an hour prior to when it’s set to begin—no wait, no fee, no problem.
As a gig worker, you’re blazing your path and making your own rules. Modern technology has created and will continue to create new types of jobs, and with the right safety measures in place, think how far hard work will take you.
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.