Amid economic uncertainty and shifts in the labor market, participants in the “gig economy” have risen in recent years. These independent contractors or freelancers are expected to make up a $2.18 trillion industry by 2034.
Here’s what you should consider before pursuing work as a gig worker.
What is gig work?
“Gig work” is any individual task, short-term project, or ongoing work that an independent worker completes for a client that is not their W-2 employer. These gigs may be project-based, hourly, or part time and can either be an ongoing contract or a temporary position.
To earn enough money to make a living, gig workers typically take on multiple jobs or gigs at a time. Some do outsourced work in addition to their traditional jobs to earn extra money or gain skills in another field.
How does the IRS classify gig workers?
The IRS considers gig workers as self-employed contractors, not employees of the companies they work for. This means employers don’t withhold taxes or provide benefits, and workers have the advantage of controlling how and when they work.
To determine if you are an employee or an independent contractor, the IRS considers three factors:
- Behavioral. Gig workers generally have the freedom to decide what they do and how they do their job.
- Financial. Gig workers control how they receive compensation, which expenses they cover, and which, if any, tools they use.
- Relationship type. Gig workers typically work on temporary projects for a company, whereas ongoing or core work can indicate employee status.
While employers receive W-2 tax forms, gig workers are given a 1099-NEC form come tax season and are typically responsible for paying self-employment taxes to the IRS.
The IRS considers gig workers as self-employed contractors, not employees of the companies they work for.
How do gig workers pay taxes?
The primary difference between an employee and a self-employed individual is how they handle taxes. While employers cover specific tax responsibilities and withhold taxes for W-2 staff, as a gig worker, you’re responsible for yourself. Clients typically issue a 1099-NEC if they pay you $600 or more in a calendar year (for 2026, this threshold rises to $2,000).
As a contractor, you’ll generally owe self-employment taxes for Social Security and Medicare. To avoid penalties, many contractors make estimated quarterly payments to the IRS to cover the taxes.
You may be eligible for tax deductions that lower your liability, such as a qualifying home office, mileage and vehicle costs, supplies, and retirement contribution deductions. If you’re unsure of your tax obligations, seek advice from a financial expert to clarify what you owe.
[Read more: Getting Ready to File? Tax Deductions For Home-Based Businesses]
How do gig workers find freelance jobs?
With the number of freelance job listing websites, as well as corporate America’s shift toward using contractors to supplement its workforce, the gig economy has become easier than ever to participate in. Some of the most common 1099 job opportunities include rideshare driving, delivery driving, creative work (writing, editing, graphic design), software development, and web design.
Gig workers usually find work through the internet and apps. Employers will post their company’s individual needs on job boards and be paired with a gig worker best suited for the position. The wages, skills, and gig workers’ suitability for the project can be taken into account to be matched with an employer.
Best platforms for finding work as a gig worker
Online platforms have helped gig workers find countless new opportunities. Each platform caters to different industries, so it’s important to choose the right one based on your skills, pay expectations, and flexibility.
Creative and professional services
- Upwork and Fiverr: If you’re seeking structure and ongoing contracts, Arjun Mahadevan, CEO of doola, suggests sharing your services on Upwork. For quick, one-off projects, he suggests Fiverr Pro.
- Time etc and Zirtual: If you have administrative experience, Time etc and Zirtual can connect you with employers seeking virtual assistants.
Home and local services
- Thumbtack and TaskRabbit: For those with home improvement skills, use these platforms to showcase your services and help time-strapped homeowners.
- Wag! and Rover: Good with animals? Advertise your pet care services, including dog walking, pet sitting, and boarding, and connect with clients.
Delivery and driving
- DoorDash and Instacart: With a car and a clean driving record, you can earn money as a delivery driver, picking up orders from restaurants, stores, and more.
- Uber and Lyft: If you enjoy driving and meeting people, turn your car into a rideshare business and earn money on the road.
[Read more: Tap, Deliver, Thrive: How Small Businesses Are Growing With App-Based Platforms]
Other ways to find gigs
Social media
Use social media to showcase your talents and connect with potential employers organically.
“When it comes to creative talent — photographers, designers, storytellers — social media has been surprisingly effective,” said Sean Cavenaugh, Co-Founder and CEO of Buchart Colbert. “Instagram and TikTok, in particular, allow us to see a creator’s style, personality, and audience engagement at a glance. [It] helps us identify people who can not only deliver beautiful work but also translate our vision into clear, engaging deliverables.”
Referrals
Many gig workers find the best opportunities come through networking and word-of-mouth referrals from past clients.
“The best freelancers … [have] come through referrals, other founders, or operator communities,” noted Mahadevan. “If someone I trust tells me, ‘This person delivered for me,’ that’s worth more than scrolling through reviews online.”
Pros and cons of being a gig worker
There are many factors to consider when becoming a gig worker. Here are some of the pros:
- You will be your own boss. Gig workers only have to answer to themselves and the work they take on.
- You can work a flexible schedule. Working as a contractor or freelancer allows you more freedom than you would get with a 9-to-5 job. For instance, you can go grocery shopping in the middle of the day, take a long lunch break, or work around your children’s school and activity schedules, as long as you deliver to your clients on time.
- You decide which jobs to accept. Gig workers can choose only the jobs they want to and decline any project that doesn’t suit their interests or desired pay. Many businesses use short trial projects, giving freelancers the opportunity to see if the project is a good fit before committing. “We run almost any new hire (short- or long-term) through a [paid] test project … to gauge their work product and how well they … fit with our team and culture,” said Jared Navarre, Founder of Keyni.co.
- You can focus on your passions. With more flexibility as a gig worker, you can start your own side hustle or pursue your passion projects.
However, there are a few downsides to gig work, including:
- You’ll owe self-employment taxes. One of the biggest challenges gig workers face is setting aside enough of their earnings to cover taxes like FICA and Social Security that are normally covered by a corporate employer.
- Clients can drop you at any time. Freelance clients can come and go, with or without warning, and you may lose a sizable chunk of your income if one of them drops out.
- You’ll need to work hard to brand yourself and build a client base. Because gig work isn’t always steady, you’ll constantly need to market yourself and look for new projects to sustain your income.
- You’re typically not eligible for employer-sponsored benefits. Unless you have a particularly generous client, you will likely not be eligible for any kind of employer-sponsored health insurance, retirement savings plan, or other benefits as a 1099 worker.
[Read more: Building an Online Portfolio to Promote Your Freelance Writing Business]
Despite its challenges, gig work is an increasingly popular career path and one that can be quite rewarding if you’re willing to put in the effort of building a business. If you’re interested in joining the gig economy, do your research and understand how you can best serve the marketplace with your skills and talents.
Lauren Wingo contributed to this article.
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