Starting a business, even a one-person shop, comes with financial risk. But does “the system”—government, banks, healthcare companies and other institutions—add to the hazards, by making life unduly hard for the self-employed?
That question—once rarely asked by anyone other than freelancers themselves—is starting to come up more and more, as the number of people running solo businesses rises. This uptick is fostering both activism and innovation by organizations that see opportunity in addressing the major pain points for free agents. These players are taking on some of the biggest challenges that send people back to the world of traditional jobs: difficulty accessing affordable healthcare, maintaining a stable income, getting paid on time and keeping up with obligations like paying taxes.
Leaders are starting to notice there is not only a big untapped constituency in the freelance population but plenty of money to be made by making life easier for them. Here are some new developments that are worth keeping an eye on if you’re self-employed or interested in this market:
A new advocacy group emerges: After stepping down as CEO of Kelly Services, a provider of temporary workers, in 2017, Carl Camden founded IPSE U.S. – The Association of Independent Workers – last September. The organization, based in the Detroit area, aims to create a political voice for independent workers—addressing issues such as the high cost of health insurance and the hazards of unsteady income.
“There is a group of people who desperately want to be employees,” Camden says. “To a large degree, the reason they want this is our country has put in so many barriers to pursuing independent work. The only way to get access to the safety net easily in our country is as an employee.”
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What keeps it so inaccessible? One reason is government likes taking taxes out of people’s paychecks, instead of waiting for freelancers to receive their pay from employers and send it to government later.
“One of the sources of resistance in the government is we have outsourced tax collection to employers,” says Camden. “As more and more people have moved into the independent work style, government tax collection is under pressure.”
PPSE US, founded last September as a not-for-profit, hopes to break down some of the institutional resistance to the growth of freelancing. It is asking independent workers to stand up and be counted by signing The Declaration of Independents, a campaign to organize self-employed workers.
IPSE U.S. has been working with partners such as Prudential to bring access to a package of products that will, if successful, offer “an equivalent safety net” to the one available to W-2 workers, says Camden. Insurers like the idea of reaching many freelancers at once, he says. “We’re going to offer a way to access large groups of independent workers,” he says.
IPSE U.S. isn’t the first group to advocate for independent workers. Other groups, among them the Freelancers’ Union and the National Association for the Self-Employed, have also taken up the cause of freelancers, particularly their need for affordable healthcare.
However, Camden could bring some useful on-the-ground knowledge. At Kelly Services, he had a front-row view of the increasing use of contingent labor by big companies. Not everyone welcomes that trend. Some believe it would be better for many freelancers and contractors if they were W-2 workers, who had the same protections as colleagues on payroll and fear that corporations are trying to avoid providing needed benefits to the people they hire on a freelance or temporary basis.
Camden believes government should play a bigger role in protecting freelancers. “Almost every other country makes the social safety net as a condition of citizenship,” says Camden. “If we discriminated against any other part of the U.S. population as we do independent workers, it would be stunning.”
Curated communities take root: One of the best ways to grow a freelance business is by teaming up with other independent workers, so you can go after bigger and more complex projects. But that approach can backfire if you don’t screen the other freelancers carefully.
Communo, a by-application-only marketing and creative agency and coworking provider that launched in January, has focused on making it easier to find like-minded, serious professionals in its industry. Solo entrepreneurs who make it through the application and vetting process pay $200 a month to belong to the community.
When we spoke recently, CEO and co-founder Ryan Gill, formerly co-founder of the agency Cult Collective, said the curated community had grown to 300 members and is on pace to hit 1,000 by year’s end. “People don’t want to work a 9-to-five job anymore,” says Gill.
Gill says he’s raised $1 million to start Communo and is now embarking on a Series A round of financing.
A big player looks to simplify quarterly tax payments: For many freelancers, calculating and filing quarterly tax payments is one of the biggest hassles of being self-employed. That’s why many freelancers put it off and pay their taxes only once a year.
Fidelity Labs, a business incubator at Fidelity, just released a new product, called bSolo, to ease the pain. The service, which costs $12.99 per month, automatically deducts a predetermined amount from a freelancer’s business bank account to set aside for taxes and, with the freelancer’s final approval, transfers that money to the federal or state government.
“The pain point around taxes is a huge blocker, an emotional headache,” says Duke Chang, managing director of Fidelity Labs.
The idea of bSolo is to mirror the automated deduction of taxes that occurs with payroll checks. “We feel payroll is an under-appreciated employee benefit,” says Kim Langway, co-founder and head of product at bSolo.
Crypto payments become an option. Although many freelancers do business globally, accepting cross-border payments can be difficult. Spera, a Utah-based platform that provides tools such as invoicing software to freelancers, now enables freelancers to accept payments in crytpocurrencies through a partnership with merchant account provider CoinPayments, which allows freelancers to accept more than 760 altcoins for .50 per transaction.
Spera saw the need for such a service after hiring a freelancer overseas for a project. Spera had trouble paying him, due to logistical difficulties, which delayed his payment.
Speaking with freelancers, the company found 75% had international clients and concluded that many would benefit from being able to accept alternative currencies. “Talent knows no borders,” says founder and CEO Greg Pesci.
A new platform aims to level the playing field. In addition to offering tokenized payments, QuiGig, a new freelance platform for service providers based in Houston, has introduced profiles in which the freelancers do not enable purchasers to see their name, age, or ethnicity (there are no photos). Explains founder and CEO Emad Mousavi, “Sometimes hiring processes are not fair.”
It will be interesting to see if this approach helps equalize pay gaps, like the one between men and women that Freshbooks recently found in a survey. In the meantime, Mousavi says the AI-powered platform allows for speedier bidding on jobs, something that could help all freelancers using it to maximize their income.