SelfInformed

April 2015


Freelance Entrepreneurs

Thursday, April 23, 2015

Welcoming the Freelance Entrepreneurs to the Self-Employed Demographic

Whether it’s the private car service Uber or Lyft, the online marketplace Etsy or an accommodation provider called Airbnb, these small and individual entrepreneurs operating in the shared services space are part of the growing small business community in what is being called, the “freelance economy”.

These sole entrepreneurs express qualities of not being an employee of any other entity, control their own destiny’s and decide themselves when, where, how long, how much, how often and for how much they work. The “freelance economy” includes a variety of new and growing entrepreneurs who operate as independent contractors, on-demand employees, small employers or a variety of shared services for car rides, shopping, and lodging. In this regard, anyone can operate his or her own small business by becoming an independent contractor with a larger, umbrella corporate business operation. But under these arrangements, there are specific business responsibilities such as wage and hour laws, tax obligations, liabilities for accidents, and pension and nondiscrimination rules. For instance, these entrepreneurs may receive paychecks without any federal and/or state government tax withholdings. Despite being self-employed, they may still be required to pay a host of taxes, including income, self-employment, Social Security, and potentially Medicare tax.

The new entrepreneurs in the 
“freelance economy” join the self-employed community of nearly 27 million non-employer and micro-businesses whom generate over a billion dollars annually, according to newly released 2012 U.S. Census statistics. This is an increase of 80,822 self-employed (55,165) and micro-businesses (25,657) over 2011. In fact, 2012 represents a peak year for the self-employed with an average growth rate of 2.86 percent over the last 10 years (more than any other small business demographic). Non-employers are single or sole proprietors without employees also known as the self-employed while micro-businesses are small employers with fewer than 10 employees.

The NASE is actively engaging with local, state, and federal officials to make sure that these entrepreneurs understand their legal obligations but also work to ensure the laws and regulations are flexible to allow for this demographic to continue to thrive.

Katie Vlietstra
is NASE’s Vice President for Government Relations and Public Affairs.

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