Zahir Khoja, CEO, golf.
Dismissed employees. A looming recession. Minimal Mondays and conscious stop. Let’s be honest; people think differently about work.
It is well reported that entrepreneurship has boomed during the pandemic years. According to recent US Census data, Americans have formed 5 million new businesses in 2022an increase of 44% compared to 2019. But what is becoming even more apparent today are the after-effects of the pandemic, namely the disruption of the 9-to-5 jobs in the office.
Many Americans are losing faith in conventional work and feel stretched by high inflation. Qualtrics surveys have proven that 52% of employees considered getting a second job. To find work, people are using technology in new ways to start entrepreneurial side businesses and create a lifestyle that works better for them. This is even apparent from a recent survey by my company 51 million people (download required) in the US today operate independently and makers are one of the fastest growing segments of small businesses.
These trends are fueling a new wave of entrepreneurship and the emergence of what some call ‘multi-hurlers’. I’d like to look at some of the trends shaping this group and see how a new generation of entrepreneurs can prepare for long-term success.
Unlocking entrepreneurship by working from home
Remote work has made it much easier for people to try a side job. a recent research found that 10% of American workers have a full-time job plus a part-time job. Add gig workers (3.6%) and full-time self-employed (8.6%) to that, and that makes 22% of the workforce opting for flexibility and empowerment.
With some companies trying to get people back to the office, will this reduce the amount of multi-hustling? In general, hybrid work is here to stay. While some companies are returning to the office a few days a week, I don’t see us going back to pre-pandemic “normal.” After three years of more freedom and flexibility, employers can’t just put the genie in the bottle. I believe that employees with an entrepreneurial spirit are more likely to be loyal to companies that allow them to work flexibly.
Make money in flexible ways
Mobile technology and online gig platforms have allowed multi-hustlers to take their professional skills straight to the market – whether they’re a web developer running freelance consulting projects, a carpenter selling woodwork, or a personal shopper running errands.
Many day-to-day business tasks can now be performed entirely from mobile phones, providing everyone with a “corporate headquarters” in their pocket. That’s according to Microsoft’s research 48% of small business owners conduct most of their business through their phones.
As with hybrid work, it is also difficult to see side hustle disappear. Among people who started a side business to earn extra money for the 2022 holiday season, 92% intend to continue doing their side gigs. We see a permanent shift in how people think about their household finances; instead of cutting back, what if you could make some extra cash?
New tax and money management models
If you’re a full-time employee, you’ll get a W-2 form at tax time; but if you’re a multi-hurler, things can get more complicated. This new type of entrepreneurship requires knowledge and planning to ensure that your income is properly recorded and cash flow management best practices are established.
In addition to improving access to ‘income on demand’, I believe entrepreneurs should look to new technology and education to get their financial house in order. This can help drive greater digital and financial inclusion and grow your business. Here are four essential guidelines for those within this new wave of entrepreneurship:
1. Separate your business and personal finances.
There are a few ways to do this, depending on how committed you are as an entrepreneur. You can form a limited liability company (LLC) or other legal entity and get an Employer ID Number (EIN) for tax purposes, or you can conduct business as a sole proprietorship under your own name with your own social security number. But anyway, I highly recommend getting a separate bank account for your business income.
2. Be creative with your business offers, but not with your expense deductions.
Personal, living and family expenses are not deductible as business expenses. There are also limits to how much you may deduct for business use of your car or home. So while things like local transportation costs and insurance can be deducted, there are nuances. look at the IRS website for what might be considered a business expense, and talk to a tax professional for advice on your specific situation.
3. Report your business income, including third-party payment apps.
Just because you get paid through mobile payment apps like Venmo doesn’t mean earnings don’t count for tax purposes. All business income must be tracked and reported. The IRS is changing its rules for 1099-K reporting of business income received through payment apps; as of 2023 gross business payments of $600 or more received from these apps will be declaration to the tax authorities as taxable business income.
4. Take advantage of new funding sources.
There are several organizations that provide resources, including funding and mentorship, to entrepreneurs who are part of the growing creator economy. For example, my company recently announced the Elevate Creatives Fund in partnership with The Shorty Awards, which aims to provide a financial boost to creators who want to grow sustainable businesses. But being there many others tooincluding LinkedIn’s Creator Accelerator program and the COLORFUL portfolio contest offered by The One Club for Creativity.
Just as it’s becoming increasingly easy to tap a few buttons on a phone to access income on demand, money management models and tax preparation mindsets need to change. By establishing a separate financial identity for your businesses and using easy-to-use technology to keep proper records, even the smallest business owners can build a strong foundation for future growth.