In the past, “going to work” was a fairly straightforward concept. Show up for your shift, clock in, clock out, and ultimately, get paid. Simple, right?
Nowadays, things are a bit more complicated. Professionals who want to be their own boss, make their own hours, or supplement their income with a side gig have endless opportunities to do exactly that. Thanks to today’s advanced technology, we enjoy an almost infinite number of work arrangements – including the ability to work from home in your favorite pajamas! Even better? The same technology that makes it possible to work from home has also paved the way for a thriving gig economy.
What is the Gig Economy and How Does It Impact Payroll?
The gig economy – which includes freelancers and independent contractors – has revolutionized the way we work. No longer limited to traditional workplace frameworks, many professionals now enjoy a new level of flexibility and autonomy – over their incomes and their careers. For individuals, gig work is an attractive way to earn a living (or just some extra cash!). For employers, it’s a great way to meet certain needs without committing to a long-term arrangement. In short, the gig economy provides businesses and professionals with more options than ever.
Unsurprisingly, gig work, such as transportation, delivery, or other freelance services, is currently so popular that nearly 36% of the U.S. workforce is now a part of the gig economy – and the trend shows no sign of slowing down. But while gig work offers plenty of benefits, it also poses certain challenges – especially from a payroll perspective.
In addition to paying hourly and salaried employees, modern businesses are now also paying freelancers, contractors, and other independent consultants – each with their own payment schedules, benefits, and tax implications. With the increasing complexity of managing various payment structures, having accurate time tracking solutions is more critical than ever. Reliable time tracking ensures businesses can properly calculate wages, avoid compliance issues, and accurately account for all costs. As the gig economy grows more and more popular, many businesses are struggling to keep up.
So, what are the challenges associated with gig work, and what can we do to overcome them?
Tax Compliance: Tax Challenges for Gig Workers
Let’s be honest – taxes are complicated, even under the best of circumstances. And when you’re paying multiple types of workers, things can get even hairier. Full-time employees, part-time workers, freelancers, and independent contractors all come with their own unique tax obligations – making it difficult for businesses to ensure accurate and comprehensive tax compliance for each employee type.
Managing Diverse Payment Schedules for Freelancers and Contractors
Freelancers and independent contractors often require more frequent payments compared to traditional employees. Depending on the type of work, you may find yourself managing weekly or even daily payments. From a payroll standpoint, this can create unnecessary stress, unpredictability, and complications.
Navigating Benefits for Gig Workers: What Employers Need to Know
It’s extremely uncommon to offer benefits to gig workers. Still, depending on your contract, you may want or need to provide health insurance, retirement plans, or other benefits to your freelancers or independent contractors. Unsurprisingly, this is a complex situation that may even involve state and local laws.
Streamline Payroll with Flexible Solutions
For many businesses, gig workers are an important and valued part of the team. As such, it’s increasingly important to find a solution that’s as flexible as the gig economy itself!
Fortunately, modern payroll platforms like Primepoint offer adaptable payroll systems that meet the needs of all employee types. From salaried employees to short-term freelancers, Primepoint helps businesses implement customized payment schedules, manage benefits, and calculate taxes automatically – and accurately – for each employee type.
It’s official – the gig economy is here to stay. With Primepoint, you can ensure your payroll processes are as dynamic and adaptable as your workforce. Want to simplify payroll for your gig workers? Schedule a demo with Primepoint today!