We're at an economic crossroads in the Canadian economic landscape. Today, more professionals are joining the growing ranks of the self-employed workers in Canada. This is driven in part by an increase in the on-demand economy, like ride-sharing, peer-to-peer rental, project-based job platforms and online retail platforms.
In fact, Intuit Canada's newest study in partnership with Emergent Research projects that full and part-time freelancers, independent contractors and on-demand workers are expected to make up to 45 per cent of the workforce by 2020.
(Photo: Izusek via Getty Images)
Flexibility and work-life balance are part of the story, but there is also the tougher reality that traditional jobs are much harder to come by now than they were for previous generations. While unemployment rates in Canada remain stable at 7 per cent, the vast majority of jobs created in the past year are part-time, adding fuel to the emergence of the gig economy.
As the on-demand economy continues to expand, there will be unprecedented income opportunities for freelancers. This work however, comes with a host of new challenges -- many of which are all too familiar for me as a former self-employed worker and now the proud husband of one -- like co-mingled and confusing business expenses, quarterly and year-end tax headaches, and a general lack of visibility into your "real income."
If you're considering self-employment in 2017, whether that means full-time work or the increasingly popular "side hustle," here are my three tips to maximize your financial success.
1) Don't mix business and personal
I know firsthand the temptation of co-mingling your personal and business finances, whether it's using your personal credit card for your freelance expenses or keeping your finances together in one bank account, but there are important legal, tax and financial reasons for keeping your finances separate. Self-employed workers often struggle to keep track of their finances without the luxury of an employer withholding taxes for them and many have no visibility into their real earnings and income. Separating your finances will help you keep a closer pulse on the health of your business and prevent any unpleasant surprises when you find out how much you owe come tax time.
Be bold, be diligent, be well-organized. You've got this.
2) Ditch the shoebox
Our research shows that 29 per cent of self-employed Canadians are keeping track of their finances on paper and seventeen per cent of on-demand economy professionals say that difficulty managing finances has the biggest potential to put them out of business. This is deeply concerning to me and points to a major financial literacy gap among this demographic. Part of feeling confident about your freelance business and its future is understanding the more in-depth financial aspects. Using cloud financial management software to track expenses, mileage and invoices all in one place can help you find more tax deductions and save thousands in taxes.
3) Don't be afraid to ask for help
Just because you're self-employed, doesn't mean that you're on your own. Working with an accounting professional can help you create the building blocks for your financial future and make sure you're not missing out on deductions. Building a close relationship with someone you trust early on can foster a value-added relationship, where they aren't just doing your bookkeeping but giving you strategic insights on how you can set yourself up for long-term success. Whether you're working towards quitting your day job to freelance full-time, expanding your client base nationally, or achieving profitability, if you're direct about your goals and open to guidance, a strategic advisor can be a critical resource to help you realize them.
As a former entrepreneur and someone who has spent the greater part of my career working to advance entrepreneurship in Canada, I'm thrilled to see a growing number of people taking control of their own future and leveraging the technology available to them to shape their careers and support their families. If you're one of the 45 per cent of Canadians who will enter this economy by 2020, be bold, be diligent, be well-organized. You've got this.
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