Still, even if you’re among the most tardy and disorganized of freelancers, at least you can count on the media to help out, offering their annual onslaught of articles peddling tax tips for the self-employed. To save you time we’ve sorted through them to weed out the obvious (that guy who says he can get you your refund in two days? Yeah, he might be a scammer) and the repetitive (keep your paperwork in order, people!) to find the few less expected gems. Primary among them this year is the SEP IRA.

Accountant Neil Johnson told Business Insider that opening a Simplified Employment Pension IRA funded from freelance income could help reduce income tax. Both the Chicago Tribune and SmartMoney agree, with the latter offering more details about who should look into a SEP IRA and how to do so:

Establish SEP for Big 2011 Tax Break. If you’re self-employed and have not yet set up a tax-favored retirement plan for yourself, you can establish a simplified employee pension (SEP). Unlike other types of small business retirement plans, a SEP can be created this year and still generate a large deduction on last year’s return. In fact, if you extend your 2011 return to October 15, you’ll have until that late date to take care of the paperwork and make a deductible contribution for last year. The deductible pay-in can be up to 20 percent of your 2011 self-employment income or up to 25 percent of your salary if you worked for your own corporation. The absolute maximum amount you can contribute for the 2011 tax year is $49,000. To establish a SEP, go to your bank or brokerage firm and fill out Form 5305-SEP. It takes five minutes. But don’t jump the gun. You may not want a SEP if you have employees, because you would probably have to cover them and make contributions to their accounts. That might be too expensive. Bottom line: if you have employees, don’t start up a SEP without consulting your tax pro.

Besides endorsing the SEP idea, the Tribune also suggests a crafty way to approach sorting out your health insurance via a suggestion from TurboTax: “if you hire your spouse and give him health care benefits, you can put yourself on his health care policy, which saves money on self-employment income and tax. Similarly, if you hire your dependent for clerical tasks or even to clean your home office, the wages will be deductible for you, and if their earned income is less than $5,800, they won’t owe any tax on the money either,” writes Anya Kamenetz in the article.

Of course, just because these are the less obvious suggestions, doesn’t mean the usual advice doesn’t remain valuable. It might sound like nagging to hear, once again, how important it is to get professional help and remember all your deductions (the Tribune offers a helpful run down of broad categories to keep in mind) but people still mess up the relatively straightforward aspects of filing. A recent study, for example, revealed that the most common small business tax mistake was mixing personal and business expenses. We all know you shouldn’t but apparently many of us still do. LearnVest helpfully compares specific scenarios that are perfectly alright to those likely to trigger an audit.

So good luck to late filers, remain vigilant on the basics, and try out some of these slightly more advanced tax minimization efforts  if they seem right for you.

Are there any other less well known tax tips that have helped you trim your bill?

Image courtesy of Flickr user Mat Honan.

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Whether Zaino’s estimate of exactly when freelancers and independent professionals will outnumber regular employees proves correct, the general trend toward a rise in the number of independent workers is hard to deny. Online platforms connecting these pros to contract-based work are flourishing, and media chatter about the so-called “gig economy” is growing steadily louder. But is what is true in America also true abroad? Are other countries experiencing the same rise in the percentage of workers going independent?

A new piece of evidence suggests that freelancers are a growing part of the economy in the U.K. as well, at least when it comes to the small-business sector. Online labor platform PeoplePerHour.com recently polled 1,300 British small businesses about their use of freelance talent. The survey found:

• Eighty percent of responding businesses said freelancing had become more common in the UK small-business community over the past year.
• Thirty-two percent of respondents had started using freelancers for the first time in the past six months.
• Forty-one percent of respondents planned to increase freelance hiring over the next 12 months, compared with 16 percent who plan to hire more in-house staff.
• Thirty-three percent reported they now use freelancers on a weekly basis.

The release accompanying the survey also points out that the trend has been good for PeoplePerHour specifically, with total registered users doubling from 120,000 to more than 240,000 over the past year.

The technology changes that are enabling businesses in the U.S. to take advantage of independent workers are just as present in the U.K., as are strong economic pressures on businesses to cut costs and maintain agility, so the findings are hardly surprising. Nonetheless, the survey is interesting as a confirmation that these trends are affecting workers and organizations across the Atlantic as well.

Image courtesy of Flickr user C.G.P.Grey

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Swart said that competition for talent is rapid, despite economic woes. He specified two big problems: getting work to workers, and the hiring process, in terms of investment of time and resources. How to deal with both those problems has been steadily evolving: Work 1.0 was rigid, single-employer, and on location, probably what describes your grandfather’s career. Work 2.0 was about more flexible work schedules, better collaboration between remote teams and some ability to take work home with you. It’s sort of the model that’s still in place at big tech firms in Silicon Valley.

Work 3.0 is where we’re at now and where a good chunk of work is heading, according to Swart, and it’s only just getting underway. It means “access to the best people no matter where they are in the world,” and the “ability to work with those people as if they’re in the room with you.” Swart says it’s a transparent process, one that takes place primarily online using tools with built-in reporting elements. It’s a very situation-based, ephemeral mode of staffing, too: He applied a movie production analogy: the team comes together to accomplish something specific, then separate again.

He discussed examples of companies forming in order to source and staff remote work projects. Thumbtack is one, which serves 170,000 customers today, Swart says, and provides access to the services of 230,000 service professionals in discrete areas for on-demand, just-in-time labor requirements.

In short, we’re moving from rigid, structured, non-specific workforces to on-demand, targeted transparent freelancer-based staffing. Doing so saves on infrastructure, by cutting back on costs like transportation and facilities, and also leverages talent on a global scale that otherwise might go unnoticed and unappreciated. Swart sees Work 3.0 as just getting started, with its most significant effects on how we do business yet to be felt.

Photo by Pinar Ozger.

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How much you feel you should pay remote workers is one thing; what your payment is worth to them — and how its value changes over time — is another.

Recent global financial strife continues to cause some economies to suffer, including that of the U.S. Many digital freelancers earning U.S. dollars are now receiving substantially less for the same work, as their own nations’ currencies gain strength against the U.S. dollar.

The rates that U.S. companies offer to remote workers may no longer compete with firms that are more local to the freelance web worker. For U.S.-based organizations, this may make sourcing good remote workers much more challenging. It may also be a challenge they haven’t had to face before.

Of course, currency fluctuations don’t just affect pay rates. In theory, web workers buying goods from the U.S. should enjoy exchange rate benefits as the U.S. dollar weakens, but this is rarely the case.

Late last year,  for example, I bought a $35 piece of software from the States on a day when the U.S. dollar was worth 1.015 Australian dollars. The software should have cost $35.53 AUD, but my receipt shows that I was actually charged $1.40 AUD more. The effects of a stronger currency aren’t usually reflected across the board.

And of course, your remote freelancer’s local costs don’t fluctuate with your currency’s value. So what could be a great rate for them this month might be a very lackluster rate in a month or two. You may need to consider offering other perks or advantages to procure the remote talent you really want, rather than accepting that which you can get cheaply.

Freedom and fun stuff

If your remote freelancer has some ideas they’d like to trial on your project, or extra suggestions that they feel are worthwhile, can you give them the freedom to implement those ideas?

The extra work may take extra time, but if you can see real value for your project, the extension of scope could be beneficial to the remote worker as well as to your business. It could also ensure you get a top-notch job on the key parts of the project, rather than settling for second-best.

Software and systems

Can you reduce the cost to the freelancer of taking on your project by giving them a license to use necessary software, or providing access to specific systems?

Finding ways to make their lives easier — and more cost-effective — could help you to win the remote worker.

Team involvement

Some remote workers really value the opportunity to work with a team — particularly if they’re solo operators, or work from home. Showing them how you’ll involve them in the project team, making them feel welcome, and communicating their value to their new colleagues are a few ways to help cement good relationships with valuable remote workers.

The promise of close working relationships with like-minded pros is likely to appeal to more than a few web workers — especially those who are interested in collaborative, on-the-job learning, and in building networks.

Credits or kudos

Kudos matters. Can you give credit to the freelancer you’re pursuing, perhaps through social media, LinkedIn references, linking to their site through your organization’s blog, or some other method?

Most freelancers will appreciate being publicly named for their contributions — especially if that recognition can help them win further work, or gain them exposure among peers who matter to them.

These ideas may not win you the remote web worker you want, but they might help sweeten a deal embattled by global financial tumult. Are you finding it harder to land good remote talent in places where your currency has weakened?

Image courtesy stock.xchng user OmirOnia.

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By allowing managers to source talent from just about anywhere, technology makes it easy to take advantage of disparities in pay and cost of living to get the same services for cheaper. Just look at the trend of rural-sourcing, where companies are looking for skilled workers in unusual, less settled locales. It’s a boost to struggling rural communities and allows firms to save a few bucks too. What could be bad?

But not everyone sees paying according to the prevailing local wages as without its moral complexities, especially when companies begin to look overseas for additional help. Blog Freelance Switch recently ran a post on the issue, with writer Thursday Bram (who also writes for WWD) musing on her compunctions about paying significantly less for the same services from providers based overseas:

More than a few freelancers have a sore spot about how hard it can be to get paid what we’re worth by clients who see freelancers as a way to get cheap labor. When you turn that around, it’s easy to draw comparisons between what a freelancer might hate when a client does it to her and what she’s willing to do to a sub-contractor based overseas. It’s going to be a personal decision, no matter what. Your priorities decide whether or not you’re willing to pay a sub-contractor more.

For me, the personal decision comes down to what the person I’m working with is actually worth. I know plenty of people who live in places like Thailand and charge rates on par with what folks living in the U.K. might (with no problem getting those rates). If someone comes to me and tells me that’s what they’re worth, I have no problem paying it.

But if the person I’m working with needs training, requires extra explanation or simplified English and generally can’t finish a project without hand holding, I’m going to pay a lot less… I have worked with a virtual assistant based in the Philippines and paid him about $270 a month for his work. I don’t have a problem with doing so — he was doing fairly basic work and didn’t have a skill set that I’d be willing to pay more for.

Bram identifies the key factors in deciding how much to pay someone, including their skill level and your level of comfort with the arrangement. Perhaps added to that should be the cost of living where the web worker is based. After all, $270 probably goes much further in Manila than in Mountain View, just like a salary that barely covers the basics in New York might comfortably provide for a family of four in a more rural area.

How do you weigh location, skills and personal compunction when deciding what to pay web workers in various locales?   

Photo courtesy of Flickr user Infusionsoft

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In last week’s post, I talked about how technology is creating an “always on” social media world. Like it or not, these days, if you’re in public (i.e., out of the safety of your own house and/or in the presence of a another person with a camera or camera phone), you’d better be comfortable with anything you do being captured and possibly even posted online.

For this week’s post, I thought I’d provide some tips from the PR industry to help you feel better prepared for those impromptu publicity events.

1. Stay (at least somewhat) presentable. Make sure that you’re at least presentable most of the time. My solution is to keep my closet up-to-date so that I feel “put together” enough, no matter what I might wear on a given day.
2. Get comfortable with public speaking. Fear of public speaking is often reported as the #1 fear of most people, so it’s no wonder we’re a little resistant to having video of ourselves broadcasted to the world. A public speaking or improv class can help alleviate anxiety and instill confidence for those times when you’re placed on the makeshift stage of the World Wide Web.
3. Spruce up on interpersonal communication skills. Learning to manage facial expressions and body language and to maintain eye contact can greatly improve how you feel, as well as your effectiveness, when communicating with others.
4. Control your energy and attitude. Sometimes we leave the wrong impression with people, even our loved ones, simply because we aren’t in the best of moods or because we’re not quite feeling up to par. Doing things to better manage how we feel overall can improve how we handle stressful situations.
5. Mind your manners. I often wonder about celebrities who are dismissed as rude, thinking, “Did they just have a bad day and get caught on camera at an inopportune moment?” Bad habits, poor manners and language, and being less than courteous can be a big turnoff for prospective clients and business associates, so it never hurts to err on the side of caution in this department.
6. Try not to appear defensive or guarded. If you come across on video like you’re fighting off paparazzi, it can easily be taken out of context so that others think you have something to hide or have a bad attitude. As nerve-wracking as it can be to appear on camera, try your best to relax and be natural.
7. Get comfortable making smooth transitions. You can expect to be asked a question at some point that you either can’t or don’t want to answer. Learn to make smooth transitions to another topic so that you avoid sticky situations or avoid coming across as uninformed or elusive.
8. Watch what you say and do. As many celebrities can attest, one careless slip in judgement can quickly put you front and center of a debate or media firestorm. Even if you think you might not be that powerful or important to warrant that kind of attention, you could still get into hot water with friends or family, your clients, or your boss, so be careful not to do or say anything that might be insensitive or offensive to someone else.

While it was once the job of publicists to manage the images of high-profile individuals and companies, these days, with the ever-present social media and devices to share content like photos, audio, and video, it’s becoming increasingly necessary to take charge of our own publicity and image as it’s presented online. Fortunately, a little preparation goes a long way to keep you in the good graces of clients and business associates online.

What other tips do you have for preparing for social media close-ups?

Photo courtesy Flickr user Carnoodles

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Here are a few reasons why side projects make good business sense.

1. New skills. I love to use side projects as a way to stretch myself and learn new things that I wouldn’t normally do as a result of my regular work. In the past, I’ve had side projects where I co-founded a nonprofit to organize community technology events, co-founded a location-based startup, wrote a book about community, wrote a cookbook, started blogs and much more. Out of each of these efforts, I’ve learned many new skills that I’ve applied in my day job. I’ve personally benefited from each of these efforts, but the companies I’ve worked for have also benefited from the skills learned in my off-hours.
2. Connections and networking. Most of my side projects have given me an excuse to meet new people. I’ve made friends and valuable industry connections that I can talk to about new ideas or trends. Especially for those of us working in technology, many of these connections bleed over from one project or company to the next. Having additional contacts in your industry gives you a broader base of people to talk to about new side projects or interesting things that you are working on in your day job.
3. Sense of accomplishment. While many of us are lucky enough to have great jobs where we get a sense of accomplishment from our regular work, it isn’t always the case. There is nothing quite like launching a fun project to boost your overall mood and give you a sense of excitement. For me, the accomplishments from my side projects tend to have a positive impact on my regular job, too, since my improved mood makes me even more productive when it comes to other work. Employees with improved self-confidence from a big accomplishment can often become better workers in other areas.
4. Safety net. In today’s economy, we need to be prepared for a potential job loss. The people who have wrapped their entire identity and life around their job at a company can be devastated when they lose a job. Those of us with healthy side projects can throw ourselves into these existing projects and maybe even generate a little income while we look for a new gig. Having some projects to fall back on and keep your skills current can help to maintain your sanity and prevent you from becoming despondent over your loss.
5. Fun. Most importantly, side projects should be fun! In many cases, side projects can be hobbies that you enjoy spending your free time on. If your side projects start to suck the energy out of you, then it’s time to find a new side project that leaves you energized and with a sense of enjoyment. This is part of why I organized tech events in my spare time for so many years. They were hard work, but it was great to get all kinds of different people together and create an amazing and fun experience. After a while, I had done so many of these that it ceased to be much fun, which is when I dropped them from my side projects and moved on to other projects.

What types of side projects do you most enjoy?

Photo courtesy of Selena Deckelmann

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It’s impossible to provide specific advice for any given situation, but are there general tips for web workers worried about international tax issues to make sure they find a quality professional to help them, and keep that relationship running smoothly? Fred Corso, head of the international tax services group at Marcum LLP, has some basic tips to help you navigate your tax stresses:

• Personal connections make the difference. Corso suggests you turn first to your personal and professional network to find someone to help you with your tax issues. In an area as broad as tax law, someone with experience in your particular industry or region is often best, and friends and colleagues are a likely route to finding such a person. And it’s not just your network that is useful; your tax professional’s is as well. “Become familiar with the practitioners’ professional network. It is impossible for an individual to know everything about United States tax law in the area of cross-border taxation. You can imagine the challenges of becoming familiar with the local law of one or more foreign jurisdictions,” says Corso. “A practitioners’ capabilities are only as good as the strength of his or her network of professional resources overseas.”
• Stay loose.  You won’t know exactly what details of your case are relevant to your new tax pro, so following unexpected conversational alleys can pay dividends, according to Corso. “People often arrive with a preconceived notion of how their issue should be resolved. While trying to be well informed beforehand, be sure to keep an open mind. Common sense very often does not apply in international taxation, which is often shocking to people. Focus not only on the question as you see it, but inquire about other considerations that you would not necessarily have reason to know about.” And be aware that when it comes to international tax complexities, there is often more than one way to skin a cat, “so you want to have confidence that you will be comfortable with the practitioner’s general approach to tackling an issue.” Whatever approach you choose “be flexible and understand that the scope of a project will likely change to some extent as work is performed.”
• Don’t expect miracles. “Leniency has been on the decline,” Corso warns, so don’t be taken in by other people’s stories of dodging their tax bills. “Be wary of cocktail party advice. If it sounds too good to be true it probably is. ‘Everyone else is doing it’ is not a sound basis for making a decision in international tax.” And understand that extreme efforts to reduce tax are not always cost-effective. “Although businesses often employ tactics and structures that help reduce taxes, such methods are usually not cost-effective or lack business sense for small to mid-sized businesses,” Corso concludes.

Image courtesy Flickr user alancleaver_2000, CC 2.0

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Source: Elance

It should be noted that because this study is the result of an online survey conducted on the Elance site itself, there will likely be considerable selection bias distorting the results towards freelancing, so it would be wise to take these  findings with a pinch of salt. I doubt that a more wide-ranging survey of recent college graduates, for example, would show such an overwhelming number of respondents in favor of freelancing over traditional employment.

While some people may argue that freelancing has only become more popular as jobs have become harder to come by following the economic downturn, the Elance study shows that many millennials actually choose freelancing over traditional employment. Only 27 percent indicated they would prefer to work as an employee, while 42 percent stated they prefer the freelance lifestyle. Web working is popular, too, with 54 percent saying they plan to telecommute at least some of the time — a lifestyle choice probably made easier by freelancing. It seems freelancing is making these millennials happier: 53 percent say they are happier when freelancing than when working as an employee. Encouragingly, despite a somewhat weak jobs market, particularly for younger people with less experience, 78 percent of respondents said they were either “Optimistic” or “Very optimistic” about their chosen career path.

Source: Elance

The study also looked at millennials’ job search habits. Unsurprisingly, many respondents reported they use online methods to find work. Online job ads (Monster.com and Craigslist, for example) were popular with 94 percent of respondents, but social media (Facebook, LinkedIn) was also used by 40 percent. The study also shows that 56 percent of respondents think that a digital resume (a LinkedIn profile, for instance) is the most effective tool for landing a job, compared to 44 percent who prefer a more traditional resume.

Despite the selection bias that’s probably skewing these results, it’s interesting to see such a positive attitude towards freelancing in younger people. Attitudes toward freelancing have shifted over the past few years, with many more people now prepared to consider it as a long-term career choice. It’s a shift that has certainly been helped by online freelance marketplaces such as Elance and Odesk, which have made it much easier for freelancers to find work worldwide. While some people may have initially tried freelancing out of necessity due to the economic downturn, many people now choose to freelance because it gives them the flexibility to pursue their lifestyle of choice. If more younger people really are actively looking to freelance rather than take up traditional employment now, it could point to an even bigger shift toward freelancing in the years to come.

Photo courtesy Flickr user {Guerrilla Futures | Jason Tester}, charts courtesy Elance.

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Solo’s main screen is its dashboard, shown in the image above. It’s dominated by a message display that offers things like tips and updates about upcoming deadlines, with infographic-like charts below that provide at-a-glance details of project status, as well as turnover and hours recorded over time. You can also start and stop the task timer from this screen. Accessing the other areas of the app, such as the planner, timesheets and invoices, is done through the tabs at the top of the screen.

Designers and other creatives who take aesthetics seriously will appreciate Solo’s beautiful interface. That’s something I rarely get to say about project management apps, which are usually functional rather than pretty. Microproject, a scheduling app I reviewed recently, also has an attractive and well-designed interface, but it really can’t come close to Solo’s data-first design and attention to detail.

Solo’s a lovely product to look at, is quite easy to use and has a good set of features for freelancers, but there are a few potential issues with it. First, there doesn’t seem to be any way to export data, nor is there integration with any existing accounting, CRM or invoicing apps, which is disappointing. There isn’t even seem a way to import contacts from CRM or email apps that I can see. Second, it’s unclear how the product will scale if a freelance business expands to take on additional staff. Thrive’s Jerome Iveson says that the company is working on a multi-user PM app called Studio; hopefully it will be possible to migrate accounts and data between the two products. Finally, once you move beyond the dashboard into other areas of the app, some areas aren’t quite as polished and aren’t all that intuitive in use. It’s not clear how recorded hours are moved from timesheet to invoice, for example. Hopefully, those areas will be cleaned up over time; the app is still in development with several new features due to be added, such as a client area, blog feeds and messages.

Solo costs $10 per month, with a 14-day free trial available.

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