Last week, I answered a composite reader question about everyone’s favorite subject: taxes. This week, I’ll build on that with another composite question. This time about how to scale freelancing work that you might do.
I’ve gotten a few different questions about this over the last several months. I’ll try to cover everything you all have asked by answer this composite question.
Freelancing is going well enough, but now I’ve got a spike in work that will be more than I can probably do on my own. I’ll need to hire someone, somehow, to do something. How does that work?
It’s understandable to wonder this. Speaking from my own experience and what I’ve heard from many others, you’ll probably have your own freelancing practice or side hustle for a long time before this comes up. Or, it might never come up, and you still have a rich happy professional life.
But when it does come up, it’ll probably happen quickly. And, you’ll be swamped when it does, since, by definition, you’re looking to hire due to too much work for yourself. So it’s good to at least have a concept of how this works ahead of time.
As I mentioned in the last post, I am neither lawyer nor accountant. I’ve hired subs and done a lot of business this way, but I am not a professional advisor. What you’re getting here is my best understanding and things that have worked for me in the past.
Use the advice here to orient yourself and get a feel for how this works. But before you actually go execute this stuff, you should contact your lawyer and accountant to verify that it’s right and that it makes sense for your situation.
And, once again, a lot of this may be US specific, but I hope non-US readers can get something out of it as well.
Can I just pay someone, the way I pay the neighbor kid to shovel my driveway?
This is the first thing that might occur to you. You’ve got to deliver 4 modules by the end of the week, and you can only possibly deliver two of them. Can’t you just offer a fellow developer $1,000 or whatever in exchange for her doing the other two? Seems simple, and it should be simple, you think. That’s what I thought. And it would actually be simple if not for the tax man.
Think of the kid you give $10 to shovel your driveway. Seems innocent enough and like pure commerce in action, right? Wrong. In the first place, you’re probably technically violating some kind child labor law and possibly running afoul of minimum wage laws. But, even if that little scamp were 18 and of legal working age, this would still represent an illegal transaction because he’s almost certainly not making a note of that $10 of income so that he can report it on his tax return.
So now, you can’t “just pay someone.”