Freelancer/Independent Contractor Starter Kit

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Guide - Freelancer Guide

The Freelancer Guide is an overview of what it takes to be a part of the gig economy in San Francisco. Every gig, whether you use an online platform or not, is different, but we provide the basic steps – along with tips, tricks, and common mistakes to avoid. Explore below or download the Guide for quick reference.

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Permits (1)

Business Registration Certificate

The basic city business registration required for all businesses who wish to operate in San Francisco.

Freelancer Guide

The Freelancer Guide is an overview of what it takes to be a part of the gig economy in San Francisco. Every gig, whether you use an online platform or not, is different, but we provide the basic steps – along with tips, tricks, and common mistakes to avoid. Explore below or download the Guide for quick reference.

Finding Your Gig

Whether you are considering freelance work to supplement existing income, rejoin the workforce, or as a stepping stone to build your own business, here are a few questions you may want to ask yourself:

  • Do I perform best in an environment where I get to interact with people, or am I more effective working on my own?

  • Do I already possess a skill that I can monetize?

  • What is the minimum amount I need to earn each month to meet my expenses?

  • Do I have enough time for freelance work to be worth the effort?

  • Do I understand the do-it-yourself requirements of the gig economy?

Take a free online course sponsored by The Office of Economic and Workforce Development of San Francisco and explore the world of freelance work in the gig economy in San Francisco.

Register Your Freelance Business

Providing services and resources without a traditional employer, such as freelance work, qualifies you as a small business owner. If you engage in business in San Francisco you must register at the SF Office of the Treasurer & Tax Collector (TTX) within 15 days of commencing business in San Francisco. This includes gig economy freelancers who may only occasionally work in San Francisco, such as a TNC driver that is only in the city for an occasional drop off every few weeks. If your total time working in San Francisco exceeds 7 days in a calendar year, you must get a business registration certificate.You don’t need to register with the IRS. You can register yourself using your Social Security number.

Some entrepreneurs may find registering as a Limited Liability Company (LLC) or other designated entity to be most beneficial depending on the trade. To view all of your designation options check out the Business Structure page.

Register your business with the City through the Office of the Treasurer & Tax Collector.

Note
You may choose to obtain a separate business address, or you may use your personal address for your registration.

Check for Professional Requirements

Make sure to take a moment to investigate whether the service you offer requires a professional certification or license. Career One Stop is a free online resource to assist you in determining if a license is required for your occupation.

Some freelance work may require more than just a business registration. To determine if any additional permits are required, find your type of business using the permit locator.

If considering a Home Office, keep in mind the following:

1. Clients cannot come to your home
2. You can't display advertising
3. You can't use more than 25% of the space for commercial purposes

Review the SF Planning Department's Guide to Home Offices for more information.

Note
Beware that operating a home-based business could violate your lease or Homeowners Association (HOA) charter.

Tips on Managing Freelance Work

Solicit work

There are several ways to seek out work, including gig economy platforms, word-of-mouth, advertising, partnerships, etc.

Bidding on work and compensation

Negotiate compensation and a payment plan before signing a contract. Keep in mind your costs for travel, healthcare, overtime, etc. Consider taking a class or seeking other advice on contracts.

Contract reading/writing

Know your rights in getting paid. One of the most difficult aspects of being a freelancer is getting paid adequately and on time. Make sure you develop contracts that establish your payment for work and provide a clear scope of services and deliverables for the project.

Visit the Legal Services for Entrepreneurs and SF Bar Association for additional information.

Establish bank accounts

A bank account is the first step to financial security for yourself and your family. Without one, it is harder to save and to get well-priced car loans, credit cards, or mortgages – the exact financial tools needed to climb the economic ladder. Not all bank accounts are equal, so make sure your account works for you and isn’t costing you too much money in fees.

Create a habit of savings

Creating a regular savings habit can help you weather financial emergencies and prepare for retirement. Start early, save consistently, and bump up your contributions when your budget allows. Even if your income is volatile or uneven, aim to set aside a portion of each paycheck for emergencies and retirement. Here are some strategies and tools to use:

Bank On San Francisco makes it easy for you to get a bank account – even if you’ve had problems with an account in the past, have never had an account before, or are not a U.S citizen. Learn how to find a participating bank or credit union and open a free or low-cost checking account.

Set up direct deposit and save automatically with split deposit. Direct deposit is faster, easier, and safer than paper paychecks. And “splitting” your direct deposit into checking and saving (or multiple saving/retirement accounts) makes saving automatic. We all know that it’s too easy to plan to save, but then forget – so set it and forget it with split direct deposit!

To save for emergencies (or other short-term goals), the EARN Starter Savings Account is a free, easy to use program that helps you save for what's most important. You can start saving in minutes. For every $20 you save, you'll get $10 in cash rewards. In just six months, you'll have at least $180 saved from your contribution and earned rewards.

Health Insurance

As a self-employed freelancer, you are responsible for your own medical insurance. As a resident of California, you may qualify for federal premium assistance to buy private health insurance through Covered California. If you’re a resident of San Francisco, you may also consider getting insurance through Healthy SF, which is available regardless of immigration status, employment status, or pre-existing medical conditions.

Disability Insurance and Paid Family Leave

Elective Coverage (EC) through California Employment Development Department (EDD) is available to self-employed individuals for coverage under State Disability Insurance (SDI). SDI coverage includes Disability Insurance (DI) and Paid Family Leave (PFL) benefits. Premiums are based on the net profit you reported on Internal Revenue Service (IRS) Form 1040 Schedule SE for the previous tax year. After electing EC coverage, you must participate in the plan for two full years. To maintain EC eligibility, you must show a minimum profit of $4,600 per year. If your profits fall below this level for three consecutive years, the EDD may cancel your coverage. For more information on how to apply for EC, please visit the EDD Elective Coverage FAQ page.

Pay your taxes

Taxes are more complicated for people who do not have a traditional employer. Freelancers must take additional steps in calculating their income and figuring out their tax payments, including deducting eligible expenses. When self-employed you're paid in gross and get the full amount of pay for your work.

Most gig economy platforms pay people through a third-party system. In these cases, a form 1099-K is generated. Although some companies send 1099-K forms to all of their freelancers, you cannot rely on this annual reminder to think about taxes.

Freelancers may need to make estimated quarterly payments. It is important to track your business-related expenses, as these may be deductible. The more specific, the better – some advisors recommend setting up separate banking accounts for work and personal spending, and using personal financial management software, like Mint or Quicken, to track your income and business and personal expenses. Advisors also recommend putting aside 25- 30% of each paycheck for tax payments.

Need help? San Francisco Office of Financial Empowerment recommends the following free resources:

Free Tax Preparation

Earn It! Keep It! Save It! Find free tax preparation services in the Bay Area designed to help low- to-moderate-income individuals, families, and seniors. Tax returns are prepared by trained and IRS-certified volunteers at local community organizations.

The IRS has also set up a Sharing Economy Tax Center, with answers to many common questions.

Financial Coaching

BALANCE, formerly Consumer Credit Counseling Service of San Francisco, provides counseling services and free workshops on understanding your credit score, consolidating debt, bankruptcy, money management, and first-time homeownership. Their website also includes tools and resources to learn more about credit.

Mission Economic Development Agency (MEDA) provides low-and-moderate-income Latino families with bilingual Spanish and English workshop curriculum and coaching to achieve financial literacy.

MEDA’s financial education program helps participants achieve three key outcomes:

    • 1. Improving credit scores to 650 or higher
    • 2. Increasing savings to three months of living expenses or greater
    • 3. Reducing debt to income ratio to 40% or lower

San Francisco Housing Development Corporation (SFHDC) works closely and independently with each client until he/she meets his/her financial goals. SFHDC clients receive individualized services that will lead to homeownership and/or financial stability. SFHDC counselors offer free professional advice and strategic resources to help you develop an action plan that will ensure you meet your personal goals.

SparkPoint Centers, created by the United Way of the Bay Area, helps families create step-by-step plans to tackle their unique financial needs and connect them to services that address each one. Services range from Financial Coaching, Career Coaching/Counseling, Credit and Debt Counseling, Benefits Screening, Tax Preparation and more.

The Office of Economic and Workforce Development (OEWD) connects job seekers in San Francisco with employment opportunities in growing industries such as Technology, Healthcare, Hospitality, and Construction. OEWD provides industry-aligned job training and access to job search assistance at community-based neighborhood access points throughout the City, to help provide employers with skilled workers.

Note
Depending on the legal form of the services and resources you provide through freelancing, you may be required to pay the federal self-employment tax, among other taxes. Review the Forms and Associated Taxes for Independent Contractors.

Freelancer Rights and Protections

Obtaining freelance work has a variety of benefits that many workers enjoy, including setting your own work schedule and working in a variety of fields. But because you are considered your own business and not an employee, you also face many of the challenges of owning a small business and generally do not receive traditional workers’ rights and protections. Furthermore, some gig platforms do not allow for negotiating work rates or contracts, locking you into the terms provided.

As a freelancer on a gig platform you have little to no recourse regarding:

•  Deactivation from a platform
•  Collecting on severely late payments or non-payment
•  Protection against discriminatory or predatory behavior

The benefits traditional employees enjoy under the “social contract” include unemployment insurance, disability insurance, pensions and retirement plans, worker’s compensation for job-related injuries, paid time off, and protections under the Fair Labor Standards Act. If you determine that you need legal assistance, you can find information on low cost, affordable resources under the Legal Services tab of the San Francisco Business Portal.