More and more Americans are embracing gig work. According to Upwork’s Freelancing in American 2019 study, 57 million Americans freelanced last year. That’s more than one-third of the entire U.S. workforce. It’s also an increase of 4 million since 2014.

Whether you call yourself a gig worker, a freelancer or an independent contractor, you may appreciate the flexibility that the work arrangement gives you. There are some downsides, however. Financial planning can be trickier for freelancers.

To avoid financial problems, here are three things that freelancers need to do.

1. Don’t Forget About Taxes

Everyone has to pay taxes, but independent contractors take on a little more responsibility here than employees do.

First of all, no taxes are paid using payroll deductions. This means that independent contractors need to set money aside and make payments directly to the IRS. In addition to the annual tax return, independent contractors may be required to make quarterly payments on their estimated taxes.

Second, independent contractors are responsible for the entire tax burden. In addition to income tax, they have to pay self-employment taxes, which cover Social Security and Medicare.

Make sure you’re setting aside money to pay your taxes. Otherwise, you’ll run into some major problems when Uncle Sam demands his due.

2. Set Money Aside

Many Americans have trouble setting money aside, not just independent contractors. However, the situation can be especially perilous for freelancers.

Many employees have access to employer-sponsored retirement savings accounts, such as 401(k)s with an employer match for contributions. Gig workers need to set up their savings themselves. This can be more difficult, and it can require financial discipline, but it is possible. Retirement savings options for freelancers include the solo 401(k), a 401(k) plan for self-employed individuals.

In addition to saving for retirement, freelancers should also prioritize an emergency fund. Gig work can be especially unpredictable, so it’s important to have money set aside for a rainy day.

3. Obtain the Right Insurance

Many Americans get their health insurance through an employer. For freelancers, this is not generally an option. Independent contractors need to obtain health insurance coverage on their own, and they do not have an employer to help pay the premiums.

Under the ACA, eligible Americans can purchase health insurance coverage through the Marketplace, and they may qualify for premium tax subsidies. Individual health insurance policies are also available through firm such as PTT Financial. These are good options for many freelancers.

However, health insurance isn’t the only type of insurance that freelancers should consider. Other types of policies, including life and disability insurance, provide important coverage. While some employees get these protections through their employers, freelancers need to purchase it on their own.

You may also need professional liability insurance, also known as errors and omissions insurance.

Need insurance or financial planning guidance? PTT Financial can help. Contact us to learn more.