Refining who and what

Who should we serve?

Since the freelancers market is so fragmented (see All About Freelancers post), it’s helpful for us to define who exactly Warren is for. Here are some thoughts. They probably overlap a lot.

  • non-employer businesses (75 percent of total U.S. businesses or 22.5 million businesses across the country)
  • FU members, specifically creatives, writers, tech. (over 200K)
  • recent graduates who are freelancing (overlaps with previous two categories)


What do we do?

Based on reading FU reports and the couple of long interviews we conducted, he three biggest challenges for freelancers are getting paid, doing taxes, and budgeting based on cash flow.

getting paid

  • contracts
  • invoices


  • FAQs
  • preparation
  • receipts and expenses

budgeting and saving

  • short term/flexible financial planning
  • expenses analysis

general tips

This is a lot. We can start with getting paid and tax.


All about the freelancers

“We are like hunters and gatherers” – Pam Liou


Last week we received a lot of good feedback, particularly on what group of users we should focus on first. It came down to freelancers. There are a lot of opportunities in this market because of various reasons:

  • lack of financial management tools that support specific needs of freelancers (personal + business accounts and multiple companies/clients/projects)
  • lack of standards on rates and best practices
  • growing market (more recent graduates are doing independent work)
  • I have understanding of everyday challenges of freelancers (freelance experience, and hiring freelancers/contract workers)

These opportunities also present challenges, namely the fragmentation of the market and lack of consistent documentation/census (not to mention international workers). Luckily, there is the Freelancers Union, which provides data on their members and have a lot of useful content in one centralized place.

53MM freelancers in the US

Based on a 2014 survey commissioned by FU and Elance-oDesk there were 53MM freelancers in the US.

“Gone are the days of the traditional 9-to-5. We’re entering a new era of work — project-based, independent, exciting, potentially risky, and rich with opportunities.”

“There are more avenues available to find work, to make contacts, to connect with others, etc. thanks to technology and its ability to network.”

  • 40% independent contractors: don’t have employer, work on a project by project basis
  • 27% moonlighters: have employer, moonlight on the side
  • 18% diversified workers: combination of different work types (full time secretary + uber driving + freelance writing project)
  • 10% temporary workers: single employer/client that is temporary (1-2 months)
  • 5% freelance business owners: 1-5 employees, also considers freelancers

Here’s a great tree of the interview questions they used to categorize the workers.

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FU also provides a report on their members. Here are some useful summaries from the post.

Key takeaways

  • For Millennials, freelancing is the new normal.
  • Concentration in the following fields
    • artists & creatives (38%)
    • services & sales (25%) — Lawyers, nannies, accountants, chefs, yoga instructors (kind of all over the place)
    • writers & editors
    • tech & web dev
  • Cities: New York still has the majority of FU membership (over 60%), other cities are (from highest growth to lowest)
    • LA, SF, Portland, Detroit, Baltimore, Milwaukee, Kansas City, Denver, Austin


Biggest challenges for freelancers: nonpayments and late payments

  • “One in every two freelancers had trouble collecting payment in 2014”
  • The average unpaid freelance worker loses almost $6000 annually – which accounts for 13% of their total income

It would be helpful to have a Glassdoor for freelancers with features such as report nonpaying companies and ratings, and help with written contracts.

There needs a way for freelancers to assess the risk of not getting paid by a company, and weigh the importance of experience/portfolio showcase piece vs. financial earning.   

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Frequent offenders:

  • 43% of respondents had trouble collecting payment from microbusinesses (1-5 employees)
  • 40% had trouble collecting payment from small businesses (5-49 employees)
  • 36% had trouble collecting payment from medium (50-149 employees) and large (150+ employees) businesses

Most freelance engagements aren’t protected by clear, written contracts.

  • Only about one-quarter of freelancers (28%) say they always use a contract
  • 33% say they always put the terms of agreement in an email
  • 42% always use a verbal agreement
  • 21% of freelancers have worked with clients who have refused to sign a contract

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Learning financial managment


  • self-employed status impacts tax situation
  • what kind of return: LLC, individual (1040)
    • individual (1040) or individual LLC
    • partnership/multiple member LLC,
    • corporation: C-corp, S-corp
  • set aside enough tax money: in a separate savings account
  • $600+ must report income on personal tax return (1099-MISC)
  • need 1099 from client before 2/2
  • file 1099-Misc if hired other freelancers
1099 contractor
  • double taxed as employer and employee
  • $400+ annually: pay self-employment tax in addition to income tax
  • 92.35% tax on self-employment
  • net earnings: gross income – ordinary/necessary/business expenses
quarterly estimated payments
  • 4/15, 6/15, 9/15, 1/15
  • put aside money out of every freelance payment
  • based on income history, estimate tax payments
  • rules: home office deduction – room must be solely for business-related activities
  • can deduct a portion of household expensesL mortgage interest, rent, utilities, insurance
record keeping
  • all receipts and records related to income and tax payments
working with CPA
  • ensure take advantage of all possible tax deductions and credits
  • advice on how to structure business and personal finances to lower tax bills
  • CPAs are tax deductible