Creating your own business in the industry of your choice sounds like a sweet deal. That is, until entrepreneurs find out that they have to not only make sure they're paid on time by regular clients, get health insurance and keep up with their own bills. For online freelancers, the new dilemma is staying away from online spammers who target those who are looking to make a buck without the security of a corporate job.
In the April 2014 issue of Men's Health magazine, the article "Punch Your Own Ticket" makes accurate points about how the Affordable Care Act makes health insurance portable so entrepreneurs can focus on the highest bidder versus what employer has benefits. Freelancing job sites, such as oDesk, Elance, Freelancer and Guru, are suggested as some of the companies that could give a freelancer a to-do list of short-term assignments that include everything from web design to reporting to copywriting to editing to administrative work.
But those terms and conditions matter a great deal when working with online freelancing gigs.
In a recent example of this, here's a first-hand story:
I applied to take on an administrative short-term job for a painter who needed someone to keep financial tabs on his sales for his company Blaisjioel Artistry. The job description seemed easy enough: emailing; bookkeeping; filing; photocopying; processing of invoices; assisting with special projects as assigned; needs access to the Internet, a copier and a printer.
Here's where things got weird.
Blaisjioel Artistry: The painter wanted me to create the name of my own company so he and a couple of his partners would all be able to have payments sent to my company.
Warning 2 -- Verify the company name: There is no reason that any company hiring you should ask you to create the name of your own business. If this is the case, you would've done that before contacting the company. This also hurts that company's own branding if you're getting all the bucks and no one knows who they are.
Blaisjioel Artistry: The painter immediately told me of how he was going overseas to Syria and would have limited access to email and needed someone to take over his business while he was away on military duty. He said that his brother used to take care of his business, but he'd died of cancer and he wanted to rename the business in his brother's name.
Warning -- Keep tabs on a business owner's story: Spammers usually are terrible liars and can't keep track of their own stories. His initial message said he wanted to name the business after his dying brother. Now scroll up. Two messages before that, he wanted me to choose a business name and "be creative." Also, be cautious of business owners who immediately want to tell you all of their personal business from immediate contact. They're looking for the sympathetic ear that'll lower your guard.
Blaisjioel Artistry: The painter wanted to set up a merchant account through PayPal or another source for customers who would be paying for his work. He said he was losing money from paintings because he was traveling back and forth from the service. However, he wanted the PayPal account to be in my own name, the money to be sent directly to me and my "creative" company name, and he felt it would "take up too much time" for me to set up a merchant account under his own name.
Warning -- Never mix your money with another business' money: From a tax standpoint, any entrepreneur who makes $400 or more has to pay self-employment tax. The IRS can easily research all deposits made to any of your checking accounts, saving accounts, health savings accounts (HSA), and so forth. So let's just say this was a flat-rate job of $500 per week, but this painter sold $5,000 worth of paintings. The IRS will look at the sum total of $5,500 deposits as your gross income, not that of an outside employer. Therefore the self-employment tax on all of those deposits will be money you'll be held accountable for when tax time comes around.
Any successful company that makes money also has expenses, and a company worth its weight wants to have a paper trail of expenses versus profits. If a company is getting profits from another person's PayPal account, guess what? That person can say he makes less of a profit and only bill expenses, which means he'll probably get more back in taxes or not have to pay self-employment taxes at all. Why? You're footing the bill.
And although it may seem logical that this soldier going overseas doesn't want a random stranger to have access to his checking and savings account information, any person who is contracted or hired to work on financial work for a company has this access. An entire department of accounts payable employees and accounting managers can co-sign for this. Companies may have to do a background check on financial employees and sign contracts about theft, but the idea of someone having access to company accounts is not a foreign concept.
PayPal has a love-it-or-hate-it relationship with merchants. Some business owners can easily set up their merchant accounts, show documentation that their companies are legitimate, and send and withdraw money with ease. Other companies, specifically financial institutions like credit unions, get taken through all kinds of hoops to make sure employees aren't trying to make a profit off of their jobs. So yes, the painter may have had a point that setting up a merchant account takes too long in some circumstances. But as with any financial account, it is worth waiting for a reputable company to set up the account with a secure site than to try to sell things under the table.
Blaisjioel Artistry: The painter wanted me to set up a Yahoo ID so we could talk offline.
Warning -- Abide by the privacy rules of freelancing sites when networking through them: The four sites mentioned above are very strict in their guidelines about what information can be visible on the site, not just so clients don't steal their freelancers and lose the fee. This is also to prevent spammers, such as Blaisjioel Artistry, to have the opportunity to keep the conversation going once the freelance company owners figure out it's a scam. In this case, it was Guru. (The problem is that Guru shut down the user's account, but once a freelancer starts replying directly to email, until I logged back into Guru I didn't know this account had been disabled. Reply emails can continue to be sent even after the account is shut down.) Always reply to messages directly through the freelancing sites. With other freelancing companies, such as Textbroker, there is no option to reply directly to email. Entrepreneurs receive alerts that they have new messages and are required to log into Textbroker's messaging system. This is not the case for other freelancing sites.
As with most spammers and thieves, the stories get more creative. The problem is spammers have a terrible time keeping up their own lies so eventually things will start sounding too good to be true. Within a half hour, I'd shut down this entire conversation and got ready to report the user on Guru without knowing Guru already knew. But spammers can't be spammers without someone falling for their tricks. And they'll keep poking their heads into one site after the next. Be a step ahead of them.
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