The rise of the gig economy happened after COVID hit. Many people got laid off or were forced to work from home. This left workers with a lot of free time to make even more money.
These people become freelancers and independent contractors. They gained some flexibility in their work. Instead of working full time from 9-5, they filled temporary and part-time positions.
Gig work can range from writing articles to delivering food to driving for Uber or delivering food to writing code or freelance articles. Many part-time professors are also gig workers.
Gig work is beneficial for everyone involved. Businesses save money because they don’t have to pay full-time wages and benefits. Workers work the hours they want, allowing them more time with family and hobbies. However, they have no vacation time, so if they miss a day, they don’t have paid time off to make it up.
These gig workers are often classified as business owners, even if they don’t have a company name or employees per se. They are often considered sole proprietors for tax purposes, as they will be taxed on their income as a freelancer.
In the event of a divorce, this can make things complicated, especially in terms of calculating alimony. That’s because it can be hard to calculate long-term earnings. A freelancer or gig worker may earn $100,000 one year, and then drop down to less and less money in the subsequent years. A gig worker has to keep hustling and chasing down jobs so that they keep making money. This is unlike a full-time worker, who has a permanent job and does not have to worry about finding new jobs constantly.
Divorcing as a freelancer is tricky. It is considered a business owner divorce, which is always complex in some way. There are some complications that freelancers may have to deal with during a divorce.
One of them is a lack of time. You don’t have vacation time as a freelancer, so you need to spend your time on your work. You don’t get paid unless your work is complete, so if you’re spending all your time fighting and negotiating with your spouse, this will directly impact your income.
Another thing to keep in mind is that your work could suffer if you’re stressed during your divorce. Not being able to focus makes it harder to complete projects. Depending on the type of work you do, getting distracted could put you or others in danger. It could also put you at risk of losing the job.
Planning Long-Term Support After a Freelancer Divorce
Now more than ever, each freelancer’s circumstance must be analyzed carefully. A person working in the gig economy will likely see their income fluctuate year over year, depending on:
- How successful their year was
- Whether their industry is impacted by economics and other factors
- If they are working in a completely new industry
Because there are so many variables involved, it becomes challenging to create long-term support arrangements. Clients must revisit their income levels and support amounts every few years, which can lead to a costly and frustrating process.
However, you can take steps to avoid the drama that comes with yearly reviews. Divorcing couples should think outside the box and compromise. A popular option is to create a “financial zone,” which creates a fair range of income so that if a freelancer falls a few thousand dollars, they can still absorb the expenses. However, creating a financial zone is not easy and requires playing with various hypotheses and formulas and evaluating them in real life.
Protect your work and income by making a plan early on. Devote certain time slots to your work and others to the divorce. Be sure to close shared accounts so that your ex-partner cannot dip into the money you have coming in.
Get refocused on your work. Keep your divorce as separate as possible. If you need time off, be reasonable with your requests while keeping your clients’ major deadlines.
Contact Us Today
Freelancers often have multiple jobs and can be considered business owners. However, this type of work makes divorce complicated, since determining earnings can be complex.
The Ohio business owner divorce attorneys at Lawrence Law Office can help you deal with valuations and tax issues regarding businesses. We are experienced in helping separating couples divide their businesses. Schedule a consultation with our office today by calling (614) 228-3664 or filling out the online form.