On-demand work, such as Uber or AirBnB , is growing so fast that it’s steadily becoming a real alternative to working for an employer. You can set your own hours, work several different on-demand positions at the same time, and find work tailored to your specific niche.

A 2010 study performed by Intuit in conjunction with Emergence Research projects that 45% of Canada’s workforce will be made up of on-demand workers, such as freelancers and independent contractors, by the year 2020. As of 2017, there were already 41% of Canadians choosing the remote or on-demand work style. The study revealed that, of current on-demand workers, 63% choose self-employment to supplement their current income, while 46% do so to have more control over their work/life balance. Thanks to services that include Uber, Lyft, UpWork, and OneSpace, the on-demand business model is within reach for more people than ever before.

You can take part in the new gig economy, too, with some thoughtful planning and a bit of financial finesse. So, how should you begin?

Build an Emergency Fund

Before you step off the ledge and pray for wings on the way down, it’s important that you have a plan, especially if you want to eventually leave your nine-to-five position and transition to full-time on-demand work.

Identify Needs vs. Wants

It’s not necessary to completely cut yourself off when it comes to spending, but understanding how you’re currently spending your money is highly beneficial in the long term. To begin saving money, analyze your spending habits. Do you buy coffee everyday at the shop on the corner? Each latte may seem trivial as you sip, but say you get two every day – one on the way to work and one on your lunch break. Add up $5 per latte, or $10 per day, and you’re spending $50 or more per week for your caffeinated pick-me-up. When you look at it from the standpoint that your coffee costs $200 per month, it causes a moment of introspection. Can you thrive on just one cup per day?

Other items, such as rent, mortgage, or utilities, are a given, but do you really need that cable subscription? Make note of all your spending for a month and see where you can cut back. Little changes to your current spending can amount to a growing savings account in a short time.

Save Money Automatically

Grow your savings every day. You might be surprised at how much you can save by simply tossing your loose change in a jar at the end of the day. Pay with cash and only with bills, so you have change to put in your jar every time you make a purchase. There are even savings apps, such as Mint, that transfer money into your savings account automatically – a set-it-and-forget-it way to save.

Sell Some of Your Unused Items

Sites such as eBay and Etsy allow you to make a side-income by selling things you no longer need or use. Selling these items has a two-fold benefit: you earn money, and you finally have a clean basement, garage, or storage space.

Reduce Your Interest Payments

If you have any debt, including a mortgage, loan, or credit card, check with your lending institution to see about lowering your interest rates. Sometimes your bank can refinance a mortgage or loan to reduce your monthly payments significantly.

All your savings can stay put in your account to help cover the cost of being self-employed.

Manage Your Cash Flow

Depending on the type of on-demand gigs you complete, you might submit an invoice every week or month to facilitate payment. Creating, submitting, and tracking your invoices is a crucial aspect of being self-employed in Canada. This way, you know what you have coming in and what you’re still waiting on payment for. You can best cover your self-employment expenses and know where you stand financially with proper cash flow management. QuickBooks offers a convenient cash flow statement that illustrates exactly where you stand financially.

Verify Your Self-employment Income

A full-time employee receives a paycheque stub at the end of every payroll period that itemizes wages and all deductions. As a self-employed small business owner in Canada, you have to produce these documents for yourself. Because you’re self-employed, you have to show proof of your income for at least the two prior years when you approach a bank or other institution for funding. In addition, you might have to produce a relatively reliable projection of your earnings for the coming three years. To prove your revenue, you need statements, such as:

• A revenue statement
• Expense report with related receipts
• Profit and loss statement, and
• Balance sheet

Your revenue statement highlights all gross revenue for the past one to two years. Your expense report shows all of your expenses for the previous year and includes the receipts to back up your purchases. The profit and loss statement is a combination of your revenue statement and your expense report. It shows in detail what you brought in and what was paid out. Finally, your balance sheet is a snapshot of your business’s current financial standing and includes your:

• Assets
• Liabilities
• Capital investments

The balance sheet shows the total net worth of your business at a specific period in time.

Track Your Expenses

You must track all of your business expenses (and separately from personal expenses) to be in compliance with the Canada Revenue Agency (CRA). Some of the usual expenses associated with being self-employed in Canada are:

• Office (home or off-site) utilities and internet
• Travel costs
• Vehicle maintenance
• Supplies for your gigs (software for your computer, fuel for business travel, Employment Insurance, etc.)
• Add-on insurance for your home if you work from home

QuickBooks Self-Employed helps you keep track of these expenses so you’re prepared come tax season. Manually enter your expenses or capture a snapshot of your receipts with your phone’s camera, and QuickBooks saves and categorizes them for you. If you drive a lot for your on-demand work, like an Uber driver, QuickBooks’ mileage tracker helps you separate your business from personal mileage so you know your tax deductible mileage at tax time.

Pay Estimated Taxes

You must report all income you receive to the CRA every year regardless of how you earn it. A full-time employee receives a T4 slip from their employer to use for reporting taxable income. On-demand, freelance, and gig workers instead receive a T4A slip from each client or provider. This slip shows how much you received from that specific client for the year.

Full-time employees enjoy the remittance of their income taxes via their employer who deducts the tax from their paycheck each payroll period. As a self-employed, on-demand worker, you are responsible for calculating, deducting, and remitting these payments on your own, and you must remit your taxes owed at the time of tax filing, on or before April 30.

Other Contributions and Tax Costs

Full-time employees also enjoy the matching employer payments into their Canada Pension Plan (CPP) accounts. As of 2017, earnings over $3,500 are taxed 4.95%. If you make $5,000 in self-employment income, $1,500 of that is taxed. Your payment into your CPP is $1,500 times 4.95%, which equals $74.25. As a self-employed, on-demand worker, you are both the employer and the employee. You are also responsible for the employer share of $74.25, so your total CPP payment is $148.50. This is just one of the hidden costs of being self-employed.

Protect Against Identity Theft

Safeguarding against the theft of your identity is important, but as a small business owner, you must be incredibly vigilant. You rely on your own personal credit to obtain a business loan, secure a line of credit with a vendor (if you’re selling a product), and handle several other financial aspects of running your own business. If your identity is compromised, your business can suffer. But, there are ways you can proactively protect yourself.

Any paper documents that reflect your personal information, including bank statements, contracts, and tax returns, should be kept in a locked cabinet. If you don’t require the documents any longer, shred them. Identity thieves are more resourceful today than ever before and don’t necessarily need your Social Insurance Number to steal your identity. Any of your personal information can be used and even traded with other “hackers” on the dark web.

It goes without saying that you should only transmit your personal information online through secure, verified, and trusted sites. But, even if the site is secure, transmitting any of your information via a public Wi-Fi hotspot leaves it open to theft if it isn’t encrypted. Be vigilant in staying up-to-date on new methods of identity theft, and monitor your credit on a regular basis so you know almost immediately if there are any suspicious accounts opened in your name.

The Toughest Part of Being Self-Employed

As a self-employed individual, you’re totally reliant on yourself. And budgeting. Your income could have more mood swings than a hungry 3-year-old child. It isn’t uncommon for income to shift dramatically from month to month, and if you don’t have a plan for consistency, your bottom line could sink.

As a previous nine-to-fiver, you’re used to being on the receiving end of a paycheque – one that comes every week like clockwork in exchange for the work you perform. As a self-employed, on-demand worker, you’re still working for your money, but now you have to ask for your payment. Administrative tasks, such as preparing and sending an invoice to your clients, can feel uncomfortable, as if you’re nagging them, but the reality is that this is how it works. You have to invoice to receive your payment. You can take yourself out of the equation if you use a small business invoicing system such as QuickBooks to handle your billing needs. QuickBooks Self-Employed takes out a lot of the guesswork and provides you with detailed reports on the landscape of your business.

Being a self-employed small business owner, even with the ups and downs, is both exhilarating and rewarding. QuickBooks Self-Employed app helps freelancers, contractors, and sole proprietors track and manage business on the go. Download the app.