Today we released our Future of Work Report – a quarterly survey to understand the next generation of freelancers and small business owners amid The Great Resignation and Freelance Revolution. We surveyed 1,000 Gen Z Americans between the ages of 18 and 24 on finance-related freelancing topics such as taxes, saving habits, business expenses, and financial literacy.
A Freelancing Generation
50% of Gen Zers were freelancing in 2021 and they show no signs of stopping. By 2028, we anticipate they will be the vast majority of the 90.1 million freelance and gig workers. As our CEO Lilac Bar David observed, “Now people and especially younger generations early in their careers or about to enter the workforce, are realizing the immense benefits of being your own boss, controlling your own hours, and determining your own wages.”
Although Gen Z is passionate about making their own way in the world, similar to other generations before them, the word “taxes” still feels scary.
Gen Z and Taxes
Among survey respondents, 90% didn’t know that self-employed individuals need to pay quarterly taxes. As a result, Gen Z freelancers could be at risk of receiving penalties when annual tax season comes around. Similarly, 90% reported feeling anxious when they hear the word “taxes.”
At Lili, we want freelancers and small business owners to feel confident and prepared going into tax season so they don’t end up overpaying, as so many often do. “We see it as our responsibility to educate and inform our customers about the financial pitfalls that have plagued too many freelancers for too long,” said Lili’s VP of Marketing Matthieu Silberstein.
Tracking Business Expenses
An essential part of being prepared for tax season each year is properly categorizing your personal versus business expenses to maximize your return. Our research suggests that there could a lack of education around tracking business expenses for the next generation of freelancers and small business owners.
According to our research, 1 in 3 Gen Zers uses their smartphone notes app to keep track of expenses and receipts. Additionally, over half of freelancing students weren’t aware that they could deduct business expenses when filing their taxes.
The Education Gap
Nearly 30% of respondents shared that no one has explained to them how taxes are calculated. 40% of respondents said they learned about tax preparation from their parents and only 15% of respondents said they learned about taxes from teachers.
None of this is from a lack of desire on the part of Gen Zers. 83% believe they would save more money if they understood how taxes were calculated. Although 84% would prefer to turn to a person in their life (a parent, friend, significant other, or financial advisor), our research shows that Gen Z is getting most of their financial advice from TikTok, Youtube and Instagram.
The Future Looks Bright
Given their passion for entrepreneurship and willingness to learn, there is no doubt that Gen Z is on its way to becoming an unstoppable force. The future is bright, and so are the ones leading it forward.