Linkibuzz 37

Linkibuzz Edition 7

Linkilaw Startup Advice & Tips

We’ve got some great stories from around the globe for this week’s Linkibuzz.

We start off this week’s posts by exploring some of the myths and lies surrounding self-employment. The writer of this post, Liz Ryan, presents an interesting case why everyone can go down the self-employment path, so make sure you read that post.

Our next post looks at the reasons why a startup implodes overnight. You get a perspective from someone who has owned a startup and seen a startup fall apart,  it’s a powerful, cautionary tale.

Online retailers are always stuck in the phase of discounting. This is a problem because it’s hard to build brand loyalty and make maximum profit when the only way you make money is via discounted sales. One online retail CEO has come up with an innovative way to tackle this problem, so make sure you check that out.

Lastly, we’re covering the story about a video blogger who didn’t file his taxes properly. The tax man caught up with him in the end and a court even ruled that he must pay tax on his income. This simply reiterates how important it is to stay on the right side of the law regarding taxes.

Five Lies About Self-Employment Most People Believe

Self-employment is becoming a viable and legitimate path for many people. This is no doubt thanks to the Internet, which has created many opportunities for self-employment, particularly that of freelancing and online businesses that anyone can run from home.

However, it’s still common to hear that it’s very hard to go down the self-employment route. As a contributor for Forbes, Liz Ryan, mentions in this article, there tend to be certain myths surrounding self-employment that are constantly perpetuated.

Here are the five lies about self-employment she dispels in this post:

  1. Only people with very specific or technical skills can make a living for themselves.
  2. Consultants and freelancers have a tough way to go because their work is so sporadic.
  3. It’s safer to stick to traditional employment compared to going it out on your own.
  4. Self-employed people must pay their own health insurance (in the US), which is very expensive.
  5. Self-employment means feast or famine, there is no middle ground.

The irony in all of this, as the writer contends, is that many of these myths are even perpetuated by those who are already successfully self-employed.

She points out how really almost anyone has skills that can lead them to self-employment and we think she does a great job in dispelling those myths and giving anyone the confidence to move into self-employment.

If A Startup Shuts Down Overnight, It Means The Founder Was ‘Selfish’

Building a successful startup is a tough gig and many of them fail. However, many of these startup failures shouldn’t occur overnight but some do and according to the founder of former company Shift, Zach Ware, that only happens if the founder has been selfish.

If it does happen, then the consequences are devastating not just for the founder but for the employees and everyone else involved in the company. Ware talks about an example from his own company. He explains how his former company Shift only had about 10 months left of cash but they needed to expand into another city to grow.

The only problem with that was it would have reduced cash reserves to about five months’ worth and required the company to get immediate funding. It was a tough position to be in, but he knew that he needed to do the right thing by his employees. So what he did was lay off all his staff with generous severance packages and created a path to help them transition out of the company into new employment.

For him, this was the right way and the only way to do it.

Compare this to another company called Zirtual that imploded overnight that contributed to financially in its early startup days. This laid off its 400 employees via email, about as low-class a move as you can imagine.

Ware says that this should never happen to any startup because you can see in advance that the cash is running out and it’s not being replenished. In his mind, if a startup implodes, it’s completely the fault of the founder and selfish motivations.

It’s certainly an interesting article to read with an fascinating insider perspective.

Discounting Is Killing Online Retailers. Here’s How One Retailer Is Trying To Fix That.

One of the traps that online retailers fall into is constantly discounting their prices. Every online retailer knows that it’s losing a little money each time it sells something via a discount. Mark Walker, CEO of online clothing store JackThreads knows it all too well.

His company started and grew off the back of short and sharp discounts, capitalising on impulse buyers. This strategy had succeeded since 2008 when he founded the company. He even tried moving away from this strategy but found it stunted revenue growth; so begrudgingly, he went back to the discounting pricing model.

Anyway, he was determined to get out of this model and find a way to charge full price so his company could maximise its revenue. After a heart to heart meeting with his board of directors, he fully realised that you can’t build loyalty with customers only when offering sales and you can’t expect to always make money using this approach.

However, he knew it wasn’t going to be easy to escape the death spiral of discounting so he had to get creative.

So he decided to offer a try before you buy proposition that included free returns and shipping, knowing full well that many customers loved their product and would pay for it once they’d tried it on. It’s a bold move, but it’s one he’s hoping will pay dividends and if it does, it could be a blueprint for other online retailers looking to charge full price for their products.

The idea is still in its infancy and the company is needing to divert some of its advertising budget into this new initiative but it’s certainly going to be an interesting one to follow in the future. If it succeeds, it could be a game changer for the industry.

Tax Court Rules That Blogger Is Subject To Self-Employment Tax

Everyone knows that blogging is now a big thing and it’s possible to make money on the Internet. Unfortunately, many people seem to think that this makes them immune from certain taxes.

If you’re making a taxable income from your blog no matter if it’s your own products, Google AdWords or anything else, you’re required to pay tax on it. This post just reaffirms this fact.

It tells the story about a blogger from Texas who made more than $20,000 from Google AdWords via his video blog. Instead of filing for self-employment taxes on that income, he filed it as ‘other income’ so he wouldn’t have to pay tax on it.

This came back to bite him in the end because the IRS caught up with him and made sure that he paid self-employment tax on that income. A court also backed up the decision by the IRS meaning the blogger in question didn’t have a leg to stand on.

The moral of this story is pretty simple – make sure you properly file your taxes each year and if you’re unsure about your taxes, get in touch with a legal expert to help you.

This area of business is too important to not mess around with.


We sure hope you enjoyed this week’s Linkibuzz post.

As a quick recap, first, we covered some myths and lies about being self-employed. Next, we looked at why a startup can implode overnight with a lesson revealed from a startup founder who has seen it firsthand.

Third, we explored an interesting way one online retailer is tackling the death spiral of discounting with online stores. Lastly, pay your taxes properly or face the wrath of the law.

Thanks for reading and stay tuned for next week’s Linkibuzz.