How To Set Up An Independent Contractor Business

For years, I take been an independent contractor. I've grown my habitation business organization into something that earns a steady income for my family unit. In fact, I'm the primary breadwinner. Becoming an independent contractor is one of the most profitable small businesses to start this year.

how to become an independent contractor

As an independent contractor, I have a degree of freedom in choosing my own schedule, and fifty-fifty determining who my clients are. I'm also part of a segment of the workforce that is growing in demand. Many companies are turning to independent contractors considering it can exist less expensive. My hourly charge per unit might exist higher than the rates commanded by "regular" workers, just I save a company in other means:

No benefits to pay
No overhead costs
No payroll taxes to pay

A few years ago, CNN Money pointed out that an employee working for $xiv an hour actually costs an employer $20 an hour. While most of my clients pay more than $20 for a project, the reality is that they simply take to pay me for the project, rather than go along to pay me day in and day out, and pay the other costs associated with maintaining a full-time employee.

How Practise Yous Become Self-Employed?

The independent contractor arrangement can exist a win-win in many means. If you are looking to become an independent contractor, either to supplant your "twenty-four hour period job," or just to make a little extra money on the side, here are some steps you need to accept:

ane. Think of a Name for Your Self-Employed Business concern

Consider what services you lot will offer, and then selection a name that describes what you do. I telephone call my business concern Miranda Marquit Freelancing. It'south straightforward, and you know — immediately — what is washed and who is offering the services. If yous want to offer graphic design or spider web evolution services, recollect of means to include those descriptors in your concern proper noun.

Have a solid understanding of who you are and what you lot have to offering, and be able to clearly define what you do. I'm still tweaking my "elevator pitch," but information technology's coming along nicely. When y'all tin encapsulate what you lot do, it's easier to convince potential clients to hire you.

2. Cull a Self-Employed Business Structure and Get a Proper License

Side by side, think virtually how you want your business organized. My business is set every bit a Express Liability Company (LLC). I'm the full general partner and my married man is the limited partner. Others, though, discover that an Due south-Corp or C-Corp makes more sense for them. (Hither's a comparison of using LLC versus C-Corp.)

In some cases, it can fifty-fifty make sense to remain a sole proprietorship for a time. Consult an accountant or revenue enhancement professional for more information about what might be most appropriate for you.

Y'all should also become a proper business concern license. Your state or locality likely requires yous to accept a license, even if you are providing independent contractor services out of your own home. If you plan to have a LLC, LLP, or S-Corp., you lot definitely need a license. However, there are cases in which sole proprietors need licenses, also. Check the requirements, and make sure you abide by them.

3. Open a Business Bank Account

Even sole proprietors should keep concern expenses split up from personal expenses. Open a business bank account to continue everything separate, and to improve your ability to keep good records. Many of the best checking account providers for consumers too have concern accounts you can use.

This is a critical step that many new independent contractors miss. You must dissever your personal money from your concern money. If you are cocky-employed and someone sues you, and your money isn't kept separately, then everything you have tin can be pulled into the lawsuit. Even if your new contained contracting business just fabricated $200 this year and y'all take $50,000 in the banking concern together with that money, information technology can all exist targeted in a lawsuit.

Yous need to keep good records so that you are prepared come taxation time. Make sure that you are setting bated some money in your business concern bank account to help y'all pay quarterly taxes. Don't forget that you will have to pay your portion of payroll taxes, every bit well as the employer portion. This is known as the self-employment taxation. Organize your finances now so that you can avoid headaches later.

4. Advertise Your Independent Contractor Services

Finally, you need to become out at that place with your business. Let others know what you are doing, and how you can aid them with the services y'all provide.

It helps to accept a home on the spider web, and then set up a web site. You tin even write a blog. Mail your resume and relevant samples online.

Use social media to promote your services and to connect to others. (Social media is i of the key ways you tin can advertise your self-employed services while yet saving money for your small business organisation.) If you are generous in the way you promote others, and if you offer insightful data and ideas, eventually potential clients will notice — and rent y'all.