Become an independent contractor is the first step to self-employment. With the right preparation and dedication, it can be a rewarding experience. Information about what an independent contractor is, how to become one, and what types of opportunities are out there can be found here. There are pros and cons to working as an independent contractor.
What is an Independent Contractor?
An independent contractor is a person who works for another person or company. Independent contractors are responsible for their own taxes. They are not full-time employees and can determine when and how work can be done, as well as how much to charge. Freelancing is a great way to gain experience, earn extra money and have the freedom to work on your own terms.
You are your own boss as an independent contractor. You can choose when, where and how you work. You may have additional responsibilities. Increased responsibility comes with greater accountability. You might enjoy a bigger payoff down the line if you work hard and continue to grow your client base. Investing in the right marketing strategies will help you reach more potential clients. You might even be able to position yourself to earn passive income if you hire employees (or independent contractors) to service clients for you.
The first independent contractor gig is where it all begins. To build a strong reputation with your clients, you need to work hard and make a good impression.
How to Become an Independent Contractor
- Pick your niche
- Make a business plan
- Understand your business structure
- Rev your marketing engine
- Get a contract
- Invoices
- Get to work
1. Pick your niche
To become an independent contractor, you need to narrow down the type of work you want to do. Once you have an idea of the type of services you would like to offer, you should research local laws and regulations to make sure you are licensed and insured. Businesses that provide a specific service are very successful. Think about a niche in which you are an expert and start there. If you feel overwhelmed, focus on developing your skills in a few areas first and then expand from there.
As you go along, you can refine your focus. You can make sure that you are exploring the right avenues to achieve success by keeping an open mind and being willing to adjust your plan. It will be easier if you have a vision out of the gate. Creating a plan to achieve that vision can help you stay on track. What you choose to do is up to you.
Common independent contractor positions
Here’s a quick list of common independent contractor jobs:
- Virtual assistant
- Freelance writer
- Consultant (e.g., SEO consulting, marketing consulting)
- Uber or Lyft driver
- Designer (e.g., web design, graphic design)
- Recruiter
- Real estate agent
- Photographer
2. Make a business plan
The next step is to outline how your business will work. Making decisions about what products or services you will offer, who your target audience is, and how you intend to market your business are some of the decisions this might include.
This step will show you how to price your project. You will be able to maximize the value of your work if you understand how to price your project correctly. You’ll also get an understanding of how many clients you’ll need to achieve your financial goals and job security.
3. Understand your business structure
Your business structure affects your taxes, liability, and personal safety.
You can start a business without having to register it. If you don’t register your business, you may be exposed to legal and financial risks. Some lines of work may require you to form an S corporation or limited liability corporation. It is important to research the benefits and drawbacks of each business structure before making a decision about which one will work best for you.
To find out what type of structure your business needs, speak to an attorney or tax advisor. It is important to research the different types of business structures available and consider the pros and cons of each before making a decision. It’s also easy to register a business online using LegalZoom.
4. Rev your marketing engine
You will need a steady stream of customers to succeed as an independent contractor. Ensuring that you reach potential customers and keep your business growing is important to having a strong marketing strategy. You must market yourself. It’s important that employers are aware of what you have to offer, so they can decide if you’re the right candidate for the job.
Effective advertising does not need to be complicated or expensive. Getting the word out about your business is easy. Here are some easy, low-cost steps you can take to market your services effectively:
- Get business cards
- Build a simple, low-cost business website
- Optimize your LinkedIn profile
- Attend related networking events in your area (and don’t forget those business cards)
5. Get a contract
Establishing a basic independent contractor agreement is always a good idea. On a basic level, this agreement should outline the following things:
- The scope of the project
- The payment terms (e.g., upon delivery, upon month-end, net 30, etc.)
- The pricing of the project
- The legal status of each participant
Some clients will give you a contract. Before signing a contract, it’s important to read it carefully. It pays to hire an attorney to draft an agreement that you can reuse.
6. Invoices
Independent contractors invoice their clients when they get paid. You can either do this with a spreadsheet or PDF or use a paid service such as
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