5 Steps to Go Chase If You Want to be an Independent Contractor
Life as an independent contractor has many perks. An independent contractor, or a person who is not an employee and instead works for themselves, gains noteworthy advantages.
Beyond the basic work-life benefits, you do not have to share the profits and can decide how much to take or whether to reinvest the profits back into the business. Moreover, as an independent contractor, you can claim deductions that you would otherwise not be able to claim such as home business expenses, driving expenses, and depreciation on a business property.
Still, there are drawbacks to operating as an independent contractor. Not only will you take all the profits, but you will also accept all the losses. Furthermore, you cannot access employee benefits such as healthcare and paying taxes is a personal responsibility. However, despite the drawbacks, for those who crave independence, the steps for getting started are straightforward.
5 Steps For Setting Up Your Business As An Independent Contractor
There are five major steps to follow when getting started as an independent contractor:
- Choose your Business Legal Type and Apply for a Tax ID Number – There are many structures for independent contractors to choose from including a sole proprietor, single-member LLC, limited liability company, partnership or corporation. After deciding, the next step is to apply for a federal tax ID number from the IRS to identify the business entity.
- Register Business Name – You can trademark the business name or register the business name with the state. Just do a check to make sure no one else is using the name.
- Set up Business Checking Account – A checking account is not only important for handling crucial transactions, but also shows customers that the business is serious and established. In addition, keeping good records will help you claim deductions when filing taxes.
- Apply for Financing – Starting a business, even as an independent contractor requires capital. If unable to personally raise funds, consider financing options. For individuals who require specialized equipment, all kinds of equipment financing loans are available, especially for independent contractors who employ specialized equipment to carry out their trade.
- Develop a Marketing Strategy – Finding customers starts by forming a plan to get your name out. Before spending on advertising, consider your target market, competition, and more to build a comprehensive go-to-market strategy.
While assuredly a big step to take, there are many benefits to setting up as an independent contractor. The key to success is ensuring a proper plan of action is in place to offset the challenges and possible pitfalls that accompany this big decision.