If you’re ready to take the leap into working for yourself, you can save some hassle down the line by setting your business up the right way from the beginning. First things first: If you’re confused about whether you are/want to be an independent contractor or a gig worker, we define the difference here. If you’re sure it’s the independent contractor world you want to explore it’s a simple process if you know the steps.
How Set Yourself Up as an Independent Contractor
STEP ONE:
- Choose a name and decide on the best form of business ownership (e.g. LLC, S-Corp, C-Corp, etc.) for your situation. This will impact many things including taxes and your personal liability. For more info, visit
www.sba.gov/business-guide
• Most states have unique license and permit requirements for business registration. This information is readily available online by searching “register a business in <your state>.”
• No matter where you do business, you need to apply for a federal Employer Identification Number (EIN). You can do so here.
STEP TWO: Protect yourself and your business with insurance. Talk to your agent about the following policies:
- General Liability – protects against claims for personal injury, property damage, associated legal fees, etc.
- Worker’s Comp – this insurance pays for you and your employees’ medical expenses if they’re injured while working. The amount of insurance required varies by state. Even if you don’t have employees, many companies require their vendors to carry this coverage.
STEP THREE: Banking
- It will make your life eleventy billion times easier if you keep your business and personal finances separate. Set up your bank account and get any credit cards you need in your company name.
STEP FOUR: Marketing
- A great way to market your business is through a nice looking, informative website.
- For more info, visit www.godaddy.com
STEP FIVE: Equip your business
- Independent contractors typically don’t use their clients’ equipment. You may already own everything you need. If not, consider leasing your equipment.
STEP SIX: Manage your business
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Develop an Independent Contractor Agreement. Your larger clients will most likely require you to sign their own such document, but it never hurts to have your own. Either way, this is an important document. Click on the following link to order a state-specific agreement, or do an online search for “independent contractor agreement example” at www.uslegalforms.com
• Set-up an accounting system for invoicing and receivables tracking. Many independent contractors use Quickbooks or another DIY software but you can also hire an accountant to do it for you
• Pay yourself and pay your self-employment taxes.
STEP SEVEN: Do something great
- You did it. You’re in business. Now you can get busy contributing to the world in the ways only you can.
Still have questions?
Let us help you. Call PayReel at 303.526.4900 or email info@payreel.com.
