Starting Out As An Independent Contractor

Expertise in a niche is a definite plus. You'll need some tools of the trade too, such as letterhead, business cards, and independent contractor agreements. A fill-in-the-blanks independent contractor agreement (contract) will probably do until you get on your feet. But if you can afford it, it's probably a better idea to have an attorney check even a detailed customizable agreement or custom tailor one for you, to make sure it covers every contingency for your particular niche. Some of your clients might prefer to use their own independent contractor agreements. If you have any doubts, ask an attorney to check them before you sign. For more customizable and sample agreements, try searching the Web for "independent contractor agreement."

Because of independent contractor vs. employee issues and so-called "permatemps" lawsuits, some skittish employers won't hire independent contractors who use their social security numbers as tax-payer IDs. (Employers reporting the earnings of independent contractors under social security numbers raises eyebrows at the IRS, which can trigger audits. It indicates that employers might be misclassifying employees as independent contractors, to avoid employee tax withholding.) So, you'll likely have to officially start up a small business to receive a Federal tax-payer ID that employers don't fear. A state tax-payer ID (if required) can save you money, by allowing you to buy items at wholesale and free of sales tax, if you intend to resell them. Your local Small Business Administration Office will help you get started with this and other business matters too, for free.
To help you network, gain expertise, and receive discounts on insurance and other self-employment expenses that an independent contractor will likely have to pay, consider joining professional organizations such as the National Association for the Self-Employed..

Before starting out as an independent contractor, it's a good idea to read everything you can.

 

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