How to Become an Independent Contractor

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An independent contractor is essentially a small business owner
An independent contractor is essentially a small business owner (Image: contractor,foreman,construction image by Greg Pickens from Fotolia.com)

Becoming an independent contractor is easy but depends on your field and level of expertise. Independent contractors are also known as freelancers or consultants. Generally they are hired for a predetermined period of time to do a specific job or project. Many self-employed individuals make a living as independent contractors jumping from one project to the next. Independent contractors are not employees and are usually responsible for their own expenses related to the project. According to Business.gov, all independent contractors qualify as business owners.

Define your services. Determine with clarity what services you are planning to offer to the general public. Will you repair roofs? Will you offer Internet marketing advice? Will you build computers? Whatever you decide to offer, make sure you have sufficient expertise on the subject, and price your services according to the competition.

Create a business plan. Even if you never show it to anyone, creating a business plan will help you organize your thoughts and find any loopholes in logic or feasibility. Include the general idea of the service you’re offering, pricing strategy, how your customers will reach you, how you plan to market your services, and how much money you need to start. Don’t forget to include the cost of any new equipment or software you might need.

Register as an independent contractor. The easiest way to do this is to make yourself a sole proprietor. When forming a sole proprietorship, you do not need to register your business with the state. It is often as simple as filling out a DBA (“Doing Business As”) form and getting the appropriate licenses to operate legally. Go to your local courthouse and fill out the DBA form and pay the filing fee. For most states the filing fee is no more than $25. Check with your secretary of state’s office to make sure you have satisfied the local requirements.

Obtain licenses. Depending on the type of services you will offer as an independent contractor, you will need to obtain one or more licenses to operate legally. Licenses vary by state, but you can check with Business.gov, the government’s official business portal, for the licenses your type of business will need. You can use the business license search service provided by Business.gov (see Resources).

Create a standard agreement for your services. The U.S. Chamber of Commerce provides a sample standard agreement (see Resources) for you to use as an independent contractor. This agreement specifies the terms you are agreeing to work under. Project length, compensation and liability are just some of the areas you need to specify when you enter into a working relationship with a client.

Advertise your services. Place ads in the local paper or meet face-to-face with potential clients and offer introductory service rates to start potential working relationships.

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