In the old days, getting salary-based full-time employment was the ultimate goal in most employees’ minds. Today, the desire for independence is escalating, with more individuals deciding to start their private businesses where they’ll be their own bosses and call their shots.
Working as a self-employed contractor has a plethora of benefits. Besides, starting your own business, working for yourself, and making all the major business-related decisions are all very appealing thoughts to anybody with an entrepreneurship urge. Becoming a self-employed contractor is also one of the simplest ways to transition from a full-time job to having your own business when you possess solid skills and experience in your line of work.
Besides, there are other forces as well that compel people toward being self-employed. The freelance market is flourishing since many companies today, even the large corporations, demand a more compliant right-on-schedule workforce. So they prefer to hire workers part-time rather than having all their workers employed full-time.
Nevertheless, self-employment does not come without challenges. For this reason, you should fully understand and be ready for every aspect of entrepreneurship so that you avoid any unpleasant surprises along the road.
Here is everything you need to be aware of before starting and building a successful career as a self-employed contractor. So, keep reading below and find out what every independent contractor must do to remain on the road to their success.
Get Your Financing Into Place Beforehand
Figure out how much capital you will need to allocate for business establishment, machinery, equipment, etc. Financing in advance might not be a matter of question for a computer consultant who can start a home-based consulting services company with only a computer and smartphone. However, when starting a contractor business, for example, you might need a few thousand dollars worth of equipment.
Before you make the switch to become a contractor, make a thorough examination of your finances and calculate your needs as closely as possible. Afterward, if needed, consider potential sources of financing, like friends and family investors or commercial credit from financial institutions. If you need funding for executing your plan, you need to ask for loans or capital investment from equity investors. Then, you need to have an extensive outline of your necessary financial resources within the framework of your business plan.
Additional Business Expenditures
Apart from capital financing, you will have to cover business and personal expenditures until your business starts generating income. These expenditures include certain legal fees, wages, office expenses and supplies, utilities, and insurance.
In order to protect your business from unexpected financial loss, it would be wise to obtain a contractor insurance policy from the very beginning. A claim against your business that is not covered by insurance can be financially disastrous, particularly if your contractor business is not incorporated.
Market Your Business Right From The Start
Generally, when starting your own business, the biggest challenge is getting the first several paying customers. If you have shifted from full-time employment in the same profession, you might have potential customers already. If not, you should consider reaching out to family, friends, and business contacts before you open your doors.
Further word-of-mouth may help you acquire clients much more quickly, besides getting feedback about the potential of your overall business concept. So, start to market your product or service right from the start. Construct a marketing strategy with an advertising professional and start by applying some simple, low-cost marketing strategies like for instance, a social media plan that will help you gain your first clients.
Being Professional At All Times Builds Your Reputation
In the business world no matter what type of profession you have, you should look and act like it at all times. The potential clients who don’t know you might be turned off by improper dress code or behavior from your side. Behaving professionally also involves answering phone calls adequately and responding promptly to messages or emails.
In today’s modern world of social media and online reviews, having a reputation for unsatisfactory customer service will quickly become fatal for your business. Also, if you plan to manage your business from home, ensure to have a separate, well-equipped, and fitted home office set up.
Avoid Potential Tax Issues by Having Multiple Clients
One of the main benefits of self-employment is the capability to deduct costs from taxes. Regrettably, violations of the practice may lead to inspection from the tax authorities. If you work solely for an individual employer (even if you are incorporated) you are exposing yourself at risk to be considered an employee by the IRS and might lose the ability to claim the small business deduction or any other regular business deductions.
You can be especially at risk if you have shifted from a company employee to a self-employed contractor and remain working for that same company full-time. The easiest way to make sure you preserve your status as an independent contractor is by having many or several clients. If you are not sure about your status, you can address that issue with your accountant.
Make Sure You’re Ready Before You Expand Your Business
The majority of the successful contracting businesses come to a point where further expansion would demand hiring extra people to handle the increased volume of work. For instance, an independent contractor might have to make a decision either to bid on a contract that will demand a multiple-person team to get the job done or to pass on the possibility.
Recruiting or contracting new staff is a tough decision, and numerous self-employed contractors prefer to continue working solo for a variety of reasons. The more specific your business is, the harder it might be to find eligible people. Advertising, going through resumes, and interviewing consume so much time. When you make your hires, training, oversight, and paperwork processes will consume even more of your time on a permanent basis.
Paperwork is specifically problematic with hiring employees instead of contractors, as salary requires tax deductions plus, it will increase your accounting overhead. Unless your new employees generate higher income than the expenses for having them employed, your earnings will not increase. Your business’ reputation could suffer if whosoever you hire does not carry out at the level that is expected from them.
Most of the contractors find it easier and less nerve-racking to remain small, maintaining their amount of work within manageable boundaries and maintaining a positive revenue by controlling running costs. On the contrary, if your goal is to develop a larger business and you are able to manage to put the time and energy toward its expansion, then you should definitely take the step.
In the end, permanent success is the purpose every individual should aim to achieve. So, if you have dreamed of being a self-employed contractor forever, advance planning will help you ensure your business efforts will be productive and profitable. Therefore, put the above-given things into your plan of action and start working.
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