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5 Tips for Becoming a Successful Independent Contractor
If you have an interest in contracting, but you’re not sure about working under someone else, you may consider independent contracting. This strategy allows you to claim yourself as a business entity, and receive the benefits larger companies enjoy.
It can be difficult to know how to begin this process. There are quite a few requirements needed to become a legitimate independent contractor. So, here are 5 tips for becoming an excellent contractor and businessperson in one.
1) Receive a Contractors License
Many different trades require you to earn a contractor’s license. This can include licenses for real estate agents, massage therapists, and barbers, as well as contractors. If you know about contracting and you want to be a professional, this is one of the first steps.
You can study for a national contractors license on sites like the Contractor Training Center. These exam prep courses are designed to help you pass the exam on the first try, and receive the accreditation you need.
2) Choose the Right Name
There are two different options when you’re picking a name. The first is to have a “fictitious business name” which means any name that doesn’t include your full name. You will have to register this name with the government.
The other option is to use your full name in your business name. A name like “Willie Hughes Contracting” does not require you to file any paperwork. Either way you choose, you will then be able to open a bank account under this name and enforce any contract that you sign with it.
3) Develop Your Marketing Skills
Marketing is always an essential tool. Creating a website, managing social media, and listing yourself on the Yellow Pages are just a few ways to advertise.
Your marketing style is another matter entirely. As your contracting practice grows, you may want to consider hiring someone to manage this for you if you’re not especially tech-savvy. This is especially important in your first few months of business – you’ll need all the help you can get when building a customer base.
4) Learn how to Pay Your Taxes
The average’s person’s paycheck is adjusted to take out taxes like income, Social Security, and Medicare taxes. Independent contractors, on the other hand, need to take out money from their own income to pay their taxes. If you make $400 or more a year from your business practices, you are required to report it to the IRS.
You will also have to pay “estimated taxes.” These are four yearly installments the IRS requires that you pay, depending on your business’s profit. You should plan on paying estimated taxes if you make over $3,000 adjusted gross income from your contracting.
5) Get a Tax Registration Certificate
If you want to operate as a legitimate service, you need to get a business license. Essentially, it is a receipt for the taxes you pay to operate your business. You can contact your city clerk today for an application.
Without a tax registration certificate, you can risk receiving hundreds of dollars in fines. In some places, it is a misdemeanor. These licenses are inexpensive to receive, so it is wise to get one before you begin your practice.
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Although the process of becoming a business entity can seem daunting, there are many benefits that come with being certified. Ultimately, a longstanding, successful independent contractor is trustworthy and professional. You’ll find it easier to maintain relationships, gain a client base, and build a resume with tons of experience. Think of it as paying your dues - in a few years, you’ll be thankful you took the steps towards being independent.
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Any facts, figures or references stated here are made by the author & don't reflect the endorsement of iU at all times unless otherwise drafted by official staff at iU. This article was first published here on 14th December 2019.