Becoming An Independent Contractor In 4 Easy Steps
Ok, you’ve decided that becoming an independent contractor is for you.
Not sure where to begin? I’d love to help you out. Here are the 4 steps you need to get started, shamelessly brought to you in gifs.
1. LEGAL FUN
Choose Your Business Name
You should first choose a business name. You have the option of using your own name or going with a business name. I tend to like to make what should be easy decisions fairly difficult, so this was a difficult decision for me. 🙂 Read about the pros and cons of each one here.
Set up your legal structure
Becoming an event contractor doesn’t have to be complicated, but remember, it’s still a business.
The legal structure that you choose will determine how much you pay for taxes and your personal liability.
I started off as a sole proprietor and then became an LLC when my business took off. Each has different tax implications, so make sure to see a tax advisor so they can let you know the best route to take in your own state.
The licenses and permits that you need will also vary depending on your location. Most states require that you submit an application with your business name, as do local counties and cities. If you’re using a name that isn’t yours as a business name, you’ll have to fill out a fictitious business name application, which is easy but does require that you submit the statement to run in a paper for 2 weeks.
2. GET YOUR FINANCIALS IN ORDER
Do You Need A Tax ID #/ Employer Identification Number (EIN)?
You likely won’t need a EIN. If you’re a sole proprietor, you don’t need one – you’ll use your Social Security number instead. You WILL need one if you decide to set up a different business entity.
Visit the IRS website to learn more about getting an EIN.
Once you have your business name and EIN, head on over to the bank and open up a business bank account.
Do You Need To Open A Separate Banking Account?
YES. You do.
Becoming an independent event contractor means that you are now a business owner (yes, welcome to entrepreneurship!). The IRS wants you to keep the money that you make in your business separate from your personal money. And, it’s A LOT easier to track if it’s in a separate account. You can definitely move that money into your personal account, but make sure that it lands in your business account first.
You’ll need to get general liability insurance and seriously look into whether or not you should get professional liability insurance. There are various companies that provide insurance for event planners. I’ve always used Hiscox (although admittedly, I haven’t shopped around since 2016).
Insider Tip: I heard over and over again that you should outsource that which you don’t have to do, you don’t enjoy doing, and that doesn’t have to be done by you. Did I listen? Nope. As I started making more money, things got trickier. And I got myself a good accounting firm.
Figure out Your Pricing Structure
One of the hardest situations you’ll encounter in your new business is figuring out how much to charge, when to increase your rates, when to give discounts, etc. Read this article for information on how to determine what to charge.
3. EQUIPMENT – COMPUTER, WIFI, ETC
You don’t need a website in order to become an event contractor. What you DO need is a fast, hard-working computer that won’t let you down!
Remember, when you’re a contractor, you don’t have an IT number to call, so try to find a good, reputable computer repair person that you like and trust. And of course, strong wifi.
4. GET THE WORD OUT
Ok, all set up? And now the fun part!
Now it’s time to get the word out and get that first client!
CONGRATULATIONS! You’re now a business owner!
Prefer infographics over gifs? Here you go: