For many people today, becoming an independent contractor is an appealing option. Independent contractors play a critical part in the economy and in their clients’ daily lives. In addition to their talent in the construction and maintenance industries, many individuals and businesses choose to hire an independent contractor because of their flexibility, ease, and price. If you’re looking for a small business idea that utilizes your trade skills and talents, then becoming an independent contractor may to a smart option.
However, there are considerable hurdles associated with working as an independent contractor that you should be aware of before starting an independent contracting business. Stiff competition, complex legal requirements, a high turnover rate among workers, and a cash shortage are just a few of the most major risks that independent contractors may face when they first start out.
With appropriate preparation and patience, many of these obstacles may be mitigated. Here are some steps you could take to help make your employment as an independent contractor a success.
1. Determine the legal structure of your company
The legal form you pick for your general contracting company can have a big influence on your taxes, obligations, and other aspects of accounting, as well as your overall finances. You should be confident in your selection when it comes to forming a business or legal structure for your contracting firm, and you may want to consult with an accountant or lawyer before registering. For example, you can be a sole proprietor or a Limited Liability Corporation (LLC), and both come with their own pros and cons when it comes to running a business.
After you’ve successfully established the legal framework for your firm, you may go on to develop a customer base and run your company. However, remember that acquiring a contractor license is required by law in some areas. The Contractors State License Board oversees those licenses in California, whereas the Louisiana State Licensing Board for Contractors is in charge of them in Louisiana. A short online search for your state’s appropriate body should help you understand your legal licensing requirements.
2. Plan for how you’ll run your company
Bookkeeping, invoicing, scheduling, filing taxes, and job management are all important parts of running a contracting business. While you can hire someone to help you with these tasks, this may not be possible when you’re first starting out. Fortunately, there are many online-based and computer apps that can make managing these tasks relatively simple. You should try to strike a balance between free services and those that cost money but may better satisfy your needs.
3. Create an effective marketing strategy
An independent contractor’s marketing plan should include obtaining new clients and winning bids for more profitable projects. In short, you should concentrate on producing high-quality work and establishing a positive reputation so you can attract new clients and projects. Having a combination of large and small projects of various sorts can help with this, as well as exposing you to more potential customers than you might otherwise encounter.
Furthermore, if you’re trying to reach a local audience, web marketing might be a good way to generate leads. Social media and search ads can be low-cost yet high-impact ways to reach new customers on a budget. You should also strive to maintain contact with your existing or past clients. This could help you generate new business without spending too much on advertising. Contacting existing customers can be as simple as sending an card over the holidays or an email during slow periods of work.
5. Obtain the insurance coverage you need
Insurance is important for a contracting firm. Accidents happen all the time, whether it’s hammering your finger or dropping a piece of equipment! These and other common hazards can be potentially expensive for your business and could even lead to business closure in some cases.
Liability insurance may be especially critical for contractors. Well-chosen independent contractor insurance coverage can help provide much-needed financial security for your contracting firm in the event of unforeseen events. In some states, certain types of liability coverage may even be required by law to work as a contractor.
6. Become a member of the Industry Association
Networking is critical if you want to expand your business. It may assist you by fostering your business abilities as you discuss how you carry out your work with others in similar firms or meet others whose work you might use on your projects. You’ll also be able to stay up to speed on the most current industry standards and practices. Become a member of an industry group, such as the Associated General Contractors, to do this.
Becoming a successful independent contractor can take time, but it could be an excellent way to continue a career in the trades industry. And when you’re ready, BizInsure can help you find insurance coverage for your contracting business.
