Getting started as an independent contractor may not be as complicated as you think.
You can certainly do a contractor business start-up if you have integrity, enjoy the rewards of hard work, and love helping people you’re off to a good start. Don’t overthink it or make the mistake of starting too big. Start with offering a service (or services) that you are very good at, give the customer a great experience and you will grow. If someone enjoyed working with you they will likely refer you.
As you read the following recommendations, be sure to remember that it’s always a good idea to consult your attorney, accountant, or CPA to make sure that you get things set in place to fit your specific needs when starting your contractor business start-up.
So where do you start?
Establishing Your Independent Contractor Business
If you are new to being an independent contractor and serious about making this a business, you may want to look into establishing an entity. Most independent contractors start with establishing an LLC or S-Corp. Here’s information to help you better understand an LLC.
Consult your lawyer or accountant about your best options. Establishing an entity can help with protecting your personal assets from litigation should you find yourself on the other end of a lawsuit due to botched work or other claims that can arise from a dissatisfied client.
Having an established business entity does not guarantee that your personal assets can’t be touched, but it’s better to have an entity than not have one in my opinion. Once you establish your entity, then you’ll need to apply for your EIN (employer identification number). These are free and can be acquired through the IRS. Your EIN is like the social security number for your business. Again, be sure to consult your lawyer or accountant when putting this together.
Insurance For The Independent Contractor
You don’t want to start any work as an independent contractor in your contractor business start up without having the proper insurance. Assuming you’ll be working alone to start, you will want to at least carry general liability. These policies are typically not very expensive and you should be able to make more than enough money to cover the monthly premium. You’ll find that most clients (particularly larger clients) will look for a $1,000,000.00 general liability policy.
If you have employees you’ll also need work comp as well.
Work comp can be a bit pricey for a contractor business start-up, but you will want to have it if you have employees. The key is to make sure that the employees are pulling their weight and making money for the company to cover those expenses as well as bring in a profit. You can find great policies online that offer immediate coverage. Be sure to keep a copy of your certificate with you. In most cases, you’ll end up emailing the certificate to clients but it doesn’t hurt to have it with you.
Accounting and Banking
When getting started as an independent contractor in your contractor business start-up, it’s important to not forget that you are running a business. This means that you want to keep a close watch on the money. It’s important to keep a thorough record of what’s coming in and what’s going out. The best way to accomplish that is with accounting software. I recommend starting with Wave Accounting. It’s a free, online accounting program that works very well for small businesses.
As an independent contractor, keeping good financial records is non-negotiable.
Believe me when I tell you, that administrative work (including accounting) can be a full-time job by itself. Without it, you are not running a business. Your accountant can help you to set up your accounting software. There’s also a wealth of information online as well. But, you want to have a strong accounting program.
As an independent contractor, you will also want a business bank account separate from your account.
Do not combine your business and personal funds under the same bank account. There’s a lot to discuss about keeping good accounting records, but the last thing I’ll mention is to be sure you do a monthly reconciliation of your bank account records with your online accounting.
Make sure that the records you keep in your accounting software match the bank records of your account. You want the activity and balances to match.
If You’re New, Start Simple
If you’re a seasoned contractor with strong skills you can skip this part. If you’re new to the business then there are a few places where you can start. The following services are easy to learn, are easy for a contractor business start up, and people are always looking for help with these items.
Hanging blinds: In most cases, you can achieve this with a tape measure to determine the proper-sized blinds and a screwdriver or drill to install them with.
Changing door locks: This can be completed with a screwdriver or drill and is very easy to do. Rarely will you need any other tool.
Changing garbage disposal: I’ve installed plenty of garbage disposals with only a multi-screwdriver that includes a nut driver for attaching the dishwasher hose (you can also use pliers or a crescent wrench). You’ll also need clear silicone caulk for the drain (I think it’s better than a plumber’s putty). If it’s a plug-in garbage disposal, you’re done. If it’s a hard wire you’ll need wire strippers, wire nuts, and a little more knowledge.
Smoke/Co2 Detector Install: This is probably the easiest yet. Simply screw it into the wall or ceiling. Refer to the local municipal codes to help with exact placement. If it’s a wired smoke you can get those from your local hardware store. Wired smokes come with alternative connectors so that you can match the right one for your application. There may be low-voltage wires you’ll be attaching it to. But the task itself is easy to accomplish.
Changing toilet Fill Valve: For starters, you want to be sure that water is entirely off to the toilet. If the valve at the toilet doesn’t completely stop the water flow then shut off the water to the entire house. Trust me on this. Often, you can change a fill valve by hand without tools. But it may be a good idea to have channel locks with you just in case the fittings are stubborn. It’s also a good idea to have a large sponge too.
Before removing the valve, use the sponge to remove any excess water from the tank and wring it into the toilet bowl. Do this until the tank is empty (if there’s any water left inside the tank when you remove the valve it will spill on the floor. So the more you get out the better).
Remove the supply line from the bottom of the valve, remove the nut that holds the existing valve, install the new valve, and reattach the supply line (I recommend wrapping the thread on the valve with Teflon before reattaching the supply line) and put the small black hose that came with the valve onto the valve and aim it down the overflow tube.
Only perform work that you are confident about doing a great job with. There are other jobs that you can perform as well. Just look around. The more you do, the more you learn. This is a fun business with a lot of great opportunities.
Painting: If you are a novice painter and want to consider offering that service, you may want to read this article about painting first. Knowing what types of paints to offer and how and when to use them is very important.
Marketing
Believe me when I tell you, as an independent contractor you’ll always encounter people who need help around their home. So, just start with simple business cards. If a member of your church has a leaking toilet and you give them your business card, they will hug your card like a grandchild. So for starters, just let people know what you do.
You don’t need a website but it doesn’t hurt to have one. I recommend starting with a Facebook business page and maybe a Twitter business page. Make sure your social media is nicely done and post something new on it at least once per week. Twice per week is even better. Post images of your work and images of you or your employees working. Ask for a video testimonial and post it to your social media. Do these things and you’ll succeed in your contractor business start up.
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