Working in the “gig economy” has its benefits. As an independent contractor, you get to do what you love on your own terms and schedule. Of course, there are certain drawbacks to consider before starting your own self-employed business, including no healthcare coverage, no employer-provided 401(k) plan, and no guarantee of getting paid. However, for an aspiring entrepreneur, the pros may outweigh the cons.
If you’re curious about working for yourself and providing contract-based services to other companies, here are a few “rookie” mistakes you’ll want to avoid to ensure your small business is a success and stays protected!
Know the Difference Between a Sole Proprietorship & LLC:
As an independent contractor, you have the option of choosing a business legal structure that will benefit your operations. For example, under a sole proprietorship, you would offer services under your name and would file all your income and expenses (related to your business) on your personal taxes. In contrast, an LLC (Limited Liability Companies) operates as an independent entity, which means your business and personal finances stay separate, and you receive better liability protection, should a legal dispute arise.
Get General Liability Insurance:
Whether you decide to form a sole proprietorship or an LLC, you’ll want to ensure you have adequate business insurance in the event of an accident, injury, or copyright infringement issue. In fact, some companies won’t even work with contractors unless they have business liability coverage. When you have quality coverage, you’re not only protecting your small business, but you’re also establishing trust with your clients and putting their minds at ease.
There are many types of insurance policies available for small business owners to consider, particularly independent contractors, so it’s a good idea to meet with an experienced agent. By doing so, you’ll find the best policy that protects your business and will cover any legal expenses, should you find yourself being sued by a future client or customer.
Have A Business Law Attorney Review All Contracts:
In addition to the specialized services you offer clients, one of the most essential pieces of running a successful business is drafting legally-binding contracts. Whether you’re providing professional consulting services, renovating a home or office building, or providing IT support for a larger corporation, as an independent contractor, you need to have written contracts in place for each client and job you perform. Why? Because there are many items your contracts should include in order to hold up in court and ensure you receive fair compensation. Items can include scope of work, expectations, responsibilities, deadlines, disclaimers, and more. By having an experienced business law attorney draft or review each contract agreement will ensure you and your business stay protected now and in the future.
Whether you’re just starting out as a contractor or you’ve managed your own company for years, consider working with the experienced business attorneys at KTF Law Firm. From contractors and construction agencies to independent builders and handymen, we’ve helped many small business owners find the legal expertise they need and the support they deserve. Contact us today for a free consultation.