Many contractors never actually plan on having their own contracting business; it seems to be something that has its own natural evolution. People start working in the construction industry first and start doing little projects left and right to earn some extra money, as a sideline. Soon, however, their efforts accumulate so much attention that becoming independent seems to be a logical (and more lucrative) step.
If you want to work as an independent contractor, however, there are some important requirements you need to fulfill – and while it’s true that you might be able to do without these for a short period of time, you’ll never be able to grow and truly be successful without them. What do you need to have as an independent contractor aside from insurance for independent contractors (an important requirement)? Here are top requirements.
Name, license, and registration
It’s a basic requirement no matter where you are in the world: you’ll need to come up with a name for the business, the kind of business you want to operate (sole proprietorship, partnership, limited company, or corporation), register as such, and get the appropriate licenses. The requirements for this can vary from country to country, so do your research carefully. When choosing a name, don’t just pick any; focus on your customers – let them know what you are all about.
Tax identification number
You will be expected to pay taxes (that’s just part of doing business), so you’ll need a proper tax identification number. This, along with your registration papers, is usually also a requirement for opening bank accounts under the name of your business. Just because you have a tax identification number doesn’t necessarily mean you have to pay taxes right away (you don’t if you have only a small income), but it sets you up from the start for growth; it’s one less thing you have to take care of down the line.
The construction industry is laden with risk, more so than many other industries; insurance, as mentioned, is a must. As a contractor, there are many kinds of policies you can consider – do the proper research.
The above requirements are, of course, only the basics, and if you truly want to grow as a legitimate contractor, you should learn the basics of bookkeeping and record keeping. You may also need legal advice when you decide to hire employees. You’ll notice that, as your business grows, it can get more complex – so putting a simple and straightforward management system in place from the start is crucial. Construction and contracting can be very exciting and lucrative, but it needs to be done right. It’s full of risks that need to be managed.