When you’re an independent contractor or a freelancer, you have general control over your own work. You can decide whether to take a job or not, discuss compensation on your terms, and essentially manage yourself. But this freedom does not come without any responsibility.
Because you are your own manager, you have to pay extra attention to everything that you do. Your quality of work must be up to what clients expect of you, you need to make sure all your bases are covered, and you have to know how to handle and conduct business well. Managing your business well includes learning the ins and outs of being an independent contractor. You might be a seasoned one or a rookie looking for more knowledge; regardless, refreshing the information you need to know is helpful. Here are a few tips for protecting yourself as an independent contractor.
Always be clear about your scope of work and contract
Setting up a contract before starting on a project or work is absolutely important to independent contractors. This is a way for you to protect yourself, and it’s also effective in establishing expectations and setting boundaries and consequences between you and your client/s. You and your clients might not be on the same page on what constitutes your responsibilities, and that’s why you need to go over your contract with them and come to an agreement. Even honest mistakes and misconceptions happen in the professional industry; that’s why you should get that out of the way by being transparent and upfront about your scope of work.
Separate your business from personal finances
Even as a small business, you must protect your personal assets from your business liabilities. You don’t want to keep pulling from your personal funds to address business concerns or vice versa. Keeping separate accounts for your personal and business transactions guarantees that you won’t mix up the two. It will also help you file your taxes easier since your books are separated and easy to manage. This might sound like basic advice, but it’s so simple that many forget to apply it. Don’t make this mistake, and always separate business from personal financial accounts.
Make sure your business complies with all legal requirements
As you work as a freelancer, you’ll notice some holes in your industry’s legal system. You might even feel like some paperwork is unnecessary and only adds to your work. While there is definitely room for some improvements for the system itself, you’re still protecting yourself from potential legal implications by adhering to these laws. Make sure you protect yourself on all bases by ensuring that your legal requirements are all met and that all the paperwork you need is submitted.
Don’t forget about your taxes
We talked about keeping separate accounts to make your accounting process more manageable, so tax is definitely something you shouldn’t miss. This is often the area where many independent contractors fail at. Because they have to file taxes both as a business and as an individual, many overlook the fact that they need to accomplish both. Don’t bring legal trouble to yourself: make sure you file your taxes correctly.
Get necessary insurance
Errors and omissions (E&O): This particular piece of advice is something that you shouldn’t overlook. When you’re an independent contractor, you’re essentially responsible for the entirety of your work. This is particularly true in certain industries, which is why truckers consult with a truck driver labor lawyer, manufacturing specialists make sure their insurances cover all the potential outcomes, and medical professionals and institutions always have their errors and omissions insurance.
Bodily injury and property damage: Accidents happen in the workplace, whether high risk or low risk. The only way you can protect yourself is to be prepared for it. Wearing safety gear and following safety protocols are part of that, but so is making sure you have damage insurance. If you get into an accident, you should get some compensation, so insurance is your best bet.
Property Insurance: If you have an office or base of operations, it’s best to ensure that as well. We can’t predict what will happen next, and natural disasters don’t choose who they affect. An earthquake or a flood might suddenly hit your office. Make sure you’re protected from the elements by also having property insurance for your office.
Being a freelancer can be a liberating experience, but that’s only if you’re responsible enough for yourself. Hopefully, these tips provide you an idea of how you can protect your career as an independent contractor.