(NC) Being an independent contractor is not a straightforward endeavour, but it can lead to more diversity in your work, better income, and greater flexibility. But, before you make the jump to launching your own freelance business, keep these three things in mind:
1. Do your homework.
Research your market to determine your customers’ needs, your competitors, and the range of pricing for your service. If you’re considering offering something that hasn’t been offered on a contract basis before, think about how you’ll actually do this. Then, take each client as a learning experience; for instance, see which type of work you enjoy and which jobs are the best paying.
2. Keep your taxes straight.
When you start out and before you incorporateyou’re considered a “self-employed sole proprietor.” This means the CRA views your personal income and business income as the same — both of which you file under your personal income taxes. But, this also means you’re responsible for self-employment taxes, such as Employment Insurance and Canada Pension. Or, if you need Workers’ Compensation coverage, this again falls on you to provide for yourself.
3. The more you know.
Even if you’re a sole proprietor, think of yourself as a business. Make sure you get paid by issuing invoices on time. And get a signed contract before you start work on a project. Above all, know the difference between an employee and contractor. One of the main differences being that freelancers pay their own employment taxes, also known as payroll taxes, while employers will manage an employee’s payroll taxes. As your buisness grows, you’ll also want to keep this in mind when you find yourself needing to hire.
To learn more about the differences between employees and contractors, blogs like Wagepoint’s, a small business payroll provider, are an excellent resource. Check out blog.wagepoint.com to see for yourself.