There are all kinds of reasons why people decide to become contractors. Some like flexibility, while others want variety; some want to supplement their income while they work on a dream project and others just plain like the lifestyle that contracting affords them.

While there are additional steps to take as a contractor that you don’t have to do as an employee, most will find that these steps are worth the trouble. Once the systems are set up and in place, the additional paperwork is usually easy and well worth it.

What Exactly is a Contractor?

Being a contractor (aka freelancer, consultant, 1099-er) basically means that you are your own business. So instead of a company hiring you as an employee (and paying your benefits, taxes, etc.), they hire your business to do the work. And your business sends you on the job and takes care of your benefits, taxes, and all the other things that you need to do your job.

While it may seem silly for you to create a business, do the work for the client, AND do the extra work of running the business (handle benefits, taxes, etc.) yourself, there are advantages like time management, pay rate, time flexibility, and making decisions that materially affect the way you live.

Facet Guides

We’ve put together some material to help guide you through the maze of setting yourself up as a business.

Setting Up an LLC: Step-by-step instructions on the LLC formation process

Bookkeeping for Contractors: Options for setting up bookkeeping to fulfill corporate requirements and make sure you can file your taxes properly

Taxes for Contractors: What to look for in an accountant and other tips for tax time

Health Insurance for Contractors: A comprehensive guide to finding the right health insurance plan

Retirement Planning for Contractors: Know how to put money away for your retirement

How to Set Up a Home Office: Tips to make your workspace less distracting and more productive