Working as a 1099 independent consultant offers several advantages, such as greater earning potential and flexibility. However, it also comes with its own set of responsibilities and challenges. If you are considering this career path, here is a step-by-step guide to help you get started.
Consider your priorities
Before you begin, consider what is most important to you: benefits (W2) or hourly rate (1099)? Are you creative and entrepreneurial? What are your goals? Are you willing to take risks and be flexible? These questions will help you determine if working as a 1099 independent consultant is right for you.
Get Legally Set Up
To work as an independent consultant and start your own business, you will need to get officially set up as an LLC (or other formation) through your state. This will allow you to make more money per hour with clients; however, you will not get any benefits or paid time off. Keep in mind that not all firms will work with independent contractors, so do your research and choose the best option for your needs.
Purchase Insurance
As an independent consultant, you will need to purchase Professional and General Liability Insurance. This can range from $85-$150 per month. BiBerk is a great company to get quotes from to get started. Firms you work with will want to know your limits per occurrence if you were to be held liable by a hospital for an error, usually $1-$2 million per occurrence. Some may also want to be named as an additional insured.
Stay Organized
To keep your finances and schedule organized, consider using tools like QuickBooks Online Tax Software and Motion Calendar. Additionally, setting up a business checking account through a reputable bank can help you manage your finances more efficiently.
Pay Estimated Taxes
Keep in mind that no money is taken out of your paycheck for taxes, so you will need to pay estimated taxes each quarter. Consult with a tax professional to determine the best approach for your situation. However, as a 1099 consultant, there are many items that you can claim at tax time which can help lower the amount of income claimed.
In Conclusion
Working as a 1099 independent consultant requires dedication, hard work, and attention to detail, but it can be incredibly rewarding. By following these steps and staying organized, you can be on your way to a successful and fulfilling career. Remember to consult with professionals when needed and stay up to date with regulations and requirements.
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