It’s a rewarding career, but what should you look out for?

Working as an independent contractor or consultant can be a very rewarding, lucrative and satisfying career. Beyond knowing the dynamics of your field, however, you also have to understand how to keep the business operating smoothly and how to protect yourself and your assets. What does being an independent contractor entail and what should you be cognizant of along the way?

First, an independent contractor is an individual who is self-employed and utilizes a contract agreement to provide service to a client in exchange for an agreed upon fee.

Below are some frequently asked questions and guidelines to help you better understand what consulting and independent contractor work involves.

Q1. Who do independent contractors and consultants typically work for?

A. This is dependent on the industry that the independent contractor focuses on. It might include information technology, web development, consumer products, and manufacturing, to name a few. Businesses both large and small will often utilize the services of an independent contractor for a variety of jobs.

Q3. How do independent contractors receive payment?

A. Typically, any credentialed organization will disclose payment terms and conditions in a written agreement. It is essential you have a signed agreement in place prior to starting any work. The agreement should specify whether the contractor is paid on an hourly or time and materials basis, or is paid a project fee based on deliverables.. It will also outline how and when payment will be made. Terms relating to pay structure should be clearly defined and everything should be put in writing then agreed to by all parties before work commences. If the organization you are working with does not supply the contract or agreement, you should have one ready to go. Contract templates for consultants are readily available through businesses that specialize in draft agreements, and can save you time and ensure all of the necessary elements are included.

Q5. What, if any, risks and responsibilities are involved with working as an independent contractor?

A. Like anything, there are some risks and responsibilities associated with self-employment. These might include becoming responsible for tax obligations and personal benefits; managing billing and collections; and maintaining current and necessary licensing and insurance. You also have to consider legal responsibilities and the exposure associated with job performance.

Q6. Are independent contractors protected by any employment laws?

A. While this varies by state, independent contractors and self-employed consultants typically are not protected by employment laws, making written agreements even more vital. Laws, such as workers’ compensation, which pertain to safe working environments, would not necessarily apply to independent contractors. The same is true of laws that address discrimination or harassment.

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