How to Become an Independent Contractor in 5 Steps
PUBLISHED ON 8 April 2025 | VIBHU AGARWAL
Becoming an independent contractor can be exciting — and a little intimidating. You’re trading the stability of a 9-to-5 for the freedom to set your own schedule, choose your clients, and build something of your own. But with that freedom comes responsibility. The kind that involves paperwork, taxes, contracts, and knowing exactly where you stand legally.
If you’re here, you’re probably asking:
- Can I start working without a contract?
- What’s the difference between an independent contractor and an employee?
- Do I need a work permit?
- Where do I even begin?
Good news: this guide walks you through the real-world steps you need to take — no jargon, no fluff. Whether you're a designer, developer, consultant, or in-between gigs and ready to start fresh, this is your practical roadmap to going independent.
Step 1: Know what an independent contractor actually is
Before you dive into setting up a business or chasing your first client, it’s important to understand the basics: what does it really mean to be an independent contractor?
An independent contractor is someone who works for clients or companies without being their employee. You’re not on payroll. You don’t get benefits. You typically don’t report to a manager. You work on your own terms — but that also means you're responsible for your taxes, legal compliance, and finding your next gig.
So why does this matter?
Because misunderstanding your status can lead to serious problems — like getting reclassified as an employee, losing client trust, or facing fines. And on the flip side, knowing your rights and responsibilities puts you in control from day one.
Quick comparison: Independent Contractor vs Employee
Step 2: Check if you’re legally allowed to work as a contractor
Let’s get one thing straight — you can’t just declare yourself an independent contractor and start working for anyone, anywhere. Depending on where you live, who your client is, and where they’re based, you might need legal permission to work.
So, do you need a work permit?
The answer depends on:
- Your location (are you working locally or cross-border?)
- Your nationality or visa status
- Whether you’re providing services as a business or individual
Here’s a breakdown of some common situations:
? Working in your own country
If you’re self-employed and working for local or international clients while living in your home country, you likely don’t need special work authorization — as long as self-employment is allowed and properly registered under local law.
? Working in a foreign country
If you’ve moved or plan to move abroad, things change. Many countries don’t allow freelance work on tourist visas or while holding dependent/family visas. You might need:
- A freelancer visa or self-employment permit
- Local business registration
- Proof of income, contracts, or health insurance
? Working remotely for foreign clients
This is where it gets fuzzy. If you're living in Spain and working remotely for a company in Canada, you might not need a Canadian work permit — but you still need to stay compliant with Spanish tax and business laws. Same goes for Italy, India, or any country you reside in.
Be aware, be cautious
Always check if you’re legally allowed to work as an independent contractor in the country you live in. Not doing so can lead to fines, visa cancellation, or unpaid taxes.
If you're unsure, ask yourself:
- Am I registered as self-employed or running a business?
- Do I have contracts or invoices to prove I'm not an employee?
- Am I staying compliant with tax and labor rules in my country?
If you answered “not yet” or “I don’t know” — don't worry. The next steps in this guide will help you fix that.
Step 3: Register your business and get it in writing
You might be working solo, but that doesn’t mean you can skip the paperwork. If you want to get paid, protect yourself, and build long-term client relationships, you need to be officially recognized as a business — and you need a contract.
First: Register your business (even if it’s just you)
Depending on where you live, you might register as a:
- Sole proprietor or freelancer
- Limited liability company (LLC) or equivalent
- Self-employed individual under a government scheme
Some countries (like Germany or France) require formal registration to issue invoices. Others may only require it once you hit a certain income threshold.
Why registration matters:
- You’ll need it to pay taxes legally
- It helps you open a business bank account
- It builds trust with international clients
- It protects you in case of legal disputes
Second: Always use a contract
Can you work without a contract? Technically, yes.
Should you? Absolutely not.
A contract sets expectations on:
- Scope of work
- Timelines and deliverables
- Payment terms (including currency, deadlines, and late fees)
- Intellectual property and confidentiality
- Dispute resolution
No matter how friendly the client seems, get it in writing. Verbal agreements are a liability. Without a contract, you may not get paid — and you’ll have no legal recourse if things go wrong.
Tools like Bonsai, HelloSign, or even editable Word templates can help you send contracts quickly. You don’t need to hire a lawyer every time — but you do need a paper trail.
Step 4: Build your offer and set your rates
Now that you're legally set up and contract-ready, it's time to answer two important questions:
- What exactly are you offering?
- How much are you charging for it?
Many new independent contractors skip this part or try to “figure it out later” — but getting this right early on saves time, prevents awkward client conversations, and helps you attract the right work.
Define your services clearly
Don’t just say, “I do design” or “I’m a developer.”
Get specific:
- What kind of design? Branding, UI/UX, packaging?
- What kind of development? Front-end, app dev, Shopify builds?
Create a short list of 2–4 core services that you enjoy, have experience with, and can deliver well.
This helps clients trust that you know your niche — and makes scoping projects way easier later on.
Set your rates with confidence
There’s no one-size-fits-all answer here, but a few methods can help:
How to choose a starting rate
Ask yourself:
- What would I earn doing this full-time as an employee?
- How much time (and overhead) will this project take?
- Am I factoring in unpaid admin work, taxes, and expenses?
- What’s the going market rate in my country or client’s country?
And if you're working internationally, be sure to price in the currency you’re paid in, and account for conversion or transfer fees.
Don’t undercharge just to land a gig. You’re not just getting paid for your time — you’re getting paid for your skill, your speed, and your reliability.
Step 5: Find clients and manage your work like a pro
So you're registered, contract-ready, and have your offer and rates in place. Now comes the part that turns all of that into income: finding clients — and keeping things running smoothly once you do.
Let’s break this into two parts: how to get work and how to manage it like a professional.
How to find clients
There’s no one-size-fits-all formula, but here are three channels that consistently help independent contractors land great clients:
Freelance platforms
Good for getting started and building momentum:
- Upwork
- Toptal
- Fiverr
- PeoplePerHour
Just remember: these are crowded marketplaces, and you'll need to stand out with strong proposals and clear positioning.
Direct outreach & referrals
Some of the best projects come from simply letting people know what you do.
- Reach out to past colleagues, clients, or classmates
- Send personalized messages to businesses you admire
- Ask happy clients for intros — referrals are golden
Build your personal brand on LinkedIn
This is a long game — but one of the most powerful.
Use LinkedIn to:
- Share your POVs on trends in your field
- Post behind-the-scenes wins or challenges from your projects
- Repurpose blog content or insights into snackable posts
- Comment thoughtfully on others' posts to build visibility
Find your voice — and give it time.
Don’t try to mimic viral content or force someone else’s tone. Speak from your experience. Be honest. Be useful. Your unique point of view is what will make clients remember (and trust) you.
You don’t need to go viral — you just need to be visible, credible, and consistent.
How to manage clients like a pro
Once the work starts coming in, don’t fall into the chaos trap. A few habits will save your sanity:
Use project management tools
Stay on top of payments
- Send clean, timely invoices (via tools like Bonsai, QuickBooks, or Wave)
- Stick to clearly defined payment terms
- Use platforms like Wise or Payoneer for smooth global transfers
Track everything
- Hours, deliverables, deadlines, feedback
- Keep digital backups of all agreements
- Organize your workflows like a business — because you are one
The more organized and communicative you are, the easier it is to earn repeat business and referrals.
Wrapping up: You’re ready to go independent
Becoming an independent contractor isn’t just about freedom — it’s about ownership. You’re building a career where you set the rules, choose the clients, and grow on your own terms.
Here’s a quick recap:
- Understand your status — you’re not an employee, so act like a business.
- Make sure you’re legally allowed to work — especially if you’re abroad.
- Register your business and use contracts — protect yourself from day one.
- Define your offer and price it right — clarity attracts the right clients.
- Find work and stay organized — consistency builds trust (and income).
Need help working as a contractor across borders?
We support independent contractors with cross-border payments, local compliance, and proper documentation — so you can focus on doing what you do best.
? Download our independent contractor starter checklist
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