Getting Started as an Independent Contractor

Because of independent contractor vs. employee issues and so-called "permatemps" lawsuits, some skittish employers won't hire independent contractors who use their social security numbers as tax-payer IDs. (Employers reporting the earnings of independent contractors under social security numbers raises eyebrows at the IRS, which can trigger audits. It indicates that employers might be misclassifying employees as independent contractors, to avoid employee tax withholding.) So, you'll likely have to officially start up a small business to receive a Federal tax-payer ID that employers don't fear. A state tax-payer ID (if required) can save you money, by allowing you to buy items at wholesale and free of sales tax, if you intend to resell them. Your local Small Business Administration Office will help you get started with this and other business matters too, for free.

To help you network, gain expertise, and receive discounts on insurance and other self-employment expenses that an independent contractor will likely have to pay, consider joining professional organizations such as the National Association for the Self-Employed.

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