I get asked this question a lot. Okay, so you've decided to leave the comforts of your full time job and take the plunge— going it solo. Where do I start?
A move like this seems daunting at first to many. It was the same for me when I first started out. At the time, I was juggling between a full time offer from a large global financial services/insurance company. It offered a decent salary with good benefits, paid time off, sick, dental, health benefits, and, with good opportunity to move up on the corporate ladder.
But just when I was about to accept the offer, an agency approached me for a position at one of the big 5 banks in Canada. At the time, I was unsure as I had never done a contracting role before and it was all new to me. As a matter of fact, I wasn't even sure how they got a hold of my information and/or resume at the time. In fact, I wasn't even sure what an agency was or did.
I did what any sane person did at the time. I asked around. I asked my friends, my girlfriend, my parents. The big question, what should I do? Almost everyone told me to stick to what I've always done and what is stable. That is, a full time job with guaranteed salary every 2 weeks. To tell the truth, that answer makes sense, afterall, we are all creatures of habit. We love comfort and stability. And as much as there is always some thrill to trying anything new, the unknown can sometimes scare and deter us from ever doing so.
So what did I do? I did the exact opposite. I immediately contacted the company with the full time offer and told them I was not going to accept their offer. And to this day it was one of the most rewarding decisions I have made in my life. It was not easy in the beginning as I did not know anyone personally who had went out and started their own incorporation before.
I will try and provide a brief outline for you to take if you are interested in starting your own business and contracting out your service and/or products.
Incorporate your business
1. You need to incorportate your business. Nowadays all this can be done online. Normally, you can visit your state or provincial website for details and it should guide you through the process. It is not as daunting as you may first percieve. In Ontario, Canada you can visit here. The cost involved is around $300 plus any service fees- about $400 in total. The online process shouldn't take you more than 1 hour. It is recommended that you consult with your lawyer and your accountant as well when setting up your incorporation. And bam, you're done. You have just officially created your business.
2. Once your corporation is set up, you will need to (In Ontario, Canada within 60 days of incorporation), fill out an Initial Return/Notice of Change (Form 1 under the Corporations Information Act).
finding your first client
Again, this step is not as difficult as you may think. The first question you may have is do I go direct that is source and sign a contract with a client directly or go through an agency? A recent study by the Association of Independent Professionals and the Self-Employed (IPSE) showed that over half of all contractors were sourced through a staffing agency.
When you first start out unless you have great connections or a contract lands on your lap, your easiest way in the door is through an agency. Think of it this way, you are an employee of your own company, your agent is your marketing channel, and the clients are your customers. The agent essentially is bridging this gap from a buyer (the client) to a seller (your company).
You may find it helpful to revise your resume to contain your company information and as well advertise your areas of expertise and what services you can provide to a potential client. Remember you are a consultant now, often working projects ranging from 3 months to 2 years usually. Clients want you to dive into a project at full speed. They do not want to know your goals in 5-10 years- they want you to deliver impactful work day one!
Accounting
Once you start having business expenses you will want to pave a good foundation for your success. That means accurate and well documented bookkeeping. There is a lot of software out there that will greatly assist you along your journey; however I strongly advise you hire an accountant to at the very least do your corporate tax returns and any year end financial statements. They usually offer services that can include monthly bookkeeping as well if you want to concentrate fully on your business.
As with an accountant, I highly recommend you start to separate your personal expenses from your business expenditures. You can very well do it with your bank account and credit card you already have. But it is much easier in the long run to open yourself a business bank account and apply for a business credit card. That way your accountant too, will have a much easier time doing the reconciliation for you; potentially saving you in some accounting costs as well.
Stay calm and keep invoicing
At the end of the day, owning your own business is not easy. Sure you are your own boss now, you have freedom to make decisions for your corporation- but it's not that simple. You have responsibility now. You have to withhold your own taxes, keep track of expenses of your company, and at the end of the day keep your clients happy. But if you've made it this far you are already well on your way to achieving your goals to financial freedom.