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Advice for independent contractors
The road to becoming a successful independent contractor isn’t a walk in the park—it takes grit, resilience, and a whole lot of hard work. Aside from servicing clients, you need to juggle multiple responsibilities of managing cash flow, taxes, and of course, securing your next gig.
To help you in your contracting journey, we’ve put together a list of all factors you need to consider as an independent contractor. Read on to make sure you’re prepared for the unique challenges of independent contracting and enjoy a fulfilling, successful career on your own terms!
Must-do essentials for independent contractors
1. Make sure you’re set up with ‘independent contractor’ status
To set yourself up for success as an independent contractor, you need to understand the nitty-gritty of compliance. One key aspect is making sure your contract clearly identifies you as an independent contractor, not an employee.
Why is this so important? Your contract status affects your tax and determines how you’re treated legally. As an independent contractor, you’re responsible for paying your own taxes and government-mandated contributions, while employees typically have taxes and contributions paid by their employer.
Our advice for independent contractors is to make sure that your contract clearly defines your status as an independent contractor not only by job title but also by working conditions. That means you should have control over your schedule, working hours and location.
2. Stay on top of your taxes
As an independent contractor, paying your taxes on time is essential to avoid facing hefty fines, fees, and even criminal charges in some cases. We understand that this added responsibility can be complicated and overwhelming, especially when you’re managing it all on your own.
But missing tax payments or avoiding them altogether can put you in so much trouble. Running away from this responsibility is not a solution. And the longer you delay, the more serious the consequences can become.
For example, in the United States, independent contractors are required to pay self-employment taxes as well as estimated quarterly taxes to cover Social Security and Medicare. If these payments aren’t made on time, the Internal Revenue Service (IRS) imposes penalties that increase the longer the taxes go unpaid. Similar rules apply in Australia, where contractors need to pay their own tax directly to the Australian Taxation Office (ATO) and can face penalties if taxes aren’t paid on time.
If handling taxes feels overwhelming, consider hiring a tax advisor or workforce solution expert, such as CXC. A professional can help you understand your tax obligations, take advantage of deductions, and make sure you’re compliant.
3. Plan your long-term career path
One of the biggest challenges as an independent contractor is that you’re on your own. You don’t have a company to rely on to chart your career path. No manager or HR executive is advising your next professional move. No company-sponsored training to upgrade your skills. In short, you are the company—your career path, growth, and decisions are all in your hands.
While this setup can be terrifying, the road to independence can be exciting as well. This means you need a long-term plan to keep growing and stay successful. Ask yourself questions like:
- Where do I want my career to lead?
- How will I pay myself and manage finances?
- How much will I reinvest in myself?
- Will I create multiple income streams?
- Will I diversify my services or expand my client base?
But don’t let these questions hold you back. The best way to find your path is to get out there and gain experience. As you work, you’ll naturally learn what you enjoy, what’s profitable, and where you want to grow.
The recent CXC 2024 Global Contingent Workforce Survey shows that many contractors find their skills to be highly versatile, opening doors with both current and new clients. For example, in Asia, 39.62% of contractors said their skills have allowed them to work with a range of clients, while in Australia, more than half (51.42%) believe their skills are highly transferable across different clients. This means that the time and effort you invest in developing versatile skills will pay off by opening new opportunities.
4. Commit to quality business practices
Providing quality service should be your top priority. You must ensure you are delivering your service in a professional manner and at the utmost standard of quality. Even one negative experience can harm your reputation and make it harder to gain new clients. On the other hand, high-quality work often leads to positive reviews, referrals, and testimonials, which are valuable assets when securing future clients.
One thing to watch out for though is balancing too many projects at once. With the competitive nature of contracting, it can sometimes be tempting to take on lots of projects when times are good. But be wary of compromising the quality of your work. Unsatisfied clients can cost you future work. Be sure to follow up on existing clients for additional work. Having a few regular clients who are already familiar with you and your services will help to generate more stability over the years.
5. Keep an eye on your own performance
Without a boss constantly checking how you are progressing, it is very easy to let your performance slide. Try to work out how long projects should take to be completed and how long they are actually taking. This gives you a clearer view of your efficiency.
You can also break projects down into smaller milestones to track your progress. For example, if a project has five main tasks, set a goal to complete one task per day or week, depending on the timeline. This not only keeps you on schedule but also helps you stay motivated as you see each milestone completed.
Being organised and managing your time effectively will be helpful in monitoring your performance as well. One proven tactic is the 50-10 rule—work with full focus for 50 minutes, then take a 10-minute break. This helps prevent burnout and keeps your energy high, which is especially important when working on long projects. The breaks give you time to recharge, and the focused work blocks help you stay productive.
6. Forecasting to keep your finances in check
With contracting, work can come in waves—you may have too much work to handle on one month and then experience a dry spell the next. That’s why it’s important to plan and look as far ahead to work out your cash flow and where it’s going to come from.
Having a forecast can help you potentially balance out your workload over time, and if not, give you an idea of how to manage your budget to get you through those drier periods. It doesn’t have to be complicated; even a simple spreadsheet in Excel or Google Sheets can help you track what’s coming in and what’s going out over the next few month
7. Minimise unnecessary expenses to a minimum
Budgeting! This doesn’t mean cutting every expense. It is simply about spending money on things you need, and not wasting money on things you don’t.
Identify what’s essential for your work and be mindful about unnecessary expenses. Spending on quality tools or software that improve your efficiency is worth it, but there’s no need to go overboard. Start with free or trial versions of software to see if they meet your needs before committing to a paid plan.
In addition, set aside time each month or quarter to review your expenses and adjust your budget if needed. Track where your money is going and identify areas where you could save. This regular check-in helps you stay on top of your finances and adjust as your business grows or changes.
8. Be self-disciplined in your daily routine
Working for and managing yourself can be hard to get used to, especially with all the distractions that come from managing your own time.
When you don’t have a manager pushing you to meet deadlines, it’s easy to let projects stretch longer than necessary. Set deadlines for yourself and hold yourself accountable to them. You’ll feel a sense of accomplishment as you complete projects on time.
A big part of self-management is building a routine that feels rewarding. When you meet a goal or finish a project on time, celebrate it—whether that’s by taking a break, enjoying an activity you love, or treating yourself to something special. These rewards reinforce discipline and make work more satisfying.
Not letting projects drag on unnecessarily due to low self-discipline will help maintain your motivation as well, as you see yourself getting through tasks in shorter timeframes.
9. Pitch value over price
Legendary investor Warren Buffett once said, “Price is what you pay, value is what you get.” This quote is a reminder for independent contractors: clients aren’t just looking at the cost of a service—they’re looking at what they’re getting in return. Clients are constantly looking at what they can get, so when pitching to them you need to show them the value you can give them over your competitors.
Many contractors fall into the trap of pitching price instead of value, thinking that offering a lower rate will attract clients. However, this approach often leads clients to view you as a “bargain” rather than a skilled professional. Instead, focus on the benefits your expertise can provide.
For example, if you offer a faster turnaround, specialised skills, or exceptional customer service, highlight these points. Show your client how these qualities translate into a more valuable experience and better outcomes for their business. Sharing a testimonial or case study from your previous or existing clients can help showcase your value to your potential prospects.
10. Actively pursue and nurture new leads
When it comes to finding new business leads, perseverance and determination are key. Not every client will respond to your first message, and that’s completely normal. The key is to follow up on leads in a timely, respectful manner. For example, after a few days or a week, you might send a brief message that reminds them of your previous contact and highlights how your services can meet their needs. If done thoughtfully, follow-ups can increase your chances of turning that lead into a long-term client.
If you don’t connect on the first try, don’t give up—try reaching out again. Sometimes, potential clients are simply busy, or your message may have slipped through the cracks. Remember, some of the best client relationships take time to build.
Preparing for success in contracting
After reading this, you might find yourself rethinking whether contracting is the right path. But don’t worry! For every challenge or potential mistake, there’s a way to prevent it—or at least a solution to manage it.
The most important step to avoid common pitfalls is simply awareness. Being aware of your responsibilities and expectations placed on you by your clients will put you in a good position for a successful career in contracting.
Being proactive—planning your finances, setting clear boundaries, managing your time, and honing your skills—can help you stay in control and avoid setbacks. Every contractor will face bumps along the way, but with preparation and awareness, you can confidently navigate the ups and downs and build a fulfilling career on your own terms.
How CXC can support your contracting needs
Starting out as an independent contractor can feel overwhelming, but you don’t have to do it alone. CXC is here to make your transition into contracting as smooth and hassle-free as possible. With over 30 years of experience, we understand the challenges contractors face and are committed to providing services tailored to your unique needs. Here’s how we can support you:
Receive a seamless contracting experience
From the moment you join us, your contractor experience is our top priority. With our HR experts and cutting-edge technology, we simplify the process so you can focus on what matters most—your work. Our tools and automated systems streamline the process, while our team remains ready to provide support whenever you need it.
Say goodbye to administrative hassle
One of the biggest challenges for independent contractors is handling all the paperwork. Taxes, payroll, insurance—these can take up a lot of your time and energy. CXC helps you by managing the administrative tasks, including payroll, taxes, contributions, and insurance. You’ll have access to our easy-to-use online portal, MyCXC, where you can view your payslips and manage your details—all in one place.
Join our global network of contractors
Contracting doesn’t have to be a lonely journey. At CXC, we offer more than just administrative support—we also offer community. Join Out of Office (OOO), our vibrant global network for contractors. You’ll have the opportunity to connect with like-minded professionals from all over the world, share insights, and collaborate on exciting projects. Plus, you’ll gain exclusive access to remote job opportunities from our trusted partners, helping you grow your career and find new opportunities.
