This guide covers the essential steps to set yourself up as an independent contractor.
Becoming a contractor is a bit like growing up. You get to take more risks and also get more independence and freedom.
Each contractor must register with their respective country's tax system, either as a freelancer or by creating a corporation. The process varies by country but typically involves:
- Registering your business with tax authorities
- Obtaining a tax identification number
- Understanding VAT/sales tax obligations
- Setting up proper invoicing
See Country Guides for specific requirements in your location.
Health insurance requirements and options vary significantly by country. Some have mandatory public systems, others have private markets, and some have hybrid approaches.
Check your country guide for specific recommendations.
Professional Indemnity (PI) insurance protects you if a client claims your work caused them financial loss. It covers legal defense costs and damages. Many client contracts require it, and in some countries, carrying your own PI policy is one of the markers that distinguish a genuine independent contractor from a disguised employee.
- Also known as: Berufshaftpflichtversicherung (DE), RC professionnelle (FR/CH), Professional Indemnity Insurance (UK), Beroepsaansprakelijkheidsverzekering (BE)
- Typical cost: EUR 300–800/year for IT consulting, depending on your country and turnover
Search for "professional indemnity insurance for IT consultants" in your country, or ask your accountant. Check your country guide for specific options.
To stand out as a contractor, establish your own website and professional email address. Publishing blog posts about your work and learnings helps build your reputation.
Having a visible independent business presence also helps with legal classification - in many countries, appearing as a genuine independent business (rather than a disguised employee) is important for tax and social security purposes.
Open a bank account separate from your private account. This simplifies accounting since you don't mix private and business expenses. Tax consultants may charge extra for sorting through personal transactions.
Wise is a popular choice for freelancers:
- Multi-currency support
- Competitive exchange rates
- API access (integrates with this toolbox via wise-exporter)
- Debit card available
- Works internationally
Accounting software helps track expenses, write and manage invoices, and match bank transactions with income/expenses. Good software can parse PDF invoices automatically.
Choose software compatible with your local tax laws (VAT, income tax reports). See your country guide for recommendations specific to your location.
In order to maintain a healthy lifestyle, consider separating your work and personal identities. Use different email addresses for work and personal communications.
Make sure you don't burn yourself out!
Next: Country Guides | Workflows