Mistakes to Avoid as a Sole Contractor

As a sole contractor, you’re the CEO, the CFO, the marketing department, and the cleaner; the one who gets to enjoy the thrill of complete creative freedom and the equally thrilling experience of chasing down late payments. Welcome to the glamorous world of self-employment!

There are definite benefits to being your own boss, but today, we’re talking about the mistakes that can drag down your business so you avoid these pitfalls.

Mistake 1: Ignoring the Numbers

It’s the Brussels sprouts of the business world, but trust us, ignoring the financial side of your business is a recipe for disaster. Proper bookkeeping and invoicing isn’t just about taxes (although, those are important). It’s about knowing how much you’re making, where that money is going, and whether you can afford your projected expenses. 

So, bite the bullet, get a decent accounting software, and embrace your inner accountant. This is, for example, how you’ll know whether you can really afford that gorgeous office in the CBD, or whether you should be looking at virtual offices with meeting rooms. In some cases, it may even be about whether you can really afford that third cup of coffee.

Mistake 2: Undercharging

We’ve all been there. You want the job, so you quote low. But let’s be real – when you undercharge, you sell yourself and your whole industry short. Sure, it might land you more clients, but it’ll also leave you working longer hours for less money. Remember, your time and skills are valuable, so don’t shy away from charging what you’re worth. Your bank account (and your future self) will thank you.

Mistake 3: Neglecting Contracts

A contract is like a safety net, protecting you and your clients. Without one, you’re basically jumping off a cliff and hoping for the best. Sure, it might seem like overkill for a small job, but trust us, it’s definitely worth the paperwork. A good contract is one that clearly outlines expectations, payment terms, and the process for dispute resolution. So, save yourself the headache and get that contract written up and signed.

Mistake 4: Forgetting About Taxes

Ah, taxes. They’re the bane of every sole contractor’s existence, but dodging them is a bad idea. Your local tax office has a very long memory, and they’re not afraid to come knocking. So, always factor taxes into your pricing, and set aside money to knock them out. Use accounting software if you’re confident around numbers. Hire a brilliant but affordable tax accountant if you’re not. It might cost a bit upfront, but it could save you bucket loads in the long run.

Mistake 5: Burning Out

The line between work and personal life can blur pretty quickly for sole contractors. So take breaks, set boundaries, and avoid overworking yourself. Your mental and physical health are just as important as your business. 

Mistake 6: Ignoring Marketing

You might be the best at what you do, but if nobody knows about you, it doesn’t matter. Marketing is the key to turning this sad situation around. There are countless ways to market your business, from social media to in-person networking. Find (and stick with) whatever works for you.

It’s okay to make mistakes – we all do. The important thing is to learn from them and keep moving forward. So, even if you’re guilty of some of these sole contractor blunders, there’s always time to turn it around.