Most of this site is about getting hired. This page is about the other move – the one a lot of trades people make five or ten years in, when the arithmetic of working for someone else stops adding up.
It is not advice to do it. It is an honest account of what changes, and a checklist you can be truthful with yourself about.
The honest version of what changes
The pitch is that you keep the margin your employer was taking. That part is true. What the pitch leaves out:
- You are paid for the hours you bill, not the hours you work. Quoting, chasing, buying, driving and paperwork are all unpaid, and they are most of the difference between a day rate and a wage
- Your income arrives late and unevenly. Net 30 means the work you do in September is money you have in November – if the client pays on time
- Nobody covers you. No sick pay, no holiday pay, no one else to send when you are ill
- You now carry the risk. A job that goes wrong used to be the company’s problem
None of that is a reason not to do it. Plenty of people are better off and happier. But the people who struggle are almost always the ones who costed the work and not the business.
You are taking on a second job, and it is admin
The trade is the part you already know. The second job is quoting, invoicing, chasing money, insurance, licensing, tax, and keeping records straight enough to survive a question about them a year later.
Two practical consequences:
- Build the paperwork before you need it. Writing your first invoice while waiting to be paid for your first job is the wrong order
- Do not price as though admin is free. If you bill 25 hours in a 45-hour week, your hourly rate has to carry the other 20
What to have before you quit
The single most useful thing you can do is convert intentions into facts. “I will get insurance” is an intention. A quote with a number on it is a fact.
- Named work, not expected work. Three specific jobs beats a belief that people will call
- Numbers you have looked up – licence requirements, insurance quotes, bond premium if your state wants one
- A written break-even. What you must bill each month simply to stand still
- A runway. Months you could survive earning nothing. The first invoice is further away than you think
- One conversation with someone who has done it and is willing to tell you what went wrong rather than how well it is going
The checklist
Tick what is already true today, not what you plan to do. The gaps are the plan.
BEFORE YOU HAND IN YOUR NOTICE (tick what is already true, not what you intend to do) WORK [ ] I have named the first three jobs, not "people will call" [ ] At least one is confirmed, in writing, with a start date [ ] I know what I charge per hour AND per job [ ] I know my break-even: what I must bill monthly to stand still LEGAL [ ] I know whether my trade needs a contractor licence here [ ] I know the dollar threshold below which it is not required [ ] I know what the licence requires and how long it takes [ ] Business registered, or I know what registering involves MONEY [ ] Liability insurance quoted, not just "I'll sort it out" [ ] Bond quoted, if my state requires one [ ] I have set aside money for tax, not just for tools [ ] I can survive ____ months with no income [ ] Health cover sorted (whatever that means where I live) PAPER [ ] A written contract or proposal template [ ] An invoice with my licence number on it [ ] A change order form, and the nerve to use it [ ] Somewhere to keep receipts that is not the truck HONESTY [ ] I want to run a business, not just avoid a boss [ ] I have asked someone who did it what went wrong [ ] I know which of the above I am guessing at
FREE DOWNLOAD
The sheet above, as a printable PDF
PDF · 3 KB · Real tick boxes and a notes area. Made to print and keep in the truck.
The order to do things in
People do this in the wrong order constantly – usually starting with a logo and a truck wrap.
- 1. Find out what is legally required where you are. Licence, threshold, insurance minimums. See how to get a contractor license
- 2. Work out your numbers. Break-even, rate, runway. Before anything is registered
- 3. Line up the first work. Confirmed, in writing
- 4. Register the business and sort out where legal documents will reach you – see registered agent service
- 5. Insurance and bond, because the licence usually will not issue without them
- 6. Paperwork – contract, invoice, change order. Templates in invoice template for contractors
- 7. Then quit
Steps one and two cost nothing and take an evening. If they change your mind, that evening was the best-value work you will ever do.
Where to actually look, since step one is the one people skip. NASCLA keeps a directory of state contractor licensing agencies – that is the fastest route to whether your trade needs a licence where you live and what the dollar threshold is. the SBA guide to licences and permits covers the general business registration side. And SBA local assistance will point you at free in-person help near you, which most people going independent do not know exists.
Step four is where money leaves your hand for the first time, and it is where people overpay. Registering a business is something you can do yourself on your state’s Secretary of State website. The state filing fee is unavoidable; the help is not. What you are actually buying if you pay someone is the registered agent, the EIN, and not having to work out which form you need at eleven at night after a ten-hour day.
If you would rather hand it over, Bizee is the one this site links to, because it bundles registered agent service with the filing – and that is the part a contractor genuinely cannot do well, since documents get served at a fixed address during business hours and you will be on site. How long the included period runs varies by package and has changed before, so read it at checkout, and check the renewal price before assuming it stays cheaper. If you work from one address all day and you are comfortable reading the state’s own instructions, file it yourself and keep the money.
Disclosure: the Bizee link above is an affiliate link. If you buy through it we earn a commission at no extra cost to you, and it does not change what is written here. Full detail on the affiliate disclosure page.
The mistakes that cost the most
- Working above the licence threshold before the licence arrives. In many states an unlicensed contractor cannot enforce their own contract – a client who does not pay simply does not pay
- Doing extra work on a verbal request. The most common way to lose money in this trade, and the one a signed change order fixes outright
- Pricing off your old hourly wage. Your wage was not your cost. Insurance, tax, unbilled hours, tools, fuel and the weeks with no work all sit on top
- No deposit, no progress payments. You end up financing the client’s project out of your own pocket
- Not setting tax aside. The money in the account is not all yours, and the bill arrives whether you kept it or not
- Forgetting retainage. The last 10% is the money most often left uncollected
When not to do it
An honest list, because most articles on this subject only sell the upside:
- You mainly want to escape a bad boss. That is a reason to change employer, and it is a much cheaper fix
- You have no runway. Going independent while you cannot miss a payment turns every bad client into an emergency
- You hate paperwork and will not do it. This is disqualifying, and it is the most common failure
- Your trade is licensed and you are years from qualifying. Get the licence first
- You have never quoted a job. Learn that where a mistake is your employer’s problem, not yours
Where to start on this site
If you are going independent: how to get a contractor license → registered agent service → invoice template for contractors.
If the next move is another job first: construction worker resume example, electrician resume example, welder resume sample.
If it is a licence or ticket standing in the way: electrician license cost, welding certification cost, NCCCO certification cost, OSHA 30 certification cost.
Frequently asked questions
Can I start on the side while still employed?
Often the sensible route, but check your employment contract first – non-compete and moonlighting clauses are common in the trades and are sometimes enforceable.
How much runway is enough?
There is no universal number, and anyone who gives you one is guessing. Work out your break-even, then decide how many months of it you could cover with no income at all.
Do I need employees straight away?
No, and adding them changes your obligations considerably – workers compensation, payroll, tax. Most people should be solid alone first.
What if I try it and it does not work?
You go back to being employed, with more experience than when you left. It is a recoverable decision, and treating it as irreversible causes worse choices than the failure would.