The top five contractor tips on how to get paid upfront

Get paid upfront

Limited Company contracting is fantastic in many ways – you’re your own boss, you can choose when you work and for how long, and have total freedom to design your professional career as you see fit. But like any great opportunity, there are still some downsides…


Not being paid on time is one of the unpleasant sides of contracting that almost everyone has experienced. Whilst it is considered the ‘nature of the beast’ by many contractors, there are some things you can do to avoid it. In this blog we show you the top five ways to prevent late payments.


1. Know how much you’re going to get paid

Seasoned contractors will know this point well, but if you’re just starting out then this is a valuable tip to adopt.


Never accept a contract that is yet to set out how much you’ll get paid – either as a day rate or total amount for the completed project in a set time frame. Whilst this may seem blatantly obvious, many contractors accept roles without scoping this out first, which can then lead onto either not being paid what they expected, or at all.


By doing so you’re showing the client that you understand their timescale, their expectations within that time period and how much they’re willing to pay for your professional time and skills.


2. Exude your professional presence

As a contractor it’s down to you to find your next contract. But remember that whilst you’re busy trawling job sites, speaking to previous clients and contacts, or liaising with other contractors, your potential clients are looking you up online.


Ensure your professional profiles (such as your LinkedIn profile or personal website) are up to date and display your experience and testimonials from completed contracts. If you look the part and mean business, you’ll be less likely to get messed around.


3. Charge deposits or milestone payments

A travel agent wouldn’t fly you out to a destination, let you stay in a hotel, then fly you home before taking payment – so why should contracting be any different?


Consider making an agreement with the client whereby a deposit is paid upon signing the contract, or lump sums of the final amount are paid in increments over the duration of the contract. That way you’re guaranteed payment for the work completed thus far and the client has faith that you will complete the job in full.


4. Haggle (but not by too much!)

Firstly, get a feel for how much clients are willing to pay for your skill set, experience and type of contract required to complete. Then, add 10-15% onto this amount.


When speaking to a potential client about your costs, pitch to them first with your inflated price and offer them a reduced price off your original cost. That way you’re showing the client that you’re willing to negotiate and you are considerate of their costs and budget restrictions, when in reality you are achieving your desired day rate without compromising.


This discount can also be applied to tip number three, whereby if your client agrees to a deposit or milestone payment, you could offer a discount to sweeten the deal.


5. Don’t ask – don’t get

Being upfront about payment and setting out parameters when it comes to guaranteeing payment can sometimes be tough, especially when you feel as though you’re telling the client you don’t trust them to pay you!


But remember it’s your livelihood you’re protecting, so don’t be afraid to speak up. Many contractors create written agreements with terms of engagement for their client to sign, which can remove the need to verbally discuss any potentially uncomfortable topics, so find what’s right for you.


Payment protection is key to a successful career in contracting

By setting out your own upfront payment strategies you’re protecting yourself against those clients who, for whatever reason, don’t pay you correctly or on time.


Why not try these five top tips when you win your next contract? You’ll never regret taking charge of your professional finances and will only gain confidence in becoming the contractor you want to be.


This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Moving from a permanent role to contracting

Moving from a permanent role to contracting

If you’re thinking of moving to contracting there are a number of practical factors to consider before making the move from a permanent role. Considering these points will help make your transition to contracting life easier and smoother from the start.

Leaving your current organisation

Make sure you confirm the notice period with your current organisation. In some cases this can be months, or there may be a stipulation that the individual cannot work for similar companies for a specified time.  Knowing these details helps avoid contractual issues with leaving your current employer. The majority of contract work requires the contractor to be available to take up their position within a few days of interview or a couple of weeks at most. This means you’ll need to make sure that you can be available at short notice before applying for contracting roles.

Choosing to set up as a Limited Company or using an Umbrella

You will need to decide whether you want to set up your own contractor Limited Company or to get paid using an Umbrella company.  This is an important consideration as there are several tax differences between these options which directly affect your net take home pay.

At its simplest the key difference between the two is in the amount of tax you pay on your contractor income. If you use an Umbrella company you are effectively an employee of the Umbrella with National Insurance Contributions being payable on your entire contractor pay. If you set up as a Limited Company contractor you can choose to reduce the amount of taxable salary you pay yourself and take the majority of your remuneration as dividends from your company. The overall result is that your post-tax take home pay will usually be higher. To give you an idea of the tax savings you might make as a Limited Company contractor take a look at the Intouch Contractor Take Home Pay Calculator tool.

If you decide initially to use an Umbrella company then change your mind, the Intouch team can help you easily and smoothly make the switch to becoming a Limited Company contractor.

Finding contracting work

Initially, registering with relevant contracting agencies, uploading your CV onto CV databases for recruiters to find, searching job boards and mining your contacts are good ways to find opportunities and keep up with what’s available.

As a contractor this is an on-going process. Over time you’ll build relationships with job agencies, clients and individuals which will make this easier.

Checking your IR35 status on contracts

Usually the aim is to have a contract which puts you outside IR35, meaning you’re operating ‘in business on your own account’ while working for the client. If your status is seen to be inside IR35 you are considered by HMRC to be a disguised employee of your client. This means you will have to pay more tax on the income.

Have every contract checked by your contractor accountants or lawyer before signing.  It’s better to be safe than get into difficulties with HMRC at a later stage. Find out more about IR35 by reading our frequently asked questions.

Networking and marketing yourself

Professional looking business cards are a start, but it’s helpful to be a proactive networker to keep your contacts growing and your portfolio on show. There are many groups and organisations which hold regular face-to-face networking events. Keeping your online profiles on LinkedIn and niche online communities active will also help to maintain your success.

If you decide to make the move you’ll be joining thousands who enjoy their contracting life with the variety and interesting challenges it can bring.  Our New to contracting guide will help you every step of the way or you can contact us to discuss your options.

If you’re considering moving from a permanent position over to contracting and thinking about work, take a look at our latest blog on How To Find Contract Work, where we list the top 5 tips on how to find contractor work.


This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Umbrella to Limited Company

Umbrella to Limited Company

Paul Gough, Managing Director of Intouch Accounting, the personal online accounting adviser for contractors and freelancers, discusses the benefits of moving from an Umbrella to a Limited Company and explains why he believes Limited is best.

Making the decision to become a contractor or freelancer is one of the most exciting and possibly rewarding decisions of your career. At first, you were perhaps not really sure if contracting was right for you; or if, indeed, whether you would actually enjoy not being an employee anymore.

You were probably asking yourself all the natural questions that anyone in your position would be asking – Are you suited to contracting? Will your skills and experience be in demand? Can you get decent contracts to make it all worthwhile?

With all these questions and plenty still to be tried and tested, you made the sensible decision to avoid initial long term commitments and selected an Umbrella solution, to tide you over while you were finding your independent feet and taking those first steps on your new career path.

But, a few months have passed and you’re now happy with your decision to become more self-reliant. You’re also becoming increasingly aware of the alternatives available to you. Your confidence is growing and you’ve realised that, as a highly professional individual, serious about being self-employed, you can now maximise the financial benefits, with the flexibility of running your own business.

If this sounds like you, an Umbrella will feel more and more like a “stepping stone” or a compromise that no longer best fits your circumstances or your needs.

The question of self-employment is a serious one. But, with the right professional support, it should not be difficult to assess. If you understand the rules and the practicalities of day to day working life, becoming a contractor should be quite straight forward.

There are plenty of experienced accounting providers out there capable of providing a balanced opinion, and who will show you why contracting is not some form of black art.

It is a common misconception that running your own Limited Company business is much more different or onerous than the alternatives. Or that Umbrella companies offer anything near the financial benefits of being in business with your own Limited Company.

Actually, in my experience, many Umbrella providers go out of their way to disguise the true picture of the financial benefits of running your own independent business.

A big statement to make; but don’t you ever wonder why Umbrellas are not forthcoming with comparisons? Or why so many actually provide the Limited Company solutions via an associated business they initially discounted as inappropriate for you?

Just by way of a very simple comparison between an Umbrella company and your own Limited business, based on a few assumptions*, this table clearly shows that, at different earnings level, there is a significant financial benefit that is not being made available to you.

These figures illustrate your take home pay based upon varying levels of income, under each alternative:

Income 30,000 50,000 75,000 100,000
Umbrella 20,315 32,113 44,855 57,596
Own Limited Company 24,552 40,352 55,922 71,492
Basic difference 4,237 8,239 11,067 13,896

Based on a flat rate VAT percentage of 13.5% (14.5% less 1% discount in the first year of VAT registration)   


  • Accountancy fees and Umbrella fees are the same at £900 a year;
  • Expense claims are the same and so can be ignored;
  • You are genuinely self-employed.

So, why don’t Umbrellas tell you about this? It’s simple … unlike a good accountant who explains your choices and tells you what is right for you, the Umbrella’s model is about being paid for what they do.

The Agency Workers Regulations (AWR), which came into force on 1 October 2011 – entitling temporary workers to pay and conditions equal to that of permanent staff after 12 weeks’ work – are, at best, only going to sustain the differential; at worst, Umbrella workers will generally experience a further reduction in their take home pay.

The fundamental difference remains that the financial and tax benefits of being Limited far outweigh the perceived benefits of paid holidays. Sick pay is, nowadays, mostly at statutory levels and, for that reason, marginal.

Insurance products tailored specifically to contractors can remove the risk of illness preventing you from working and can be much more attractive than an employer’s sick pay arrangement. The employment law protections against losing your job do exist, but can often be more procedural than real – and most of us recognise that redundancies happen when it suits the employer!

So, as a serious contractor, now is the time to look at how you operate and how you provide your professional skills. Make sure you choose the best and most rewarding model that matches your medium and long term objectives, and maximise your take home pay.

Being Limited really does make perfect sense!


This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.