What to consider when becoming a contractor
It’s safe to say that almost everyone knows someone who has decided to take the leap into contracting. Be it for lifestyle or financial reasons, or maybe even the outcome from starting a family, more and more people are seeing the benefits from entering the world of contracting.
But how do you become a contractor, what’s involved and what do you need to consider? In this blog we set out to answer the top five questions asked by contractor newbies, in order to help get you started on this exciting new venture!
Step 1 – Check the current market for a demand in your skills
Before quitting your job, make sure there’s a demand for the type of work you do and the skill sets that you possess. Take a look at some job boards such as Contractor UK and CWJobs to get a feel for what’s currently in demand. Sites like IT Jobs Watch and testing circle will give you an indication into the types of day rates you can commision, which will put you in good stead when gauging how much you can expect to earn.
Step 2 – Decide on what your trading structure should be
Will you trade through your own Limited Company, or work under an Umbrella company? Do the contracts you’re applying for state whether you need to be Limited, or do you want to have your own professional presence as a Limited Company? We appreciate that deciding on your trading structure can be daunting, as there are many things to consider. Download our guide: Limited Company or Umbrella – which is the right choice for you? to fully understand the pros and cons for each and how your chosen structure will affect your overall take home pay.
Still unsure of which direction to take? Our advisers can tell you whether your contracting circumstances would make you suitable to trade through your own Limited Company. Speak to them today, call 01202 375 562.
Step 3 – Understand IR35 and how you can claim expenses
Have you heard of IR35 but unsure of what it is? In short, IR35 determines whether you are an independent contractor of your own accord, or are acting as a disguised employee. Being regarded as ‘inside’ or ‘outside’ of IR35 will have a significant impact on your ability to claim tax on both your earnings and things like expenses, so it’s important to understand the impact of IR35.
If you decide to go Limited, your contractor accountant should be able to guide you on IR35. Here at Intouch Accounting we include IR35 contract risk assessments as part of our monthly service fee. To see what else is included take a look at the full list of service inclusions.
Are you considering travelling for contracts or purchasing specific equipment, but worried about your ability to claim it back? The resources section of our website has an extensive range of guides, specific to the different types of expenses you can claim for. We have also created an ebrief that explores the changes to how contractors can claim for business expenses that will come into affect in April 2016. Download it now so that you are up to speed with what you can claim for when contracting.
Step 4 – be prepared
When scouting for new contracts make sure your ‘shop-front’ is dressed and ready to receive new customers. In other words, make sure your CV, LinkedIn profile and personal website (if you have one) are all up to date and showcasing your latest work and skills. Shout about your achievements and ask previous clients for testimonials to display on your LinkedIn profile. All this will help to get you noticed and ultimately that dream contract.
Take a look at our blog, do you look like you mean business? for advice on how to get your business website in tip top condition.
Step 5 – leave full time employment and take the leap!
On paper this step is so simple, but in reality this can be the toughest part! Letting go of the security a full time position provides and starting a new way of working that you’ve never experienced before can be scary, but anyone who has made a success from contracting will tell you that it’s the best professional move they’ve ever made!
With the New Year just around the corner, why not make 2016 the year to be your own boss? If you feel confident of your decision and are ready to take the leap, remember that you contractor accountant is with you every step of the way. Sign up with Intouch today and you’ll get unlimited advice from your dedicated Personal Accountant. Plus, we’ll set up your company for free.
If you have questions about the stages of setting up, or just need to talk through your options with someone then give our advisers a call on 01202 375 562.
Want a more comprehensive guide on starting out in contracting? Download our guide: How do I start out as a contractor?
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.