Turning to contracting is becoming an increasingly attractive idea to many professionals in the current economic climate. Being your own boss, better job security and flexibility, and a higher rate for your services are just a few of the perks that may lead you give up full-time employment and pursue the independent route.
Once you have decided to make the switch, the simple steps below are here to start you off on the right track.
Step 1 – Prepare yourself
Always tailor your CV specifically towards the role you are applying for. Your relevant skills should be the first thing the employer reads. Jobs may vary slightly, so you’ll have to be vigilant and get used to updating your credentials.
Make sure you are in a position financially to make the transition. The reality is that you will probably need to leave your current job, before you start contracting. This may mean a period of time without work, while you secure a contract.
Step 2 – Leave your job
Due to the nature of contracting, a client will need your services almost immediately, so there is often a very short turnover time between a job offer and start date. If you have a lengthy notice period at your current job, it’s best to work this out before applying for contracts.
Step 3- Set your rate
Make sure you know what you are worth. A good way to do this is to see what other contractors with your skills are charging. Determining your rate puts you in a stronger position when negotiating the terms of contract.
Step 4 – Obtain a contract
The best route for new contractors is to operate through an agency. Getting the attention of an agency can be difficult, you may need to repeatedly send off your CV and then chase up its progress. Don’t limit yourself to one agency, sign up with as many as possible for the best chance of success.
You can also use internet job boards, specifically for contractors.
Step 5 – IR35 legislation
Once you have your first contract, you must determine its IR35 status. The best way to do this is to seek the advice of an employment lawyer. They will be able to tell you whether your contract is ‘inside’ or ‘outside’ IR35 legislation.
If you think your contract comes within IR35, then it is recommended that you submit it to the HMRC.
Step 6 – Choose a payment structure
As a contractor you will need to either, set up a limited company or choose an umbrella company. This will determine how you are paid and who deals with your finances.
If you choose to set up your own limited company, you will also need to employ an accountant to advise you. This can be a lengthy process as you have to select a qualified accountant who fits your needs.
An umbrella company will handle important things such as timesheets, invoicing clients and your tax deductions. Choosing the best umbrella company for you is very important. You must feel comfortable with the company you choose as it will handle your finances. An umbrella company effectively acts an an ‘employer’, much like in a full-time role. They will handle all the paperwork and also help you avoid the hassle of setting up your own company.