Home Guides Becoming a Contractor: What Do I Need to Know?

Becoming a Contractor: What Do I Need to Know?

by Anastasia

If you’re considering making a move from employment to working as a contractor, there are some important points to bear in mind before you leave your secure job. You’ve probably already thought about the advantages of being a contractor, like the freedom to choose your own work, more flexible hours, the potential to earn more money, and adding interest to your working life. To ensure success, it’s important to seek professional guidance on setting up as a contractor from a specialist like Hiscox, who can help with issues such as business insurance certificates.

You should also be realistic about the disadvantages of becoming a contractor, such as the comparative lack of job security and the loss of benefits you’d get if you were working as an employee, for example sick pay and paid holiday. You also need to be sure you can be disciplined about your work, and have the self-motivation required to put the hours in without having a supervisor to encourage you.

If you’re still feeling enthusiastic when you’ve taken a realistic view of your situation, you then need to do some research into the prospects for contractors in your sector. Have a look at the kinds of jobs and contracting opportunities that are being advertised for people with your qualifications and abilities. Do you have a skill that’s in demand right now? If not, what can you do to improve your prospects of finding work?

If you’ve established there’s a gap in the market for the contracting services you can provide, you then need to put together a business plan that details everything you’ve learned so far, and develop a strategy for finding work. Your business plan should include a detailed budget, and you should make time to research and understand financial essentials like business finance and income tax.

Contractors work under intermediaries legislation, known as IR35, which provides tax advantages for contractors. However, you must be a legitimate contractor to take advantage of IR35 tax rules, and if you aren’t, then HMRC can impose severe penalties. You can also choose to set up a limited company, which offers advantages for some contractors. It’s best to discuss the pros and cons with a specialist accountant who has an in-depth understanding of tax law before deciding which route to take.

With your business plan complete and your finances sorted, you need to start looking for work. Check your CV is up to date and include the information prospective clients will be looking for. Unless you’re starting from scratch, your CV is almost bound to need updating and refreshing so it looks current.

Get your professional online profiles sorted, making sure they reflect well on you, and sign up for job boards and relevant industry publications and websites. You need to get networking and actively seek out possible job opportunities, and act quickly as good contract jobs will be snapped up by those who are most alert and attentive.

If you have the skills and drive to succeed, then becoming a contractor could be the best move you can make.

Related Posts

Leave a Comment

This website uses cookies to improve your experience. We'll assume you're okay with this, but you can opt-out if you wish. Accept Read More