The Steps to Becoming a Contractor
The following article gives you the steps you need to go through to become a contractor or your own boss in a sort of way. Contracting can take a while to get used to and if you are wanting to take that step then follow this article on how you should become a contractor. Take the following steps to heart and you will succeed in what you desire.
Start off by doing some research
Obviously, before going into the field you wish to as a contractor, you are going to want to do some research. Whether the kind of field you wish to be in requires you to have a bachelor’s degree, master’s degree etc. Therefore, evaluate your skill set and what qualifications that you have and see if you are eligible for the type of contracting you wish to get into.
Take a look at the rates offered by umbrella companies and people who are wanting to hire contractors for specific work. Doing this is quite simple and takes little to no time what so ever, all you have to do is use one of the dedicated salary checkers around the web. Equally, you could talk to one of the many recruitment agencies that are around in your industry and see what opportunities they might have for you.
Find yourself a contract that suits you
The quickest way to find a contract is through the internet. However, looking deeply into them and digesting all the information provided is quite important as you might find somethings good and others bad about them. When online, you can use to your advantage the many job listing websites that are available as well as company websites that they have. Subscribe to relevant newsletters, this way you will receive updates on what is going on and what jobs are available and you will get them straight to your email. Social media website also has some relevancy regarding this as well.
One of the best social media websites for contractors to stay up to date with job opportunities is LinkedIn. It is quite the handy website for keeping all of your business colleagues and network together, then you can keep in touch and feel around for any job opportunities that might arise in your sector.
Do you want to be an independent contractor or work for an umbrella company?
This is one of the most important questions you need to ask yourself while general contracting. There are benefits and negatives to both. It all depends on your experience in your sector, as well as what training you have either as normal training or contractor training, yes, there is a difference which you will come across when contracting.
Here are some of the benefits of using an umbrella company rather than being an independent contractor:
All of the tax and national insurance that you contribute is deducted by the umbrella company prior to when you receive your salary.
As a contractor, you will be offered a suitable solution as all contractors are offered salaries at good rates.
The only paperwork you really have to keep and file would be the time sheets that you need to provide at the end of every week, as well as, any expenses you might have taken like travel, holiday etc. This usually has its own sheet as well.
Umbrella companies offer some excellent solutions to those who are unsure about what contracting is or want more than one job. As you are paid by how much time you work, not how much time you are filling a seat.
It is wise though, if you keep all of the receipts you receive from an umbrella company as this is the best way to keep on top of the expenses that you will be able to claim. If you do not keep your receipts then you might not be allowed the allocated claims.
One thing that you mustn’t do is claim expenses where you do not have receipts. If HMRC decides to investigate your claims you could have all of your expenses disallowed and then you might be taxed a bit heavier.
If you are looking for be an independent contractor then here are a few things you need to do:
Set up your own limited company for a start. This makes you the director and shareholder of the business that you have set up. This is the most tax-efficient way of becoming a contractor, as it allows you complete control over all of your financial affairs and just about anything that comes into your company. However, you do have a lot more paper work to fill out when it comes to this. You also would need to have your own accountant and talk to a few specialists in the first place.
The next thing is IR35
If you haven’t heard of IR35 you will in due course. As a contractor IR35 is incredibility important and you need to know this process in and out. Luckily for you we won’t delve too much into it as we already have an article all about IR35, what it means for new and old contractors. You can read all about IR35 here https://comparisoncontractor.com/ir35-what-is-ir35-ir35-explained-easily/
To put this explanation briefly, IR35 is a piece of legislation in the tax area that directly affects contractors. It is designed to stop contractors who were working as “disguised employees” which were escaping tax. Therefore, they weren’t taxable by HMRC, of course this had to change and IR35 was brought out a couple of years ago.
The last thing you need to consider is getting yourself insured
As you might already be aware of, as a contractor since you are incredibly experienced in your field you are going to be providing advice and services which your potential clients have the need to rely on. Therefore, if something goes wrong and you are the culprit then you could be taken to court in some cases.
At the end of the day, everyone makes mistakes. But it is better to be able to have yourself insured in case that mistake turns out to be a rather costly one. Professional indemnity insurance protects any one who needs it, but in this case contractors against claims that might harm them. These can cover things like compensation needed to pay to possibly correct a mistake made or even legality costs when it comes to negligence.
If you are still unsure whether becoming a contractor would be the best option for you then you can always fill out our easy and quick contact us form. We will get back to you as soon as we can with all the information you need about contracting. We are available to talk to five to nine five days a week.
Therefore, we must be your number once choice here at Comparison Contractor.