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Some Guidelines For First-Time Contractors

First-Time ContractorsTo move from permanent employment to contracting is a tough decision to make for many people. This is because of the myths associated with contracting jobs some of them being the income may not be much more than that one can get in a permanent job, skills will become outdated, contractors are liable for costly errors, etc. These are not true and there is nothing that cannot be overcome. As with anything else in life, there are pros as well as cons to contract jobs. However, you need to first make the decision as to whether you want to take the risk of becoming a contractor and earn more or continue to earn whatever you are earning as a permanent employee. It is also important at this juncture to keep in mind the fact that there is nothing called ‘job security’ these days.

Preparation

Once you have made up your mind to leave the comfort of a permanent job and become a contractor, you can initiate the process involved in quitting your job. Simultaneously, you can start scouting for contracts. Often, you will have to start your work in two weeks’ time after getting the contract. Therefore, you may have to quit your job before taking up contracting. You can make use of an agency to secure a contract or approach clients directly. It is also important to take into account the IR35 of the contracts. Some of the other preparation work that is required to be done is to decide your company structure and choose an accountant or an umbrella company. You are now ready to sign contracts.

Set Up Finances

It is easy as well as fast to set up a business as a sole trader. However, many contractors find this to be an unworkable solution. Therefore, you could either set up your contracting business as a limited company or join an umbrella company. However, the choice does not influence the contract’s IR35 status or HMRC review. After the introduction of Managed Services Company Legislation in 2007, the viable umbrella option is the PAYE Umbrella.

Find a Contract

Before applying for contracts, you have to keep your killer CV ready and establish your market rate. The next step is to send your CV to all agencies so that your name gets entered in their databases. The agencies list is available in Jobserve. Typically, advertisements of all contract jobs are published on the Internet. The major online job boards are Jobserve, CWJobs and Monster. You can apply for different roles based on your skill set, but to give yourself the maximum chances of getting a contract you should submit targeted applications.

Contract Negotiation

In order to maximize your career as a contractor, you should learn to deal with agents and build relationships. It is also important to know negotiate your contract rates as well as respond in the right manner when asked to provide your lowest rate. It is recommended that contracting rates are not negotiated on the basis of permanent employee salaries. As a contractor, you should expect a higher payment than a permanent employee, especially if the demand for the specific skills that you possess and experience is high.

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