A Beginner’s Guide to Contracting Successfully
leave their full-time jobs to have a slice of contracting. Contracting is a way
of providing your skills or services to a client or company for a specified
period of time. It is preferred by most these days because of its high earning
potential. On top of that, you get to choose how you work and when you work.
Its flexibility is undoubtedly alluring.
Switching to contracting can be intimidating especially if you do not know about IR35, Contractor Corporation Tax and many more. If you are not quite sure how to start, here are some steps to starting a career in contracting:
Utilise the recruitment agencies
The first step is to utilise the recruitment agencies. The good news is that there are many recruitment agencies that you can consider. You have to remember that these agencies are quite adept at putting contractors into roles efficiently and quickly.
For this, you need to register with many recruitment agencies. If you want to land a contract quicker, choose an agency that specialises in your field. Alternatively, you can also find contract roles straight from end-clients. This is kind of difficult for beginners or first-time contractors who do not have a large network of contacts.
Decide how you get paid
In the UK, there are two ways a contractor can get paid – through an umbrella or limited company. You should know the difference between the two so you will know what to expect at the end of the day.
Since you are a beginner, it is recommended that you choose an umbrella company. An umbrella company will tackle your administration or paperwork. You will not do anything but submit your timesheet and wait for the umbrella company to pay you.
If you already know the nitty-gritty of contracting, you have to form a limited company. A limited company is beneficial because it can yield higher take-home pay compared to an umbrella company. For this, it is considered the most tax-efficient way of operating. Having your own limited company will not only maximise your take-home pay but it will also provide you total control over your finances.
Get comfortable in your new role
Once you secured your first contract, you can get started. Before getting comfortable, you must know whether your contract puts you within or outside the IR35 legislation. IR35 is tax legislation that tackles tax avoidance by “disguised employees”. If you are outside IR35, you won’t have problems. You just need to prepare your documents and other proofs in case tax inspectors will question your contracting job in relation to taxation.
Becoming a contractor is rewarding. Aside from the potential of earning high, it will give you the opportunity to expand your professional experience by working in different roles. You have to be aware that the industries like IT, Marketing and Finance are in need of skilled contractors or professionals.