How to kick start your career as contractors in 2018
Generally, contractors can earn more than their permanent counterparts, which most agree is only fair considering the benefits they have to give up. The loss of job security and stability, the relinquishing of company benefits, natural progression and promotion are just a few among the many perks to being in permanent employment.
Most contractors agree that the benefits gained far outweigh the losses; more disposable income, less tax, short commitment and opportunities to work on different projects. No two projects or environments are ever the same.
Despite the political turmoil and economy concerns, the great news is that 2018 has started with contractors being in high demand.With their refined skills and the flexibility they offer the client, contractors are a lower long-term cost option to companies.
Below are 5 simple steps on how to be become a Contractor.
1. Quit
Contractors are generally highly proficient in their chosen field of expertise, which is great because it means it shouldn’t take you long to secure your first contract. On the other hand, this does mean that contract roles tend to come and go quickly.
The nature of the contracting world is for immediate interview followed by a quick start. Although some companies are happy to wait for the right candidate to work their notice (normally up to 4 weeks), however this is not guaranteed.
Unlike permanent roles, entering the contract market does not require a great deal of foresight. We recommend waiting until you’re 4 weeks away from being available before applying for contract roles.
2. Secure
Typically, contractors secure contracts in two main ways; by approaching their own network or using an agency. Most clients prefer to establish a relationship with an agency to source their contractors. Why not? It’s free!
Unless you have a good network of industry contacts, it will be very time consuming attempting to source a contract directly.
An effective way to find employment would be via job boards. These sites are inundated with the latest contracts to be filled with some sites catering specifically to the industry in which you are looking. To increase the chances of being found for a contract role, it would be beneficial to register a profile and upload your CV to the database. This enables agencies to search and find matches, meaning that the initial hard work is done for you.
However, building a relationship with a consultant that specialises in your area/skill set can be hugely valuable.
Over the past few months’ social media has grown in its advertisement of roles. In order to take advantage of this you should ensure your LinkedIn profile is consistently up to date. It would also be advised to follow an agency recruiting in your industry. You can follow Strategic People here.
3. Payment
There are two routes to take when it comes to payment structure. Either incorporate and become the director and shareholder of your own one person limited company OR work under an umbrella company.
Since the introduction of the Managed Services Company Legislation in 2007, umbrella companies are obliged to deduct Pay As You Earn (PAYE) Income Tax from their contractors (the equivalent of carrying out a contract INSIDE IR35). Therefore, if your contract is OUTSIDE IR35, the limited company route will leave you better off financially. This allows you to be in control of your income and only pay tax on the monthly salary you pay yourself.
4. Money
Time to choose between an accountant or an umbrella company, though having an accountant is an additional expense to limited companies, the benefit of not having to manage your own accounts as well as the contract most often far outweighs the cost.
It is recommended that research into specialist accountants be done, as while many accountants will be able to provide a sufficient service, specialists will have the knowledge of areas like IR35, VAT and Tax.
5. Sign
When you’re a limited company your agency will require the details to be sent in order to draw up the contract on the agreed rate.
There are two phrases to be aware of, the first “Contract For Service” – a business to business arrangement, the second “Contract Of Service” – a contract of employment. Ensure that you choose the first and that your role is clearly detailed in the contract.
When you’re part of an umbrella company you will need to be the go between for your company and agency to ensure that each are aware of the other and have the correct details.
At the point of signing, yourself as the consultant, the umbrella company and your agency will be required to sign the contract. However, when you are a limited company only yourself and the agency will sign.
Take back control of your career and lifestyle by becoming a limited company contractor.
Strategic People have a fantastic Contract team with great opportunities, don’t wait for them to come to you. Get in touch today on 0161 960 0116 and start 2018 right.
