Making the switch from working on a permanent basis to contract work can be tough. So, with that in mind, we have provided a survival guide to contracting, containing hints and tips on how to succeed in the world of contracting.
- Honour your commitments
As an umbrella or limited company contractor, it can be easy to get ahead of yourself and over promise to fulfil contracts ahead of time. Always stick by the rule to under promise and over deliver.
When working as a contractor you have the option to maximise your take home pay by either working through an umbrella company or setting up as a limited company contractor. Each option has its own benefits so it is key to decide which is best for you.
- Save for a rainy day
One of the biggest pulls for umbrella or limited company contractors is the opportunity to earn more money. However, it is crucial to remember that contracts will not always remain steady, so make sure you put aside some of your earnings for a rainy day.
- Pitch yourself at the right rate
Don't oversell your services, make sure you pitch yourself at the right level or you may miss out on a lucrative contract to a contractor offering the same services at a cheaper rate. This is because many contracts will be based simply upon an hourly or daily rate. Sometimes, it can be more profitable to lower your rates, because in the long term it may help to build valuable relationships with key clients in your industry.
At the same time it is key not to sell yourself short. You have to make sure you earn enough to support yourself during periods where there is less work. Do some research into industry standard fees and try and base your prices around this point. Remember working through an umbrella or limited company can maximise your take-home pay and so both these options are worth looking into.
- Be financially responsible
As a limited company contractor, it is key to ensure you retain sufficient funds in your business bank account in order to cover future tax liabilities such as VAT and Corporation Tax. You should also consider any personal tax liabilities which may arise from your income as director.
Although the limited company route is the most tax-efficient way of working, the admin involved can often be complex, our My PSC service offers a dedicated team of accountants who will advise and assist you with all aspects of running your own limited company.
- Never stop learning
Making sure you are up to date with industry knowledge along with any new skills needed in your line of work will ensure you stay ahead of your competition and in turn secure new contracts. Not only this, but your clients will reap the benefits.
There are many online websites such as Lynda.com that offer up to date skill building videos.
- Don't overdo it
Contractors can sometimes be expected to work very long hours in order to meet targets and deadlines and it is important to ensure you always meet and exceed your client's expectations. Given this, remember the earlier rule to always under promise and over deliver.
- Be aware of IR35
If you decide to go down the limited company route, it is important that you understand whether you fall inside or outside the IR35 legislation. You can suffer severe penalties if you are caught out by the IR35 rules. If you are unsure of your IR35 status we offer a free IR35 review as part of our limited company set up, find out more here.
- Ensure you are covered by the right insurances
It is important to note that some clients will not take on contractors unless they have professional indemnity insurance. Contractor insurance can be relatively low in cost given the added peace of mind you can gain. PayStream's umbrella company service includes a comprehensive level of insurances, including PI as part of the service.
- Network with permanent staff members
Try to not alienate yourself from other permanent members of staff, although you will be working on separate aspects, you will still be working under the same roof so it is important to build relationships -you never know where your next contract may come from!
- Regularly network
Social networking tools such as LinkedIn allow you to build a regular network with other industry professionals and previous employers, keeping you at the forefront of potential employer's minds for future contracts.
Why not check out our guide on how to use LinkedIn effectively as a contractor.
Finally, by following these top tips you can ensure you are getting the most out of contracting, leaving you more financially secure in the long run. Remember, you should always aim to finish a contract in a stronger position than when you started, be it by building effective relationships, or by building your skills set or even showcasing a job well done.