June 27th, 2018
Most people who leave the world of permanent work to become contractors never look back – but what do you have to do to enjoy a long successful contracting career? Here are ten useful tips from the ITContracting team.
Rainy day fund
As a contractor, you may find yourself out of contract at certain times during your career. The possibility of being 'on the bench' is part and parcel of contracting, so you should try to put aside a percentage of your contract earnings to see you through less bountiful times.
Most contract roles never make it to the job boards, as they're filled via word of mouth. Keep in touch with past colleagues and clients, as they may bear you in mind when a suitable role comes up. LinkedIn is a must if you're serious about networking.
Be realistic about your contract rate expectations. How much you can earn will depend on a multitude of factors relating to the depth of your own experience, and the state of the current contract market in your area of expertise. Use online rate tools such as Jobstats, and sound out recruitment agents and other contractors to gauge the supply and demand for your skills at any given time.
Limited companies pay Corporation Tax on their profits and collect VAT on behalf of HMRC (if you're registered). Your company must maintain funds to meet these liabilities safely – ideally in a separate deposit account.
Make sure you keep your specific sector and technical knowledge up-to-date. Learn as much as you can on the job and take opportunities to pick up new skills – either via formal training courses, or online during the evenings.
Find a good accountant
If you're contracting via a limited company, you have a number of statutory and financial obligations as a director. A specialist accountant will be able to manage these tasks on your behalf.
Online accounting software
Thanks to software like FreeAgent and Xero, accounting has never been easier for small businesses. These days, most specialist accountants use these platforms to service contractor clients. This type of software allows you to submit invoices online, keep an eye on your financial position at any time, and check for late paying clients. If your accountant doesn't provide this option, have a word with them!
This tax legislation has been in place since 2000 and aims to remove the tax benefits of working via a limited company if you're deemed to be a 'disguised employee', who does the same work and performs it in the same way as a traditional employee. If there's one thing you do before starting up as a contractor, read up on IR35 and make sure your contracts are reviewed by an employment status specialist.
As a contractor, flexibility is a key skill to have – or learn. Unlike permanent work, where you will have a wide variety of roles and locations to choose from, due to the nature of contracting you may have to compromise on your contract rate, job location, or even the skills you provide to a client. Some contracts are simply more rewarding and enjoyable than others.
It probably goes without saying, but your role as a contractor is to provide high-quality work to clients on a short-term basis. If you fulfill this role well, your chances of getting a renewal will increase, as will your reputation with the client, and other contractors on the project. Keep this up on an ongoing basis, and the availability of future contract work and your rate prospects will increase in proportion to the effort you put in.
These tips were written by James Leckie who has been running contracting news sites for almost 20 years. You can read more contracting advice at ITContracting.com.