Becoming a Contractor? 4 Things To Consider Before Jumping In
Have you thought about going solo? Read this first…..
For many people, becoming a contractor can be a brilliant career move. The allure of becoming your own boss – setting your own hours and deciding which projects you want to take – is one major benefit, while the potential pay increase is certainly something to consider.
However, it’s also important to recognise that contracting isn’t for everyone. Finding work can sometimes be tricky and you definitely need a strong sense of self-motivation to do your work when nobody’s watching.
So how do you know if contracting is right for you? Here are four things that every ‘contractor-to-be’ should think about before taking the plunge:
1. Do you have the right skills?
Your skills, qualifications, knowledge and experience are an important consideration in any job and any industry, but they’re especially important for contractors, as you’ll be applying for new roles on a regular basis. In addition, employers are often looking for contractors to plug a very specific skills gap in their organisation.
As a contractor, it is essential to ensure that your skills are up to date and it’s generally recommended that you regularly attend seminars and enrol in courses that will enhance and build upon your existing knowledge. This is especially important in fast-moving industries like IT and pharmaceuticals, where information changes on a constant basis.
2. What market are you targeting?
It’s every new contractor’s dream to wake up each morning to an email box full of messages from potential clients and the phone ringing off the hook. Unfortunately, things like this don’t happen automatically and you’ll need to promote yourself and your services if you want to be successful.
The secret to any good marketing campaign is to know precisely who your target audience is. That way, you can make sure that the messages you’re sending out will be things that they will be interested in hearing. You’ll also be able to adjust your offering to suit their specific needs. Take some time to think about who your ideal client would be and what they are looking for in a contractor.
3. Do you know how to organise your tax payments?
Understanding and navigating the world of self-assessment forms, National Insurance contributions and VAT can be a daunting process – and could be a serious financial liability if you miscalculate your tax obligations.
The HMRC website and other online resources like www.gov.uk can provide useful information to help you understand how to go about paying your taxes, as well as what you owe and when you need to pay. Alternatively, if you don’t want the hassle of dealing with all the accounting, you might want to consider enlisting the services of a contractor umbrella company such as PayStream.
4. What are the benefits of using an umbrella company?
An umbrella company is a company that acts as an employer for contractors, removing a significant amount of the administrative burden and leaving you free to focus on the projects you’re working on, as well as improving client service and marketing your services.
Once you’ve registered with an umbrella company, you will submit your timesheets, invoices and expense claims to them. They will then invoice your clients on your behalf, chasing up payments and paying you directly into your bank account – with all of your taxes deducted automatically.
Depending on the umbrella services you choose, additional benefits may be available, such as professional insurance and financial advisors. You may also be able to arrange for your umbrella company to set up automatic deductions for your pension and process student loan payments.