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Becoming an IT Contractor is certainly different to being employed. You work for yourself – no boss to deal with. On the flipside, you have sole responsibility for your own finances and if you can’t find contracts, you don’t earn.

A typical contract will range from one to six months, although contracts often run longer. You will either be paid hourly, daily or in lump sums at project milestones.

As a contractor, you are selling your particular skills, for a particular project and your reputation will live or die on whether you can deliver.

The benefits of becoming an IT contractor

Higher pay rates. Contractors are paid more than permanent staff. This is due to the temporary nature of the work, the specialist skills a freelancer has and the difficulty of finding experienced staff in some sectors.

More freedom. Contractors choose their clients and can turn down jobs if they feel they are unsuitable. When negotiating a contract, you can often specify working times or a limited number of hours.

Broader experience. By frequently working on new challenges, in new sectors, with new people and in new workplace environments, a contractor’s skillset can develop much more quickly than a permanent employee’s.

Less tax. By taking advantage of the tax breaks available by operating their own Limited Company, professional contractors find that not only do they get paid more than permanent staff, they get to take home more of that money as well!

What are the benefits to client?

Flexibility. A client can hire contractors as needed – some projects and responsibilities don’t justify the hiring of a permanent member of staff, but are ideally suited to engaging a contractor, for a few months a year.

Lower risk. If the worker’s performance isn’t satisfactory, it is easier for a client to fire a contractor. Most freelance contracts have short notice periods and no redundancy pay – compared with a permanent contract, which can be extremely costly to break (especially for senior staff).

Greater skill pool. Professional freelancers have a wide range of experience and qualifications. If a project requires a specialist, a client is far more likely to find one in the contractor pool than in their own organisation.

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What are the risks of becoming an IT contractor?

No guarantees. Even the most successful contractors don’t always know where they will be in six months’ time. If work dries up, so does your income.

No employment benefits. If you are sick, you don’t get paid. If you have a child, you don’t get paid. A smart contractor will plan for life’s eventualities and set money aside as they work; because their clients won’t.

Personal responsibility. You have responsibility for your own finances and administration. If you don’t keep on track of your finances, you could end up with an unexpected tax bill. Fortunately, contractor accountants are specialists in doing this for you.

Tips for being a successful IT Contractor

Contracting can be very lucrative and extremely rewarding, but it’s not for everybody. If you recognise yourself in the below, it is likely to be a good move for you.

I’m self-motivated. If you can ‘get up and go’ without being constantly pushed, you will do well. A contractor needs motivation to find work and to follow through on projects they have taken on.

I’m adaptable. You might change workplace every two months. If you can adapt to new people, new processes and new environments, you will do well. This is a challenge, but you get better over time!

I’m highly skilled. Contractors typically fill gaps in the workforce that a business’ permanent staff can’t. If you can develop your personal skills, keep on top of new technologies and generally be an expert in your field, there will always be a demand for your talents.

I want to become an IT contractor – what are the next steps?

Do some research! Speak to other contractors and find out how they have established themselves. If you want to read more, our guides on moving from permanent employment to contracting and the choices available to new contractors are a great place to start. We also suggest signing up to specialist IT Job Boards.

If you would like more information on becoming a professional contractor, or would like to take the first steps, our specialist contractor accountants would love to help. Pick up the phone and give us a call on 01442 795 100, or email

Why Thousands of Contractors Choose Dolan Accountancy

With over 25 years experience in contractor accountancy helping thousands of contractors, freelancers and the self employed, Dolan Accountancy has the specialist skills, reputation and credibility you can trust.

Working closely with our sister company, Contractor Umbrella, it means we can offer one low cost, fixed fee package at £105 + VAT. This gives you the flexibility of using both our Limited Company Accountancy Services and our award winning Umbrella Service, for one inclusive cost.

If you’d like to find out more about how Dolan Accountancy can help you and your business, please give us a call on 01442 795 100 or email or

We don’t believe in tiered packages or hidden extra fees, instead we aim to give you everything you need, including:

  • Free Company Formation – This is where it all begins. Once you have decided on an available name, we will form your company free of charge (if using our accountancy services) and it will be ready for you to use in as little as three hours
  • Free use of Contractor Umbrella – With IR35 Legislation changes we understand that sometimes you are required to contract via an umbrella company. We will keep your limited company ticking over, while you work margin free via our sister company, Contractor Umbrella
  • A Dedicated Accountant – Your accountant will be there for any company or personal tax advice that you require. We will never outsource work, even to internal teams
  • Free Access to FreeAgent – We offer all of our clients access to FreeAgent, free of charge
  • Free Business Banking – We have decided to waive our commission so our clients can use Tide free of charge for the first year
  • Unlimited IR35 Status Reviews – We will review all of your contracts for IR35 purposes and provide you with our professional opinion as to its status
  • Free Registered and Director’s Service Office Address – Sometimes you just don’t want your home address on display at Companies House. When you sign up to our accountancy services, we will offer the use of our address as an alternative
  • Your Business and Personal Taxation Needs – This includes Company Accounts, Director’s Personal Tax Return, VAT Returns, Payroll, Corporation Tax and Dividend advice, to name just a few

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