Moving from Permanent to Contracting

(3 minutes to read)

Leaving the security and comfort of a permanent job, for contract work, isn’t the easiest decision to make – change can be scary and there are few bigger changes! Once you’ve made the leap though, many contractors find it unthinkable to give up the variety of work, higher pay, ability to choose your own clients and flexible working patterns.

Before you do make the leap, there are a few things you will want to consider and a few preparations you will need to make. We hope this guide will help make your transition from permanent to contract work a smooth and happy one.

How should I prepare for the move from permenant to contracting?

–    Plan for the longer term. Often a permanent employee will decide to switch to contract work after identifying a specific opportunity. However, one contract doesn’t make a career. Form relationships with recruitment agencies, keep your CV up-to-date and always have one eye on your next contract to make sure your switch to contracting is a successful one.

–    Ensure a clean break. Although it’s normal to be cautious, make sure you can give full notice to your permanent employer in time to start your contract on schedule. If not, you may find yourself unable to start the contract on time, breaking your contract of employment or juggling contract and full-time permanent work – none of these are desirable! Review your contract of employment and ensure you’re not in breach of any post-employment restrictive covenants.

–  Align your skills to contracting. Remember, when interviewing, the client isn’t looking for a permanent member of staff to grow within the organisation. They’re looking for a specific skillset to solve a specific problem. For maximum impact, tailor your CV to each contract and ensure a client knows that a) You have the required skills, b) You have experience using those skills and c) You understand the requirements of the contract.

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What should I consider when thinking of moving from permanent to contracting?

–    Limited or Umbrella? An important step is to decide whether you’re better off working through an Umbrella Company or starting your own Limited Company. Although starting your own company sounds daunting, a good contractor accountant makes the process simple. If you are expecting to earn over £25,000 a year, want to become a contractor longer term and would like to take home as much of your hard earned pay as possible, it is almost always the better option. See our Limited vs Umbrella guide here, to help you make up your mind.

–    What is your IR35 status? Once you have been offered a contract, you will need to establish your IR35 status. IR35 is legislation designed to catch ‘disguised employees’ and can affect how much you take home, if you are operating through a Limited Company – see our IR35 guide here for more information and feel free to give us a call for expert advice.

–    What will your expenses be? Before you start the contract, establish your likely expenses. Prepare to keep all receipts and log expenses in order to make your company accounts simpler. Speak to your Dolan accountant – they will clear up exactly what you can claim and what you will need to do. Knowing what to expect will save you a lot of extra administration later on!

–    Am I insured? Clients have a legal recourse to claim against mistakes or negligence by contractors – you are legally required to hold insurance before accepting a contract. Check your contact to understand what insurance you will need to hold.

To find out more about making the move and how Dolan Accountancy can help you, please call us on 01442 795100 or email

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Why 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 per month. This gives you the flexibility of using both our Limited Company Accountancy Services and our award winning Umbrella Service, for one inclusive cost. 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 – The founder behind the multi award winning FreeAgent platform was one of Simon’s first clients, therefore it only seems fitting that 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.

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 795100 or email or