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?
– 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.
What should I consider?
– 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.
Dolan Accountancy was founded by Simon Dolan, one of the most respected names in the contractor industry, with a desire to provide the best contractor accountancy service on the market – bar none! If you make the leap from permanent to contract work, we hope you’ll choose to join the Dolan Accountancy revolution – and even if not, we hope you found this guide useful.
To find out more, please call us on 01442 795100 or email firstname.lastname@example.org.