The Three Biggest Worries of New Contractors, Explained
Insurance? Employment Status? Finding Clients?: Your Biggest Contracting Worries Answered!
Many people want freedom in their professional lives but this number drops considerably when they are faced with the realisation of the administration that’s involved. Contract work is no exception. Greater flexibility and potentially better levels of income are wonderful but there are some vital points to consider for anyone thinking of making the move.
The independence that becoming a contractor offers is a very attractive idea but it is one that requires a solid commitment as well as careful planning.
Being highly experienced in your field is the obvious requirement but even so, you should do extensive research and make sure that you are prepared for any nasty surprises that could come your way. Apart from anything else, it will also reveal the average rates of other contractors and give you an idea of where to price yourself in the market.
If after all of this you are still happy to make the transition, then here are some vital considerations that need to be made.
Before you ask, yes.
You absolutely need to have insurance if you are doing any sort of work which requires liability insurance. One of the key advantages of being employed is that this sort of thing is often taken care of for you. You may not even know the type of insurance required but some basic research will reveal this to you.
There are three main different ways to become a contractor, and you need to decide which one is best for you and inform HMRC.
- A limited company can mean great tax advantages but is highly complex to administer for those only just setting up and can mean some contracts are out of reach due to the updated IR35 legislation.
- Self-employment is another way to become a contractor. This work status is defined as when an individual is registered with HMRC and completes taxes annually via a self-employment tax return. Although self-employment is common in the UK, this is ideal for small and independent businesses, and is not as suited when assignments are engaged via the recruitment sector.
- For those seeking a middle ground between freedom and avoiding tax-compliance problems, an umbrella company is a great option. It will take care of a lot of the administration for you, while still allowing you much of the freedom they’re looking for.
Understanding the market, putting in the legwork and doing the necessary marketing to reach new clients – it’s a lot of work if you aren’t used to it!
However, finding your own clients is also one of the best parts of becoming an independent contractor. Choosing who you work for is empowering and freeing! You have the freedom to choose the work that inspires you and helps you grow professionally.
Having a good rapport with clients is one of the best ways to secure more work, as word of mouth is still one of the easiest ways to create more work for yourself. So doing a good job and being friendly really does go a long way.
Creating a great online presence can also help to secure more customers for your business. When consumers are looking for work to be done on their house for instance and they don’t know anyone in the area, they will go online to search for the nearest contractor near them.
Take it Easy
We understand that becoming a contractor can seem stressful. When having to consider insurance, your employment status, and finding clients to start making money, it can really be overwhelming.
At Cool Company we can help you with your financial admin and insurance, and even your employment status as when you sign up with us, you will be part of an umbrella company! If you have any questions, we are always here to help via phone, email or even live chat on our site. Take it easy and enjoy the freedom of contracting!