Starting out as a contractor can be a daunting but rewarding step. If you’re considering joining the world of contracting, or just want to know more about it, our guide covers some of the most frequently asked questions (and answers!).
Contractors provide skills and services for a set amount of time, enabling clients to hire the specialist support they need in order to complete a project.
Working on a self-employed basis means you won’t have the same entitlements and benefits as an employee, but you’ll normally be hired for the duration of a contract so it can be more secure than other types of freelancing.
Like any business owner, contractors can choose which legal structure is most suitable for their needs. The way you set up your business affects the way you report information, how you pay tax, and even how you pay yourself, so it’s a big decision.
There are several options, although for lots of contractors the decision will boil down to:
Setting up a limited company
Contracting as a sole trader
There are advantages and disadvantages to every method – it all depends on your individual circumstances.
The way you set up your contracting business can influence whether or not you’re affected by IR35 rules. In simple terms IR35 basically deals with the way contractors are meant to pay tax if they work through their own limited company.
Lots of contractors find work through agencies and jobs boards, or even vacancies advertised by the client. You can often register for these online, but it’s also worth checking if there are agencies who deal with your particular industry in the local area.
You’ll often be asked to provide a CV, so keep yours up to date each time you complete a contract!
Larger contracts might also invite you to prepare a pitch for the work so you can provide more details, such as costings and timeframes.
How much do contractors charge?
Deciding how much to charge for your services can feel strangely terrifying when you’re starting out, even when you know the going rate for your industry. Some contracts will be advertised with a pricing structure included so, like any other job application, it’s up to you whether or not it’s enough.
Other jobs might ask what your rates are, so taking the time to do some research will help you have an answer lined up ready. There isn’t a magic formula to work out fees, but as a starting point take a look at:
What contractors with your skills and experience charge
What the contract entails
How much it will cost you to fulfil the contract (basically, how much will you have to spend in order to complete the job?)
What happens next?
Contractors have the same needs and responsibilities as any other type of business owner, although the exact nature of these depends on what type of structure you set up. In general, this will include:
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A creative content writer specialising across business, finance and software topics. I have a love for all things writing, and creating engaging, easy to understand content that helps everyday people! Learn more about Rachael.