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Becoming a contractor or consultant

Category: Start Ups | Jun 9, 2019

Things to consider if you are considering becoming a contractor or consultant

Being your own boss is a dream that many people have – not having to take orders from a supervisor (for whom you have little respect!), being the master of your own destiny, away from petty company politics, doing what you are good at and enjoy for the people you want to work with, and earning more money that you would in an ordinary job!  But is being a contractor of freelance all that it is cracked up to be?

As a one-man-band you do not have the job security you have been used to, nor the network of colleagues for support and advice. And generating business is solely down to you… as is the tedious administrative side of the business…the bookkeeping…the cash-flow…the tax, National Insurance and VAT… So when are you going to have time to do what you originally dreamed of?

Choosing and setting up the right legal structure for your new business is the first priority. Should it have sole-trader status or perhaps limited liability? And have you got to grips with your fundamental tax and national insurance responsibilities?

For instance, also known as the ‘intermediaries legislation’, IR35 was established precisely for those who would normally be treated as full time employees, but who have chosen to supply their services via a personal service company. It is therefore essential for contractors to understand exactly how it affects them – and how to ensure compliance – even before securing their first job!

If you have been a full-time employee, then finding work may not have been part of your remit.  As a contractor, it is now! Depending on the particular talents and services you are trying to sell, you may need to consider advertising in the local, regional or trade press. You may need brochures and other publicity material. But, most important of all, you WILL need to build up a business network to find the right opportunities. Chambers of commerce, business clubs and even bespoke websites, such as contractor.co.uk, are great for this and can provide you with some essential material and leads. But social media is certainly coming into its own and, used properly, sites such as LinkedIn can often provide an instant list of prospective clients.

An experienced and sympathetic accountant – preferably from the very early stages of your exciting plans to cut loose from the old nine-to-five drudgery – can act as your mentor, your rock and your trusted friend to guide you along the bureaucratic road to job satisfaction.

He or she will be able to advise on VAT registration, tax optimisation and NI matters, capital and every day expenses that can be claimed against the business, public liability or professional indemnity insurances that might be required for your business, and – further along the line when business has never been so good – wealth management and pension plans.

Choose your accountant carefully, making sure that he or she has the necessary expertise and experience you require as a contractor, and let them get on with the boring bits whilst you turn the world upside down with your talents!

 

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