Deciding to become a contractor can be a difficult decision, particularly if you do not have a contract already lined up. The first step in the process is to actually leave your job. Probably the easiest part to do in terms of procedure, but the hardest part in terms of the mental side.
Most jobs will require that you serve notice so the first thing to consider when you make your decision or accept a contract with another firm is that you will be required to serve this notice, usually a minimum of 2 weeks.
If you haven’t already secured a contract with a firm, this is the next step as it is where your wages will be coming from. You can find information on contracts available either through a recruitment agency specializing in contractor work or directly with clients who may advertise on various Internet job boards.
Using Recruitment Agencies
At the beginning, it may also be worth submitting your details and CV to the various recruitment agencies and companies simply to get yourself on the mailing list for future job offers from that particular company.
Once you have secured the first contract, you need to consider how this will impact your status in relation to the IR35 legislation. As discussed before, finding out if you are IR35 compliant or not isn’t an easy task to do and in fact the only way to really ensure that you are is to consult an accountant with experience in this area or another qualified professional. This may involve an unwanted charge but it is worth it rather than risking the potentially expensive consequences of the poorly handled situation.
Choosing your Business Structure
The next step in becoming a fully-fledged contractor is deciding the payment and management structure for your business. For example, would you prefer to operate as a separate business through your own limited company or alternatively through an umbrella company. Obviously there are other options but these are the two most common. If you are struggling to make this decision, feel free to read our article “Limited Company v Umbrella Company for Contractors” to find out more about the pro’s and con’s of each decision.
The last step is to actually sign the contract. However, this isn’t as easy as it seems as any good contractor will always look through the contract first and point out any clauses that they are unhappy with.
Be prepared to compromise but that by no means suggests that you shouldn’t negotiate before agreeing the terms of an arrangement. If this is something you are struggling with, don’t be afraid to shell out a bit of extra money for professional advice to ensure you understand the agreement.