Becoming a contractor – Preparation part I
“Success depends upon previous preparation, and without such preparation there is sure to be failure.” Confucius
So, you decided you want to be an Independent contractor, you have all Personality Traits needed to become a successful one, but what’s next?
Before starting you will have to prepare.
As a contractor you will have an average 50 to 100 per cent more income than you would get as employee. Average means that your income will vary from job to job, but you will also have quite periods – periods between contracts.
Before starting, be sure you’re in good financial position to wait several months and that you can make it through gaps between contracts.
Think about your bill rate and set your financial goals and expectations, as this will be a foundation on which you’ll build your business.
Research the market
Before starting, you need to do some research of contracting market.
The Contract jobs market fluctuates a lot, so be sure to follow it in longer period. It is important that you see what sort of market there is for your skills, what sort of jobs are available and what are the rates.
Check job sites and contact recruitment agencies as they are familiar with both sides – employers and other contractors. They can tell you a lot about the market, jobs that haven’t been advertised yet and would you be a likely candidate.
Set your primary skills set and prepare your backup skills set if market changes.
Make excellent CV
A contractor CV is different than traditional employee CV.
You will have to review your CV and pick out all skills and experiences that will set you apart.
Highlight skills and experiences in your industry – you are there to solve a specific problem. Use this to your advantage to make your application stand out.
Show you can deliver results and highlight your problem solving skills and initiative.
Tell the client all about projects you’ve helped deliver in the past. Do your best to get yourself an interview.
Set up your contractor company
Next thing you will need to do is decide how you want to run your business. You have the choice between setting up a limited company and operating under an umbrella company. Each of them has its good and bad sides.
Setting up a limited company means that you are director, you have complete control over your finances and it is the most tax-efficient way of contracting. But you have legal and financial obligations and paperwork requirements in running a limited company.
If you join an umbrella company, you will become an ’employee’ – you will receive a salary after deductions for tax, National Insurance, expenses, the umbrella fee, and any other pre-agreed costs.
On the other side, there’s none of the hassle and expense of starting limited company, and umbrella company takes responsibility for invoicing, paperwork, collection of money etc.
You should consider this option if contracting is a short-term thing for you.