FAQ: How do I become a Contractor?
Step 1 - Resign
Step 2 - Find a Contract
Step 3 - Secure a Contract
Step 4 - Choose a Payment Structure
Step 5 - Sign the Contract
Step 6 - Extend or Repeat above process
Step 1
Resign
Yes, it is a scary prospect, quitting your job with nothing else in the pipeline. It’s probably against everything you’ve ever been told in relation to your career. Unfortunately, most companies won’t wait for you to finish your notice period, especially if it is anything longer than 4 weeks. You will be competing against those whose contracts have ended, or who have shorter notice periods, for a position which needed to be filled yesterday. In some cases, companies will wait, especially for key skills, but as a general rule instant availability is vital.
However, it is not advisable to resign on a whim, it is best to plan ahead. If possible put some money aside as a safety net and have a Plan B.
Step 2
Find a Contract
Make sure that you have looked at your market thoroughly, preferably before resigning. Key questions to ask yourself before contract hunting:
- What roles are you going to target?
- What locations are you willing to travel to?
- How much money are you going to ask for?
- How much are you worth? Check out www.itjobswatch.com for help with this
- How much money would you be willing to accept – taking in to account locations, clients and responsibilities?
When you have the answers to these questions, get on the Internet. Register with Net Consulting, call us for a chat. We are happy to advise you on any queries you may have and inform you of our current opportunities. As well as contacting us, you should trawl the job boards, bearing in mind that most companies and agencies advertise their roles on the main sites such as Jobserve, Jobsite and CW Jobs. If you have niche skills then it will also be worth visiting relevant niche job boards, but the choice can be overwhelming so start with the main sites first.
Finally, make sure your CV is up to date and presented clearly. For tips on how to make the most of your CV, click here.
Step 3
Secure a Contract
Once you have identified a potential opportunity, make sure you confirm the following details before being submitted:
- Your pay rate
- Who the client is
- The exact location of the position
- The full job description
Confirming these with the recruiter prior to submission ensures everybody knows where they stand. Now all you need to do is interview and negotiate the offer.
For interview tips visit:
www.monster.co.uk
Step 4
Choose a Payment Structure
Once your offer is secured, you need to decide on the best payment structure for you. See our section on Choosing a Payment Structure. Most contractors set up their own Ltd Company as the rewards can be significant, but always make sure to consider the implications of IR35.
Step 5
Sign the Contract
Contracts cannot be 100% IR35 'Friendly' due to the failure of the legislation to strictly define the term 'employee'. Much of it is interpretive and is based on various IR35 case studies. If you are contracting through your own company, make sure the contract you receive is as compliant as possible and does not bring you within the IR35 rules. Seek legal advice, this may be costly but falling within IR35 will be costlier. Negotiate any terms which you feel could cause you issues with HMRC. Once you have come to an agreement sign the contract and ensure you keep a signed copy for your own records. Be cautious of starting on site without a signed contract, this is likely to be deemed an acceptance of the clients/agents terms and could leave you open to IR35 and other threats.
Step 6
Extend or Repeat above process
You may be offered an extension to your existing contract. If you decide to extend then make sure you read your contract thoroughly to ensure it has not altered since your last negotiation.
If you decide to extend but want to negotiate a rate increase, make sure you consider the following:
- Have you been there long enough to warrant a request? If you’ve only been there a few months, consider that it may be too early to ask and could paint you in a dim light with your clients.
- Do you have justification for the increase? Telling them you have been there for X amount of time, does not necessarily justify a rate increase. Prepare a paragraph on how your responsibility has increased and present that.
- Would you still extend without the rate increase?
- Are you able to take the risk of leaving this contract if they don't offer you more money?
- How easy would it be to win a new contract in the current climate?
Finally, remember that extending for prolonged periods of time may affect your IR35 status. Working for one company for 3 or 4 years, may seem like the jackpot of contracts, but such longevity could leave you wide open for an HMRC inspection.
Useful Links:
CUK Guide to Contracting
Setting up a Ltd Company guide
Market Stats