Moving from permanent to contract work
by Dolan Contractor Group
Are you planning on making the move out of permanent employment into contract work? In many ways, the benefits are obvious and include perks such as higher income, flexible working hours, more diverse tasks, and a wider scope for innovation and creativity. There are, however, a few factors that can put people off making the move such as potential financial insecurity and a lack of guaranteed work.
Before you take the plunge, therefore, it is a good idea to thoroughly prepare for contracting life. We’ve put together a few simple hints and tips that will help you transition from permanent employment to contract work smoothly and safely.
How should I prepare for the move?
Before handing in your notice at your current place of work, it is vital that you thoroughly plan your transition to contracting in order to mitigate potential financial issues. Preparations could include:
1. Writing up a long-term plan
If you are a permanent employee that has identified a contracting opportunity, remember that you need to think about the long-term viability of your career. Whilst one opportunity may seem exciting and promising, it may only see you through for a month or two, and there is no guarantee of securing work once the contract has expired. In this way, it is vital that you nurture relationships with recruitment firms, continue to cultivate a stellar CV, and think about securing subsequent contracts early on. The better you plan for a long-term contracting career, the more likely you are to earn a stable income.
2. Make sure you have got your timeline in order
Remember to hand in your notice in a timely fashion to avoid any overlap with your new contract. Indeed, failing to start your contract on time will make you seem unprofessional and could hinder your chances of success. Equally, trying to attend a full-time job whilst working on a contract can result in burnout and fatigue. In this way, it is important that you review your employment contract and your upcoming contract to avoid any awkward commitment clashes.
3. Tailor your CV to suit your new contracting career
It is important to recognise that contracting clients are looking for different qualities than employers as they are searching for certain skills to address their business-specific problems. To ensure that your CV is as effective as possible, tailor it to align with each contract, making sure that you convey your experiences and skills in relevant areas and that you understand what the contract requires.
What administrative considerations do I need to think about before making the move?
Amidst the excitement of making your career move to contracting, it can be easy to overlook various administrative details. These include:
1. Are you going to work under an umbrella or limited company?
Before taking on contracting work, you must decide whether you are going to work through an umbrella company or set up your very own limited company. Whilst the latter option may sound intimidating, it is a common career move for contractors and does not have to be difficult if you enlist the help of a competent contractor accountant. Indeed, if you anticipate that you are going to earn over £25,000 annually, it is a good idea to set up a limited company so that you can retain as much of your hard-earned cash as possible.
2. What will your expenses cover?
Before committing to a contract, it is vital that you consider what expenses you may incur. Indeed, it is important that you keep track of your work-related expenditure and retain any relevant receipts. This is something that your accountant will be able to help you with.
3. Do you know your IR35 status?
As soon as a contract has been offered, it is vital that you ascertain your IR35 status. Indeed, IR35 is legislation formulated to weed out any ‘hidden’ employees and can have an impact on how much money you take home if you are running a limited company.
4. Do you need insurance?
The clients of contractors have legal recourse to make claims if their contractors make mistakes or fail to do their jobs properly. As such, it is vital that you secure relevant insurance cover before accepting a contract.
Ultimately, whilst moving from secure employment to contracting can seem daunting, you do not have to go it alone. Hiring a specialist accountant will give you peace of mind when making the transition, and will nip any potential administrative issues in the bud, thereby saving you time and money.