The term ‘contractor’ is broad. You can be an IT contractor, a builder, landscaper or even an interior designer. Being a contractor simply means you are your own boss, have flexible working hours and get to choose where you work and when. Contracting, though, can come with a whole host of security risks than a permanent position.
Becoming a contractor should not be taken lightly. Like with any job, you need to do your research and understand the market. Is there a demand for your services? Is the competition relatively high? Such questions need answers.
Set up your own company
The two most popular business models for contractors include setting yourself up as a limited company or operating under the umbrella of a company. This decision must not be taken lightly as there are advantages and disadvantages to both.
If you are going to be a limited company, Hiscox highly recommends professional indemnity insurance. If you are left wondering “What is professional indemnity insurance, and why do I need it?” Hiscox can explain the benefits and why it is a necessity. Professional indemnity (PI) insurance can protect you and your business in the event that a client sues your company. Even if you did not make a mistake, you would still have to fight a claim. Insurance can, however, settle such a dispute and over legal defense costs.
Setting up a limited company is the most tax-efficient way of contracting. It allows you to have complete control over your company’s finances; however, there are legal obligations when it comes to running a limited company. You also need to get the correct insurance and keep up with the paperwork requirements.
On the other hand, if you work with an umbrella company, they will be responsible when it comes to invoicing, paperwork, finances and any legal requirements.
Research your field of interest
Firstly, make sure there is a demand for your skillset. If you are a builder but people within your local neighbourhood are not renovating or building, you may find it could be a difficult endeavour. While this may mean you simply need to persuade the area that extending their property or taking on a renovation could improve their lives, it could also mean a slow start and many difficulties.
Other considerations include the local rates. Do they meet your needs, or do you need to charge higher prices? Are their many contracts up for grabs and available in your area?
Find your first contract
The easiest way to find a contract is by heading online. Search keywords so that you bring up relevant contracting jobs, such as “building contracts” or “IT contracts,” and see what the internet has to offer you. Filters can help to only bring up relevant contracting jobs for your niche and field.
It is also worth using LinkedIn to build connections with like-minded people. Learn how to network so that you have the means to find new contracts. If you, for instance, network with mutual friends of someone you have completed a job for, they may be more likely to turn to you for any work they may need doing.