Deciding to work for yourself is an exciting step in your career and one which very few regret. When you make the first step into self-employment, there’s a lot to look forward to in your future, but there are also a number of considerations which you will need to think about before you begin.
If you’re thinking about contracting and you’re in the early stages, research is key. Our comprehensive guide to contracting is here to help.
What’s inside our contractor’s guide?
- Getting started – discover which business structure is best for you and how to get started.
- Your tax and financial obligations – all you need to know about your paying tax, filing accounts and what costs you offset.
- Making your business a success – learn how to grow your business, how to market yourself and to forecast for the future.
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How should I operate?
How you choose to operate could impact your level of responsibility, the work you take on and your take-home pay.
Your situation will ultimately dictate which route you should take, but there are generally three different routes to self-employment - Limited company, Umbrella company and Sole trader.
If you meet certain criteria such as having a contract outside the scope of IR35 and have earnings of around £35,000 you should consider setting up as a limited company contractor.
How do I get started as a limited company contractor?
Making the move into contracting and going limited can be a simple process:
- Appoint an accountant – Of course we would say this as the first step but let’s dig into why this is so. To use an analogy, you wouldn’t hire a solicitor after you’ve bought your house, you instruct them to help guide you through the process. Much like an accountant, when you enlist one you will be given the best advice for your individual circumstances. How should you structure your company? Is it worth registering for VAT? What are the benefits of having a registered office address? Plus, you can forward any correspondence you get from HMRC or Companies House to your accountant and we will take care of it for you.
- Form a limited company - the application itself is relatively straight forward and the company should be set up within a few hours. The cost of formation is included when if you sign up for one of our packages, but we do offer a formation service for just £125 plus VAT. This also includes advising you on VAT & PAYE registration and setting up a business bank account for you.
- Invoice your client/agency – You could create an Excel spreadsheet template to produce your invoices, but we’d prefer to make it simple. Using the portal or expenses claim form which should take about 5 minutes per month to complete.
Why should I go self-employed?
If you’re thinking about becoming a contractor, here’s a couple of good reasons:
- Increased take-home pay - when you’re self-employed, you’ll generally earn more than your permanent employee counterpart for the work you do.
- Freedom - becoming your own boss means you have more control over when and when you work.
- Variety of work - you can take control of your career progression and your development, which means learning what you want and choosing your own job title.
Got a Niggling Question?
We've been providing expert accountancy advice and helping contractors to focus on doing what they do best since 1992. Our friendly team are on hand to answer any questions you may have, no matter how silly you may think they are.