If you have been used to the traditional corporate 9-5 employed working lifestyle, having made the initial step into contracting or interim resourcing may at times, seem more like a giant leap. It’s therefore important to think about what this change of working life means and how you can ensure you both prosper as a contractor and enjoy it.
The Resourcing team has put this checklist together so you know, top-line, what’s required to make the most of the new career in contracting.
1. You are your own boss, not an employee
You need to recognise and embrace some major contractual differences from being an employee to being your own boss. For example, you are responsible for your income tax and national insurance payments; it also means no sickness or holiday pay and having to make your own retirement planning/pension arrangements.
2. You are your own business
A key aspect of this is managing the affairs of your business, including how you operate as a contractor and engage with your clients for the supply of the services your business provides. Typically, the two options available are to engage via an Umbrella Company or through your own personal service company – we summarise these two options below. It is sensible to take professional advice on which contracting entity route is best for you, as what may suit your requirements now may be somewhat different in the future.
Limited CompanySetting up a Limited Company need not be complicated nor expensive and can actually be done within a matter of hours. As a Limited company you will need to manage your own invoicing process and will probably want to appoint an accountant to manage your tax affairs and HMRC obligations. There is a bit more paperwork and a higher setup cost including arranging suitable PI and PL insurance cover for example. Typically, an accountant can help with the setup of the legal entity as well as the accounts and tax aspects. Generally, this is the preferred option for experienced contractors.
Umbrella CompanyMomenta work with a selection of approved Umbrella companies, all of whom act as both employer and payroll service for contractors. You are paid as an employee of that company for the duration of the contract. For a fee the umbrella firm will manage your invoice process, including the deduction and payment to HMRC of income tax and national insurance. The Umbrella firm will also be responsible for contractor insurances, specifically PI and PL, as you would be covered under the company’s policy. Simple to get started on this route, it is generally stress-free and perhaps a less intimidating route into the business element of contracting.
3. You need to be flexible about time
Contractors tend not to work the normal “working hours” you would find in an employed role; you should certainly be prepared for life that might not always be the standard 9 to 5. Most projects are target-driven and correspondingly your hours are more often determined by your ability to achieve these. Sometimes this will mean long days but, on the up side, this working life can offer a degree of flexibility with start/finish times that you would not get from an employed role.
4. You need to be flexible about location and project planning
Being willing to work wherever the opportunities and projects are, even if this means being away from home during the working week, will increase your options considerably. Being open to different working patterns, such as night shifts, can open your contracting opportunities further and maximise your income and work/home life balance.
Alongside this be ready for some degree of uncertainty. Project start dates can be delayed or be brought forward and are determined by the needs of the end client.
Being as flexible as possible is important and, to an extent, this element of uncertainty is one of the reasons contractors are typically paid a premium over employees doing the same role.
5. A change of location and role can be worth it
Prepare yourself to move jobs far more often than most employed staff. Long-term contracts look good on your CV but not all projects offer this longevity. Moving onto a new project gives you the opportunity to apply your knowledge and skills in a new environment, experience different ways of working and potentially work in a different sector or industry.
Over time, moving from project to project s can provide you the opportunity to take career breaks, fit in other interests or commitments and engage in training/education during any breaks you might take between contracts.
6. Be pragmatic – it can pay off
Be prepared to consider what you may feel is a “step backwards”. When your Team Leader or Quality Assurer contract is coming to an end, don’t limit yourself to only considering other Team Leader or Quality Assurer opportunities. Considering a move into a lower paid, more “junior” role does not necessarily look bad on your CV as contractors need to be flexible and go where the work is.
The same thinking applies to you being open to diversifying: having the widest industry and product knowledge is very much in your interest. This can be gained through professional training and qualifications or new contracting opportunities. Be willing to consider a slight drop in day rate if it will help make your CV stand out.
7. Be part of the new work place
The traditional way was to have one job, even staying at the same company for your entire career and then retire.
No longer. People move jobs far more frequently now and it is also becoming increasingly popular to be your own boss. Many forecasters predict that people who work for themselves are going to become a powerful economic force and contracting as a career choice will prove to be a powerful social trend.
The contracting sector is evolving as more professionals realise the benefits of flexible working. With the value of the contingent workforce gaining greater recognition, and many sectors expecting to increase their reliance on contingent staff over the next few years, there has never been a better time to be a contractor.
Beyond having more freedom over the work you decide to take on and the time you can choose to take off, you can also often earn significantly better rates of pay than permanent counterparts.
There’s certainly something empowering about setting up on your own and with the right mind-set, you can achieve a work-life balance that perfectly suits you.
Visit Work with Momenta to find out more about working with Momenta. You can also send your CV to firstname.lastname@example.org.