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Start contracting: Steps to becoming a freelance contractor

Guest post by: Bill Wynn

Article Overview: Bill Wynn, Managing Director of Project Resource Limited discusses the steps to becoming a freelance contractor. 1. Quit your current job. 2. Secure a contract. 3. Consider the IR35 status of the contract. 4. Decide on a payment structure. 5. Choose an accountant or umbrella company for the payroll. 6. Sign contracts.

Start contracting: Steps to becoming a freelance contractor

Having made the decision to work on a contract/ freelance basis you will now need to do the following:

1. Quit your current job.

2. Secure a contract.

3. Consider the IR35 status of the contract.

4. Decide on a payment structure.

5. Choose an accountant or umbrella company for the payroll.

6. Sign contracts.

Step 1: Quitting your current job

The vast majority of contracts will require you to interview immediately or within the next couple of days and start within at most the next couple of weeks. There are some contracts that will wait 4 weeks for the right person, but this is very rare and normally only for rare/ highly skilled people.

Ideally, you will need to quit your job and start looking for contracts at the most 4 weeks before you are due to become available. This could mean you may be out of work for some time until you secure a contract.



Step 2: Secure a contract

You can either go via a recruitment agency or direct to the client. Unless you have a good network of contacts, lots of spare time and money to pay for all the calls that you will need to make to secure a contract through your own efforts, it is best to use a professional recruitment agency. Also by using a recruitment agency you have more security on payment for services and less of a direct relationship to the employer.

Some contractors choose to email their CV to lots of recruitment agencies just to get on the agency databases, we would suggest you select 3-5 agencies only (maximum) and build a long-term relationship.

Step 3: Consider the IR35 status of the contract

You can either do this yourself, or seek expert advice from a qualified lawyer who specialises in employment law. Alternatively many of the contractor services companies will have done this for you, hence why we always advise contractors to work through an umbrella service for simplicity.



Step 4: Decide on a payment structure.

This is either a "one person" limited company, where you are the director and shareholder or an umbrella company solution.



Step 5: Choose an accountant or umbrella company.

If you choose to set up your own limited company you will need a separate accountant. Alternatively, if you use an umbrella service, the umbrella service company will do all your administration, payroll, tax, NIC for you as part of their weekly charge to you.



Step 6: Signing the Contracts

The limited company will need to:

• 1. Send your limited company details to the recruitment agency (including identification, incorporation certificate, VAT certificate, insurance certificates and all bank details).
• 2. Sign the agency contract for the agreed period/ hourly rate as company director for your new limited company.

The umbrella company will need to:

• 1. Sign the umbrella company provider's contract for services (their terms and conditions).
• 2. Advise your umbrella company the details of your agency and contract for services.
• 3. Advise your agency the details of your chosen umbrella company provider.

The umbrella company and agency will then liaise to sign a contract for your services, working through the umbrella company. Some agencies will require you to countersign the contract, following it's signature by a director of the umbrella company.

I hope you found this article or interest.

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Article Tags: bill wynn, employment type, freelance contractor, project resource limited, umbrella company



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