Should you move from permanent work to becoming a Contractor – speedy looks into this for you.
Becoming a Contractor
Potentially take home pay, the freedom to choose when and where to work, greater control of your career and the chance to further widen your range of skills. These are just some of the things Speedy’s clients have quoted as being the key reasons for them taking the step into contractor.
Speedy take a quick overview of the steps involved in moving from permanent to contracting.
Finding a Contract
There are thousands of contractor roles available. In fact, due to many companies reducing full time head count, the contractor market is expanding faster than the permanent job sector. Once you developed your CV register with key recruiter and specialist job sites.
Check your IR35 status
Once you have secured your first contract you might like to check whether it falls inside or outside IR35. Most contractors do this by asking their recruitment consultant. Speedy can help you with this by giving you an IR35 Contract review.
Umbrella company or Limited Company
An umbrella company is ideal for short term, lower value contracts (less than £25,000) per year). If you choose an umbrella company then in effect you become an ‘employee’ of the umbrella company, you submit time-sheets to them and they in turn invoice the end client – something speedy is ideally set-up to handle. Working through an umbrella company means you will typically take home 60% to 65% of your contract value. There is less administration working through an umbrella company as they manage your tax affairs for you.
Contracting through your own limited company, as any accountant will tell you, is the most tax efficient way possible (which is perhaps only fair as you’ll be responsible for managing and running your company and tax affairs). Take home pay for contractors working through their own limited company is typically between 75% and 80% of their contract value. There are also greater oppurtunities for tax planning than if working through an umbrella company, you can claim a wide range of expenses, you keep complete control of you financial affairs and have access to the Flat rate VAT Scheme, which can generate thousands of pounds extra profit a year. There is a certain amout of administration required, and clients typically say this is between 15 to 20 minutes a month – with the first few months taking slightly more as you get used to running your own company.
Opening and running your own limited company can seem daunting. However, if you have made the decision to go limited don’t let this stress put you off. Very few limited company contractors go back to using an umbrella company.
Forming a limited Company
Get in touch with Speedy, we provide this service at excellent rates and can help you on this exciting stage.