The Ultimate guide to Contracting in the UK

Are you thinking of starting as a contractor in the UK? Before you begin, you will need to ensure that you understand ABC of contracting. As a contractor, you will be working under a contract with your client/agency. This contract will determine time and manner of job completion. This contract will also contain other important terms for the contract. Usually, contractors work on hourly basis and charge a rate per hour but they can also work on fixed-payment basis.

When you work as a contractor, your client will also benefit. This is probably the reason contracting is becoming extremely popular in the UK. Your client will be able to save plenty of money and will have minimal liability towards you. For employees, clients have to spend a lot on training and ensuring that employees are secured through professional insurance. Such expenses make it costly to hire employees as compared to getting the work done through a contractor.

On the other hand, contractors also benefit from this setting. As a contract, you will enjoy the freedom to work without interruption of any boss. A contractor is his own boss in many different ways. Contractors also receive handsome remuneration for their work. In fact, in the majority of industries, contractors are paid better compared to permanent employees. Additionally, contractors will also save money from tax.

Some handy tips for first-time contractors

A contractor will be able to enjoy contracting apart from making massive profits if he/she follows these tips.

• A contractor will need to develop the ability to work under different conditions so that they can fulfill varying requirements of different clients. This will open up new opportunities for contractors.
• A contractor should always work on improving communication skills as this will prove fundamental to their success.
• A contractor will need to network with other contractors. Sharing knowledge and helping each other is going to hugely beneficial.
• Contractors should network within their industry so that they can find new contracts rather easily.
• There is absolutely no alternative to reputation. A contractor will be able to find more work if he/she has built up a good reputation over time.

The next step – setting up your company

Working as a contractor becomes a lot easier if you set up your company or join an umbrella company instead of working as a sole trader. Each option will provide a number of advantages. For example, setting up your own limited company will give you various tax advantages on contractors using umbrella companies. On the other hand, contractors using umbrella companies will enjoy administrative relief whereas limited company contractors will have to act as a company director, which means a lot of administrative hassle. Similarly, umbrella companies operate PAYE while you will need to hire an accountant for a limited company.

To join an umbrella company, you will only need to find a company and complete a one-minute application. The entire process will take hardly a few minutes.

To set up a limited company, you will need to follow the legal procedure that as provided by the Companies House for setting up a limited company.

Financial matters

As a contractor, you may fall inside or outside the IR35. Depending on your financial situation as a contractor, you may and may not have to worry about tax and NI contributions.

Contractors working through their own limited companies will need to take care of their finances and submit self-assessment form according to the legal requirements. On the other hand, contractors working through an umbrella company will not have to worry about tax and NI contributions. Their umbrella company will deduct tax and NI through PAYE.

Finding Contracting Work Online – A Guide for New Contractors

 

As with most elements of contracting, the process of looking for work is very different in the contracting sector to normal areas of employment. Most new contractors will only ever have experienced looking for full-time work and applying for jobs on a permanent basis. And they will also have only had to do that two, three or four times in their lives. With contracting it is something they will need to do on a weekly or monthly basis and something that they will need to learn to do very well if they are to make a successful career in contracting. With contracting, the more gaps a contractor has between each contract, the less likely they are to stick with it as a long-term career choice. Conversely, good contractors will become adept at lining up the next contract, a long way in advance of their current contract, thereby ensuring they maximise their earning potential. This article will take a brief look at one area of contract searching that has gained more and more importance over the last few years to the point where it is now one of the main routes to finding work – finding contract work online.

 

These days online is where it’s at.

Though offline self-promotion and networking is still an essential part of modern contracting, there can be little doubt that online is now the first port of call for new contractors (and indeed long-term contractors looking for new leads.) Contractors searching online will be able to trawl through hundreds of job sites offering contracts in every single sector and niche that have been posted by recruitment agencies and also many jobs that are directly posted by clients and allow contractors to bypass recruitment agencies (and their commissions) completely. These job boards come in many forms, with some aimed at those people working specifically online and offering jobs across the board and others aimed specifically at one industry or sector – sites such as Fish4jobs, Contractors Online, TopContracts.com, Freelancers.net, Elance, theITjobboard.co.uk and contractoruk.com. Indeed, there are so many job sites that it is often difficult for a new contractor to know where to start. The best way is simply to use the search engines and type in the type of work that they specialise in, the specific role they are hoping for and the location they want to work in. No matter what sector they work in, they will see hundreds of results in front of them.

There are however one or two points to bear in mind. First of all, out of those hundreds of results, there will be a great many duplicate results. That’s because most recruiters will place adverts for jobs on a number of different sites in order to expand their increase their exposure. Similarly, there are some companies out there that will go so far as to post fake job advertisements purely for the purpose of gathering hundreds of contractors; cv’s for their records. So if a job looks too good to be true, be cautious, it probably is. Once a contractor has worked out the best (and most reputable) job boards for their industry, the best thing to do is register with them, use the filters to leave the required details regarding the type of job they are after, the location they would like to work (and how far from that location they are willing to go) and upload their cv (or at least a brief summary of their skills and work history.) 

Don’t Forget To Be Social

Of course, these days finding work online isn’t just about job boards but also about online networking.  Just as a big part of real world / offline contracting is about building a network of contacts, so online contractors need to do the same using social media. And the first place (for many the only place) to get networking is Linkedin.  Linkedin is perfect for contractors as it allows them to showcase their skills, present their CV and portfolio in a relaxed and informal way and outline their career aims and the type of work they are most interested in doing. This allows them to be easily matched to other people who are looking for precisely those skills for their company. What’s more, if done correctly, Linkedin allows contractors to stand out from their peers and to present themselves as experts in their field – particularly if they take the time to get involved in industry related groups and participate in industry specific online discussions that might be read by interested clients in the same sphere.

There are many other social media outlets that a contractor can use, many of which are industry specific and which allow contractors to share tips and leads amongst one another. But Linkedin remains the main starting point for any new contractor and it is important that their profile is well written and presented and constantly updated with their latest skills.

 

Do Your Research

Just as important for the new contractor when looking for work is the ability to know what they are doing before they start searching. And this is the other area that online job searching excels at – research. By joining the aforementioned industry specific forums and blogs, contractors will quickly be able to form an overall impression about the ups and downs of their industry. They should follow the tips left by experienced contractors, look at the warnings they leave and the things they moan about. They should try and avoid the jobs they say aren’t worth it – although when starting out contractors might not be able to do this – and they shouldn’t be afraid to introduce themselves and ask for advice.

Additionally, it is essential for any new contractor to do some basic research about their industry before they start applying. This includes industry practices when applying for jobs, expected rates for those jobs (and rates relating to experience) and the demand for that contractor’s particular skills. It is also worth trying to find out how many people apply for each job being offered and what sort of competition they present. As Anthony Sherick of TechnoJobs notes, “

 

“If you are considering IT contracting there is a wealth of information available to research in advance on the top IT job sites … By undertaking searches for your skills and location, you can see the number of roles available and the broad salary range – which is usually displayed as a daily rate… Additionally, by signing up to daily job alerts you can get notified of all the new relevant contract roles and therefore monitor new roles and rates over a period of time – or wait for the exact job to suit you goes live. You should use this to judge whether you have any skills that are in short supply that could boost your daily rate. Other ways a jobsite may help you is by submitting your CV; agencies may see appropriate skills/experience and contact you direct about relevant contract roles.”

Finding Contracting Jobs Offline – A Guide for New Contractors

 

Finding contracting work is very different from going out and getting a job. For one thing, employers are not looking at a contractor’s overall skills and their potential to fit in with their company in the long term. They want contractors for a particular, targeted skill. So a contractor’s approach to finding work needs to be adapted to this different style of market. That means advertising their skills constantly instead of once every few years and it means putting together a targeted CV that concentrates solely (or rather mainly) on those skills they intend to sell. It also means contractors have to get used to selling themselves on a regular basis and – if they want to become successful contractors – getting good at it. The most important thing that a contractor needs to remember is that gaps in between working contracts can soon add up and can equate to a serious drop in earnings (that makes contracting harder to stick with in the long run.) That is why it is essential to ensure that contracts are constantly being lined up and that gaps in working are few and far between. Elsewhere on the site, we have looked at finding contracting work online but this article will look at the traditional ways of finding work – getting out there and networking, using word of mouth and other forms of real world marketing.

 

Recruitment Agencies and the Importance of People

Obviously, the first place to start is with recruitment agencies and though these are all online there is no harm in heading down to the recruitment agencies in the nearest town or city and getting on the books in person. Why is this worth doing? Firstly, because it gets the contractor in front of people who will have a direct line to potential employers for those all-important contracts. If they can strike up a rapport with the people working in a recruitment agency then their life as a contractor will be so much the better as the agent will (hopefully) be willing to recommend the contractor for jobs that come along in their specific sector. And secondly, because when someone is starting out it might be easier for them to try and get contracting jobs in their local area rather than compete against people for nationwide jobs who have a lot more experience than them. Chances are that jobs in their town or city (unless they live in central London) will be slightly less competitive and offer more chance of success.

 

Good Old Fashioned Word of Mouth

The importance of striking up a good relationship with the people working in recruitment agencies is a principle that should be adhered to across the board when contracting. If a contractor does good work for that recruitment agent and they get good feedback and happy clients the agent will be happy to put them forward for more jobs. The better you treat people, the more relationships you build and the more willing you are to go that extra mile for people, the more successful you will be. That’s why every project should be done as if it is the sole project that a contractor will be judged on and why they should go out of their way to make sure people remember them as a good contractor. That way those people will be willing to recommend them to other people and will be keen to hire them again and again. Many of the most successful contractors will hardly ever have to log into online job sites or visit recruitment agencies as they will line up consecutive jobs solely based on word of mouth.

Networking – and why every contractor needs to do it.

When starting out all anyone can do is begin to build their reputation and in order to do that they need to get their foot in a lot of doors. Visiting recruitment agencies in person is a good place to start but the other thing a contractor needs to do – and there is no getting away from it – is get out there and start networking. No one likes that word and no one likes doing it but it is an essential part of life as a contractor. And whilst online networking for contracts is an integral part of modern contracting the fact remains that the old-fashioned way of doing things is still very important and pressing the flesh in person invariably pays dividends. Meeting business associates or potential clients in person allows the contractor to make a good impression and to build a relationship with potential clients so that they think of that contractor when a job comes along at their company. And if a relationship then develops as a result of good work they will then think of that contractor every time a job comes along and be willing to give their name to other people in the industry. Moreover, by working directly with clients met through networking contractors will bypass the need to pay fees to recruitment agencies or websites.

But how do you start networking? Where do you go?

The first place for a potential contractor to start is by letting everyone they know – friends and family and their friends and family – that they have now struck out on their own. Chances are however, that most of their friends and family don’t work in their industry so the next big step is to let their former colleagues and bosses know that they are now contracting and available for work. If the contractor is on good terms with their old bosses then those old bosses may well be willing to help out either in offering work with the contractor’s old firm or in passing their number on to other people in the industry. At the same time contractors should also keep hold of all their contacts from when they were working at that company, and make sure all their contact details are up to date. Indeed new contractors can and should give each and every one of them a call, to both check that they have their details correct and let them know they are now working freelance should they ever need a contractor. Once this is done it is also important to check in with them regularly (though not too often) and keep building that relationship. People with which the contractor has worked together in the past will (hopefully) know what a good worker they are and how well they can do their job and will be the perfect springboard for finding contracting work. Even if they don’t have any work they will be willing to pass on a number to other people. In return, contractors should always be willing to send business, customers or other contractors their way and help them out wherever possible too.

 

However, it is also important to cultivate brand new contacts when starting out and this will be the hardest part of all. It’s at this point that everyone has to get out there and go to proper real-world networking events. These events involve going out in the local community (and beyond) to spend time at industry expos and conferences as well as specifically organise business get-togethers such as local small business events, power breakfasts and lunch time meet ups. Details about these events can be found at any local town hall and in local papers as well as in industry specific publications. Also, it is worth searching online for details of offline events. The following sites are good for exactly that:

 

The British Chamber of Commerce

Local events organized and run by the local chamber of commerce can be found via the national website of the British Chamber of Commerce. This is the first port of call for local business events and one of the best links to facilitate networking with other local businessmen. These events are not just useful for making contact with small businesses but also for getting together with the directors of some of the biggest companies in that town or city. The local chamber of commerce will organise all kinds of events from coffee and a chat to paid evening events or days on the golf course.

 

The FSB (Federation of Small Businesses)

Perhaps the UK’s best-known small business group, the FSB is worth joining just for all the help and advice they can offer people when starting up a contracting business. If someone needs advice on tax or legal issues, (or just support on anything business related) the FSNB can help. But aside from that, it also offers some good networking possibilities for contractors who become members. Firstly there are a great range of networking routes via the FSB website and forums, but in addition to those they also, like the BCC above, organize all kinds of networking events at local, regional and national levels that put contractors together with other small business owners (and larger businesses) who might need their services. Most of these events are completely free although there are occasionally paid events (sometimes for charity) such as golfing or dinner.

Findnetworkingevents.com

Another site that collates all of the UK’s networking events for smaller businesses and that offers a wide variety of events (with a variety of prices) for potential leads.

Old Fashioned Marketing

Lastly, contractors shouldn’t be afraid to use old analogue-style marketing and advertising to get their name and service out there. The best place to start is with print publications (or at least the ones that they can afford). Ideally, the contractor would advertise their services in the national industry publications of the clients most likely to use them, but this might be out of reach financially when first starting out. That’s why it is a good idea to start locally at first when it comes to offline contract searching. Use online for national (and international) job searches and offline for local businesses. Contractors should start with the Yellow Pages for their area and then put adverts in their local magazines, local papers and local business pages, many of which will be free. Even if they do pay, the price will probably be minimal for local papers and magazines and will repay itself if the contractor goes on to get just one or two contracts from it.

Thereafter, they should not be afraid of doing a bit of ‘guerilla’ marketing, which involves looking around their town or city and working out where the best places to get the attention of potential clients might be. This will take a bit of research but pay dividends in the long run. Start with the areas mentioned above – locations frequented by the local chapters of the British Chamber of Commerce and the Federation of Small Businesses – as well as business hubs in the area (such as the town hall), and then go to those places and ask if it is ok to leave a flier or business card on their board or at the desk. Then make notes on the places that local businesses congregate. These could be anything from coffee shops in the business district to photocopy / printing shops to newsagents with job boards. Lastly, in this world of email and social media, the value of a letter should never be underestimated. There is no harm in a contractor drawing up a list of all the businesses that operate in the area, choosing which ones might make the best clients and then approaching them with a well-written and targeted letter informing them of the services they can offer and perhaps a discount for being local (everyone loves a bargain!)

In short, it is essential that contractors don’t get so caught up in marketing themselves online that they neglect to keep in touch with the real world. There is still a lot of business out there that is conducted over a drink and a handshake!

How to ace your Interviews

An oft-overlooked area of contracting is the whole concept of marketing oneself as a ‘product’ or a specific service. Applying for contractor jobs is a whole different world to looking for full-time work with one company for an extended period of time. Contractors need to put together a different cv and a different type of portfolio; they need to approach interviews differently and adjust their mindset to selling themselves for one specific job and not as a part of a team or a ‘good fit’ with the company. For most new contractors this will feel strange as they will inevitably be used to the traditional style of interview that comes with applying for employment, not the constant merry-go-round of interviews that is part and parcel of the contracting process (and which come around every few months rather than every few years.) Moreover, because the interviews are to ensure that they keep working from job to job and don’t have any gaps in their schedule (and therefore any drop in earnings) it is a skill that they need to get to grips with very quickly. If not, they will be faced with long periods without work, something that would ultimately affect their ability to work in the contracting sector. A good contractor is not just good at their own niche skill, but is also invariably good at marketing that skill and in learning how to win contracts and line contracts up one after the other so that they can be working effectively and regularly. This article will take a quick look at one very important part of that process, the contract interview:

You’re Not Joining a Team, You’re Offering a Solution

As mentioned above, this is the first thing that new contractors need to get their heads around. From the moment they start contracting contractors effectively become a solution or product that a company will need to fix a certain problem. When a company looks at the contractor they will analyse three things – their CV, their portfolio and how they come across in the interview. They do this in order to ascertain one thing. Is this the right person to solve the problem we are having? Consequently, when a contractor sits down for that interview they should look on the meeting as being a sales pitch for their product – their services. And in that sales meeting they need to identify the solution the client is looking for, show the client that they have understood what solution is needed and then pitch to the client their own solution. They need to sell that client their own product, making sure that the client comes away from the interview thinking that the contractor is the perfect solution to their problem. In other words, the contractor needs to be a salesman rather than an interviewee.

 

Thinking Like a Salesman

In order to get the right mindset for these interviews and meetings it is worth thinking about what it is that makes a good salesman. Obviously, they need to be personable, able to put people at ease, not too nervous and good listeners – skills which are relevant to normal interviews as well as sales pitches. But more importantly, they need confidence – confidence in themselves and in the product they are pitching. No one gets anywhere if people don’t sell their product and sell their services so it is important for contractors to go in and concentrate on the service they are trying to sell and to know everything about that service that the client is likely to want to know. Think about buying a car – no one wants a pushy salesman or someone who just likes the sound of their own voice, but by the same token no one likes a salesman who doesn’t seem to know what they are selling or isn’t able to tell them about the best features of the car they are looking at. A contractor interview shouldn’t consist of the contractor sitting there and letting the interviewer / client fire questions at them. Instead, the contractor should listen at first to find out what solution is needed and then be confident enough to reel off everything that they can offer – all the features of their particular product in other words. And just as no one likes going it when they go into a store with a product in mind and the salesman tries to tell them about other products, so in the contractor interview should the contractor concentrate solely on the service that the client is after.

 

Clinching the Sale

So what will make one contractor’s pitch stand out from another? In a nutshell, it will be the person who offers the best solution to the precise problem that the client wants solving, at the best price and with the least hassle. Bear in mind that the client will have to sit down and listen to a number of contractors, many of whom might offer nervous, rambling, and unfocused pitches. The contractor who stands out will be the one who made the interviewer’s day go smoothest. If they get a contractor who comes in and delivers a targeted sales pitch that immediately lets them know they can fix the problem, that they have experience of fixing the problem and that they can do it on time and without any hiccups then they will take notice. The art of the pitch comes in getting the balance right between listening, speaking and answering questions. The best salesman will know when to listen (in this case, at the beginning when the client is outlining the job to be done), when to talk (and sell their service) and when to ask questions. No matter how well the contractor has listened and then pitched their services it is also important to ask some questions to make sure that they have grasped every element of the job, (although they should not ask too many and make it feel like an interrogation!)

 

Sales Pitches Take Practice

There is an art to selling and no one gets it right every time. But with practice every contractor develops a pitch and a patter of their own. They start off with the basic framework – listening, asking questions, understanding the needs of the client, showing them how they can fulfil those needs and the benefits of their service (as well as their successful results on previous project) and then finally, letting them know that they want the job and would love to work with the client. Thereafter they will add in flourishes that have worked in previous interviews and the odd joke or throwaway line that interviewers seem to like.

 

Inevitably there will be some people with whom contractors just click and others where it doesn’t go quite so well. But with a professional sales pitch and a professional service being offered that won’t always matter.

Being successful as a contractor

The IT contracting is gaining popularity among the masses and each year considerable number of people quit their permanent jobs and work as IT contractors. It is a fact that you can earn more than any other equivalent job however it does not mean that every contractor is successful. Therefore, before start working as an IT contractor you should gain required knowledge about contracting or its pros and cons. Similarly, it is also advised to follow some basic rules that would help you to start a successful contracting career. Some of these rules and qualities of a successful contractor are explained as under.

• Every IT contractor in order to be successful should be vigilant and has the ability to learn new skills. A contractor must possess the ability to work in different conditions and adopt different ways of working.
• Should manage things properly as there is no boss to keep an eye on you or to notify your mistakes. Always try to finish the task related to a specific contract, within anticipated time.
• There is a community of IT contractors and each of them should help others by sharing their experience. In this way new contractors would find it easy to learn how things work and increase their chances of success.
• You should try to find work outside the ambit of agencies and in this way you can find new clients without paying agency its share. There is also a possibility to find a client who wants to work with you on long term basis.
• Keep in touch with the prospective clients and maintain their up to date contact information so that you can occasionally contact them.
• If you have built a good reputation, it is most likely for you to happen that your previous clients assign new contracts or renew the existing ones. This factor will help you to gain continuous work for maximum period of time.

 

Can Umbrella Company help you to become a successful IT contractor?

Umbrella Companies are considered as best option by most of the IT contractors working in UK. It can help them to start their contracting career without any hassle and allows them to gain success in this regard. They can concentrate over their work while all the administrative tasks like processing of invoices or deduction of Tax are the responsibility of their Umbrella provider. Following are the ways in which contractors can gain benefits while working through these companies.

• Contractors can increase their take-home pay by claiming their business expenses. In this way, contractors pay less tax and maximize their income.
• They can work more by contracting through various short term contracts irrespective of their duration. All their contracts come under the Umbrella of an overarching contract of employment, which means that contractors need not to sign a separate contract for each of them.
• Contractors while working through Umbrella Companies enjoy such employment benefits, which are normally offered to permanent employees working in UK.

 

 

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