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Things To Consider When Making The Move To Contracting From Permanent Employment
So, you’re waving the 9-5 goodbye? It’s set to be an exciting few months, that’s for sure.
As a contractor, you get to pick your own hours, work from home, and be your own boss. But as appealing as all this sounds, you shouldn’t leap in with both feet. You need to be prepared before you make the move to contracting from a permanent position. If not, you could soon find yourself stuck in a very tight spot.
There are several elements worth consideration before you bid bon voyage to your employer. We’ve listed the most important right here. Be sure you’ve ticked every box below before you start your contracting career.
Have finance at the ready
Any budding entrepreneur needs capital to get going: overheads, equipment, workspace. But to survive the plunge into self-employment, it’s worth building a rainy day finance pot that will cushion even the hardest fall.
Think worst-case scenario. This way, you’re financially secure if miscalculations or mistakes happen – which they very well might during the tricky transition. Saving this kind of money takes time, but it’ll be worth it in the long run.
Also, set up a business account separate to your personal finances. This helps to keep things neat and tidy, and prevents your living expenses taking a hit if business is ever slow.
Fill up your pipeline
Contracting involves bringing business in yourself. You can no longer rely on an already-established brand name to attract potential customers. All of a sudden, you’ll need to do the marketing and networking yourself.
Of course, it can take a long time to see money from a client after successfully arranging an initial meeting. By far the best course of action is to have a long list of prospects ready before you register your company.
Use the contacts you’ve made during your career so far to create a client base from the beginning. This will help you get your business off the ground, aiding healthy cash flow in the process.
Bring an accountant on board
As an employee, the vast majority of your tax commitments are settled without your input. Being part of PAYE means national insurance and tax contributions are extracted without you needing to take any action. When you make the switch to self-employment, however, you need to organise everything yourself.
Contracting accounting is more complicated than you might think, especially if maths isn’t your forte. That’s why it’s so beneficial to have an accountant on your side. These specialists can make all the necessary calculations for you – even communicating with HMRC on your behalf.
If you’re musing over making the move to full-time contracting, get in touch with Bright Ideas Contractor & Freelancer to arrange a free consultation. Our friendly, knowledgeable team can give you the advice and support you need for a smooth shift into self-employed life.