ICS GUIDE TO CONTRACTING

Transcription

1 ICS GUIDE TO CONTRACTING

2 FOREWORD As a contractor you have the opportunity to take home more of your income each month, but it's important to make the right choices. Get it wrong and you may face a mountain of paperwork or even a fine from HMRC if you fail to meet their requirements. Get it right and you can enjoy higher returns and a life free of administrative stress. Established in 2002, ICS work in partnership with recruitment agencies providing accountancy services and an umbrella solution to thousands of contractors, freelancers and temporary workers throughout the UK. Guided by the three principles of trust, care and compliance, we help contractors to focus on their strengths, remain compliant with all legislation, and increase their net income - you can see by how much using our contractor calculator at We make sure we get the basics right from ensuring you are paid the right amount on the right day, to always being available at the end of the phone when you need any help or advice. As specialist contractor accountants we also offer a range of inclusive solutions that you may not find elsewhere, including the required business insurance cover within certain packages. We also work with a team of experts in employment and tax law to ensure our solutions are fully compliant with existing legislation and the latest government regulations. In short, we help you to enjoy all the monetary benefits of being a contractor, without the associated paperwork and organisational headaches. This means you can get on with your job without distraction. I hope you find this guide informative. Please contact us if you have any questions or to discuss your individual requirements. Call free on or newbusiness@icsuk.com. I wish you great success as a contractor. John Lyon Managing Director ICS

3 WHY BECOME A CONTRACTOR? The decision to work as a contractor should not be taken lightly. Job security is often at the mercy of the market, so there may be times where it is difficult to acquire work. However, there are many benefits to working as a contractor, which can include higher rates of pay, extra flexibility compared to a 9 till 5 and being your own boss. Here is a selection of quotes from contractors that use ICS for their accountancy services: "You get to concentrate on what you do best." "Nothing beats being your own boss." "I love the freedom of moving from project to project." "No more office politics!" "I work hard for six months and then take two months off. It's brilliant." "I commuted to a grey office block every day. Now I work from my own home!" "I have travelled all over the world working as a contractor." "I earn far more money working as a contractor than I ever did as a permanent employee." There are a number of important considerations, which include administration responsibilities (invoicing, receipts, expenses, etc) and your accounts (corporation tax, VAT, National Insurance). THE CONTRACTING MARKETPLACE The contractor marketplace first flourished in the 1980s, when permanent IT employees experienced a surge in demand for their skills and realised contracting offered a solution that benefits the workforce and market. Today s market offers the same opportunities across all sectors - if you possess a valuable skill, you have the opportunity to charge a premium for your services. Businesses also benefit from accessing skills without committing to full-time staff. CONTRACTOR STATS 1.91m UK freelance workers 60% male, 40% female Freelancer numbers +25% in past 5 yrs Source: IPSE

4 MOVING FROM PERMANENT TO CONTRACTING Before making the transition from full-time to contract work there are two key questions to consider: 1. IS THERE DEMAND FOR YOUR SKILLS? Research your market and gain an understanding of the contractor landscape. The best place to start is online: o Job boards there are countless online job boards, Indeed is a good place to start. Be sure to filter to temporary and contract roles. o Forums search for contractor forums, such as Contractor UK. These forums will offer real advice from experienced contractors on a range of subjects. Be sure to exercise caution when it comes to legal, tax and accounting matters, which should always be discussed with a professional. o Social media - every social media platform will have accounts run by industry experts, recruitment consultants and employers. Follow those accounts relevant to your sector to gain insight and access opportunities. 2. HOW COMPETITIVE IS YOUR SECTOR? An excess of contractors with similar skill sets in your location can drive down the rates you can charge. The impact of this can be offset by added additional skills and services or identifying niches in your market that have not been identified by other contractors. For example, an IT Support contractor may decide to specialise in supporting only small businesses.

5 FINDING AND SECURING A CONTRACT REFRESH YOUR CV Your CV has one purpose to persuade an agent or client to consider you for a contract. Generally, a CV should be 2 pages long and should be succinct. Add a professional, short statement that describes you as a professional, then put your most recent experience at the top and work down from there, putting education/qualifications last. Do not be afraid to add short weblinks to Linkedin profiles or portfolios of your work. APPLYING FOR CONTRACTS When applying for positions and sending your CV quality, rather than quantity is key. Have a main version of your CV, but then tweak it depending on the description and requirements of the contract you apply for. Also, where requested, ensure that you write a tailored cover letter for each application. Nothing puts off a recruiter more than reading generic applications that have obviously been churned out at scale. When starting out, a recruitment agency will also be able to support you in applying for positions. Take the time to properly brief your recruiter about the types of contracts you are, and are not, willing to take on. A good relationship with your recruiter vastly increases your chances of finding a contract. STARTING IN YOUR NEW CONTRACT Starting a contract is not like starting a new full-time job. There is unlikely to be a settling-in period and formal induction, it is likely that the work will start immediately. You will be expected to hit the ground running, so any background research into the business and the role you will undertake will be very beneficial. GETTING PAID Prior to starting a new contract you need a payment mechanism in place. The option you choose will depend on the nature of the contract, your rate and whether it is within or outside of IR35 legislation. In most cases you will be expected to complete a weekly or monthly timesheet, which must be signed off by the clients' representative before you raise the invoice or forward it to your agent to invoice on your behalf.

6 CONTRACTS AND LEGISLATION CONTRACTS Gaining an understanding of contract law before committing to a new assignment is advisable. There is often no initial cost when consulting a professional, although you may need to spend money further down the line - this money will be well spent if it protects you from disputes with clients though, which can be expensive and professionally damaging. One legislation that particularly affects contractors operating via a Limited Company is the IR35 legislation. IR35 IR35 is the industry name given to legislation originally contained in Schedule 12 of the Finance Act It came into force in April of that year and was intended to unmask 'disguised employees' by which the government meant people enjoying both the tax benefits of working as a contractor with the apparent job security of a permanent employee. As a contractor it is of huge importance that you do everything possible to be compliant with IR35, or you risk being subjected to backdated income tax and National Insurance. IR35 has evolved considerably since it first came into force and determining whether your specific contract is caught by IR35 depends on a number of factors including: CONTRACT Did the client hire your company or you personally? PERSONAL SERVICE If there is any control from the client with the service that you are providing, then you are inside IR35. It should be clear that all decisions about how the service is provided are yours to make. MUTUALITY OF OBLIGATION Are you obliged to accept work offered, and is the client obliged to offer you work? CONSULTANTS - Contractors working as consultants with several clients are less likely to be at risk. ICS offer a free IR35 contract review, which may be useful in your decision-making and we would be happy to discuss your general contracting needs and requirements. We offer a selection of accountancy solutions whether your contract is within or outside of IR35 - call ICS on or newbusiness@icsuk.com.

7 MARKETING YOURSELF AS A CONTRACTOR BUILD A NETWORK For anyone in business, networking is great for developing leads and contacts. Get to know contractors, employers, suppliers and recruiters at industry events. There are a large number of free and low-cost events across the country. FORUMS Despite the rise of popular social media platforms, many people use online message boards and forums. If you feel confident, then sign up and join in the discussions. If not, as with social media, they can be used as a useful information resource. ONLINE NETWORKING Linkedin, Facebook, Twitter and other social media platforms offer a wealth of information. Don t feel that these platforms are only for people that like to post, they are equally useful research platforms. If you are confident at creating content then a blog, or articles on Linkedin, can offer a great opportunity to showcase your knowledge and experience. Linkedin is the go to social network for many recruiters and as such, it can connect you with people that can support you and find you work. Here are some tips to getting the most out of Linkedin: o Ensure that your profile is 100% complete as this increases your exposure to other users o Where you feel confident like, share and comment on relevant posts from your contacts. You can also join and contribute to relevant groups o Send personalised invites to everyone you know and make a habit of linking in with all new contacts that you make o Ask past employers and previous colleagues to recommend you and endorse your skills o Personalise your Linkedin profile link (Google customise linkedin url to find out how) and then add it to your signature and business cards

8 PERSONAL CIRCUMSTANCES AND REQUIREMENTS PERSONAL FINANCE As a contractor your pension, mortgage and investment options are slightly different. MORTGAGES High Street banks lack experience in dealing with contractors and without the certainty of a monthly wage may be risk averse. Specialist mortgage brokers are often better equipped to help, and ICS have partnered with Contractor Financials for this reason. PENSIONS Setting up a pension is one of the most tax efficient ways of saving money. Money invested in a pension fund can come from your limited or umbrella company. CONTRACTING ABROAD Contracting abroad is a great way to gain new skills, learn a different way to approach projects and improve your CV. Every major country in the world has a thriving expat contractor community and UK contractors are often in demand, particularly in sectors where there is a skills shortage. o Working outside the EU you are likely to require a Visa and Work Permit. Apply well in advance and seek advice from other contractors and specialist agencies. o If you have a transferable skill set in IT, engineering or construction there are opportunities all over the world. o Embassies and consulates offer a useful source of information relating to contract work and regulations. Major importers of UK labour, such as Australia, Canada and the USA, also have lists of skills shortages. o International contracting forums and groups on LinkedIn and Facebook can offer information and answer questions specific to your requirements.

9 HOW ICS CAN HELP Our aim is to help you make the right decision by providing you with clear and honest advice about your accountancy options when contracting. Ultimately you have 2 main options with ICS in relation to getting paid for your contracting work: 1. ICS ACCOUNTING Generally relevant to: o Career contractors or those with contracts longer than 6 months o Contractors earning more than 15 per hour or 100 per day o Contractors willing to take on responsibility of being a company director o Contractors that are not caught by IR35 ICS Accounting provide professional support running your own limited company, which can compliantly increase the amount of take home pay on a contract. We take the stress out of working through your own limited company and are on hand to help with the setup, accountancy and payroll requirements. Key benefits: o Free and unlimited IR35 reviews o Tax returns completed on your behalf o Online portal to access your account 24/7 o Inclusive Insurances o On-demand access to dedicated team of qualified accountants o Business expenses compliance guidance 2. ICS UMBRELLA Generally, but not exclusively, relevant to: o Those with contracts shorter than 6 months and earning less than 15 per hour o Contractors that are not prepared to take on responsibility of being a company director o First time contractors or those unsure as to whether they will contract in the longer term o Contractors that are not caught by IR35 Setting up with ICS Umbrella is a quick and simple process. After registering, you simply submit your timesheets and our experience Payroll Team take care of the rest to pay you in a quick, compliant way. Key benefits: o Quick setup process o Compliance with legislation o Online portal to submit timesheets o Same day payments into your personal bank account with SMS payment alerts o Inclusive Insurances o Dedicated Payroll Team available daily Call ICS on and our advisors will talk through your situation and advise on the options that are best for you.

10 Speak to ICS if you have any questions regarding contractor accountancy Contact ICS on or