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Archive for November, 2012

Starting out as a software developer contractor

07/11/2012 3 comments

I have been working as programmer for nearly 13 years and often wondered about going contracting. As of October 2012 I finally took the plunge and this is my experience so far.

From the moment I resigned as a permanent employee I started realising there are quite a few questions I needed answers to. The following is a list of the questions I have and will update this post with the answers I find. The answers should not be considered as safe and good advice, simply my experience of what I learn from the mistakes I will surely make. Anyone who reads this who can add comments of their experience would be appreciated. Please note that this is aimed at software developers in the United Kingdom going contracting and may not apply in other countries or fields of work.

  1. Pros and Cons of contracting
  2. What do I need as a contractor that is different to a permanent employee?
  3. When do I need it?
  4. Umbrella company or Limited company?
  5. How to register a limited company?
  6. What is IR35?
  7. How much should I charge?
  8. How much tax will I pay?
  9. Flat rate VAT scheme or standard VAT scheme?
  10. Which accountant should I use?
  11. Which accounting software should I use?
  12. Which bank is the best for my business bank account?
  13. Insurance required and how much insurance do I need?
  14. How to get a contract?

Pros and Cons of contracting

I think it’s important to understand the pros and cons of contracting. I’m sure there are many reasons why you are considering going contracting but is it really all you believe it to be? When I first started looking for contracts I had a few agents from the permanent world calling me up and trying to convince me that it was a mistake and that I should consider looking at their wonderful permanent jobs they had on offer. At the time I didn’t have the best answers to all the negatives they had raised about contracting but found they were prepared for lambasting every positive I tried to raise. Fortunately I sent them packing just by eventually saying that I had no issues with my current permanent job and saw no reason to look at other permanent jobs. I knew contracting was what I wanted and it wasn’t anything I personally had against my permanent job, so if it wasn’t a contract job they wanted to discuss I wasn’t interested. I wanted to note down what I thought some of the pros and cons were so I could be sure it was right for me but also to be more prepared to answer people why it was right for me and to show people I had considered the negatives and how I would prepare myself for those negatives.

Pros Cons
  • More money.

    Contractors can make more money than permanent staff but not entirely as much as you would think. As a contractor there a lot of expenses one needs to pay for that permanent staff can tend to take for granted. Expenses like professional indemnity insurance, public liability insurance, pension fund, stationary, accountants, accounting software, contract reviews, registering your company or paying an umbrella company, keeping money aside for sick days and for holidays and days off between contracts. There are also risks like contracts being terminated unexpectedly on short notice and sometimes the market is quiet and it can take you several months to find work.

  • More Flexible options to choose the work without trauma of resignation.

    It’s difficult to know if you are going to enjoy working for a company before you start. You may ask a lot of probing questions during interviews to find out what the company is like but this often doesn’t reveal enough. Companies also often go through changes and even you go through changes because your experience grows and often outgrows the company. Changing jobs as a permanent can be quite traumatic as you have to try do it in secret until you actually resign. As a contractor you simply wait for the contract to end and you do not need to renew if you want to move on. Going for interviews can be more pleasant as you do not need to do it in secret but getting time off for them can still be tricky.

  • Broaden experience rather than vertically up the ladder.

    Contracting is extremely attractive to permanent employees who want more income but have no desire to climb the corporate management ladder. Some developers enjoy the hands on technical more but as a permanent staff there is a bit of a pressure to climb the corporate ladder which tends to move more and more away from the hands on the higher you go. If you choose not to climb the ladder then the amount you can earn tends to become limited. Contracting is a great way to increase your salary and stay hands on for longer and because you get to work with several companies you will most likely broaden your skills. As a contractor you no longer need to ‘rise up the corporate ladder’. You can be more frank with management since your interest is focused on the project succeeding, rather than trying to get a promotion.

  • Flexibility and holidays.

    As a contractor you are your own boss and therefore have more flexible options. For instance, you can decide how many days leave you want to take in the year, more options on how you want to structure your salary and perhaps work with other clients on the side to your main contract. It’s known that contractors tend to take fewer days off in the year than permanent but there is nothing stopping them from taking far more if they wanted. It should be noted that as a contractor it can be difficult sometimes to negotiate time off while still on a contract which could mean you take most of your time off between contracts.

  • Freedom to go on more courses you care about and at your own pace without judgement.

    Permanent staff tend to be restricted by budgets and the type of work within the company to decide which courses they can go on. Often the courses are not the best because of the expense or the courses you can choose from are not much of interest. When permanent staff do eventually go on a course they are usually also monitored and their results published back to the company. As a contractor it’s your choice on how much you spend and which course is of most interest to you. Because you will most likely make more money as a contractor you can put your own budgets aside for this to ensure you always get the training you want.

  • Worry less about politics.

    Companies go through all sorts of changes on a fairly regular basis in order to remain competitive. This can lead to frustrating changes to corporate structures, budgets, office locations, etc. As a contractor if the company is no longer pleasant to work for it’s easier to move on and so you tend to worry less about these politics. See the con section as there can also be down sides to this.

  • You’ll see more mistakes so you will know more of what to avoid.

    By working for various different companies you’ll get to see more of the mistakes companies make. This is where contractors gain a lot of their competitive edge over permanent staff and bring a lot of value to a company seeking to do a similar project you have experience in and which they have none of their own.

  • Bonuses, pay rises, or promotions fail to materialise in permanent jobs.

    Contracting there is no possibility of working for nothing. It can be a more honest and frank way of working. Contractors tend to focus on the deliverables of the project and not get disturbed by other frills that people care less about. The experience you get over time will directly reflect the amount you can end up charging your clients.

  • Job security.

    From what I have seen contracts allow companies to give contractors only about 2 weeks notice to terminate a contract. Not only this but The contracting market can sometimes dry up and it can be hard to find work during these periods. I have heard of contractors who struggled for 3 months before finding work again. December is a particular bad period I hear for finding work. As long as you compensate for this by putting savings aside you should be ok.

  • Pigeon holing.

    Companies tend to hire you for the latest relevant experience you have. It can often be hard to break out into other new areas as you may not have gained experience in the new area in your last contract and companies tend to only hire contractors who do have the experience already. Be careful not to get stuck on long dead end roles that are not of much value out in the industry. Also often go on good courses or get certified in order to show you understand and can do the job you want.

  • The cause of office politics.

    As a contractor you will be kept out of most of the office politics and this can be more pleasant at times but it can also often be worse because you are viewed as “just a contractor” and have very little say in the matter. Permanent staff can also sometimes get upset seeing companies spending money on contractors when budgets are tight while it would seem to be cheaper to simply spend more money on permanent staff. So the contractors can be the cause of some of the office politics.

  • Prove yourself again and again.

    The first few months joining a new company can be quite challenging as people get to know your level of skills and commitment. This can mean you are monitored more closely and your advice can carry less weight until they learn to trust you.

  • Less say.

    Because contractors are not normally around long term to feel the impact of certain decisions they can tend to have less of a say to influence these decisions.

  • Travel.

    Sometimes contracts can be scarce and you have to go where the work is. This can mean you have to travel far. This can be less of an issue if you live near a big city like London. I have known contractors who live far away from big cities staying in B&Bs in the city during the week and coming home on weekends.

  • Be prepared to accept you may never see the final delivery, or get involved in the design.

    As a software contractor you can often be brought in to do the hands on coding after all the designing and architecting has already taken place. You may also only be brought in to do a certain part of the product and never get to see the complete finished product.

  • Despite all the ideas that contractors have most go back to permanent.

    I had heard that most contractors eventually go back permanent. When I resigned from my permanent position and told people I was going contracting I was surprised that many of my colleagues said they once worked as a contractor. None of them though said nothing to change my mind and most said I would do well. When I asked them why they went back to permanent they often said such things like they were tired of all the job hunting or they started a family and wanted more stability and security.

  • During market slumps contractors can often find themselves out of work.

    The contracting market tends to have better and worse periods in the year to find work. Economic climate can also have an impact on the amount of work available but in the current recession the amount of work still looks good. Certain fields in the contracting industry can also do better than others, fortunately for me the C# web development field is in good demand at the moment. It’s recommended you speak to other contractors in your field to find out when are the best times of the year to go contracting and put money aside for the quiet periods, usually the holiday seasons are the worst.

  • Holiday pay and sick pay.

    As a contractor time really is money. You can unexpectedly get sick or have an emergency at home and require time off from work and you will not be paid for each day you are off. You need to keep money aside for the days you plan to take as holidays and make sure you put extra aside for the unexpected.

  • Insurance and pensions.

    As a contractor you can be liable to cover the loss clients make should something go wrong because of your actions. You may also have to cover against any accidents where someone gets injured in the office due to your actions. Contractors need to take out additional insurances to protect themselves from this. Permanent staff also often get company contributions towards their pension funds, contractors may want to contribute more towards their pension to compensate this.

  • Admin.

    There can be more admin work to do outside of you working hours as a contractor. You will need to stay on top of capturing and claiming your expenses, invoicing your clients and completing tax returns.

What do I need as a contractor that is different to a permanent employee?

The first thing you need as a contractor is to either register a limited company or join an umbrella company to operate under. See the section Umbrella company or Limited company? for more details. The following lists what you need if operate under an umbrella company or a limited company:

  • Professional Indemnity insurance (PI)

    As a contractor you could get sued by a past or present client for negligence or a breach of duty while on a contract job. PI insurance helps you cover the cost of this and can also cover unintentional infringement of copyrights and trademarks, for loss of data or documents, and other similar claims. I do not personally know anyone who did get sued so it’s rare but I’m sure it happens and more and more companies insist they will not hire a contractor who does not have PI insurance. See the following section for more on insurance: Insurance required and how much insurance do I need?

  • Public Liability insurance (PL)

    If you damage a client’s server, perhaps someone trips over your bag and hurts themselves or maybe you bump your coffee over and blow up the client’s pc. PL will cover claims both against when you are at a client’s office and back at your office. See the following section for more on insurance: Insurance required and how much insurance do I need?

  • Accountant

    If you register your own limited company you will need an accountant to make sure your books are balanced and you are paying the right amount of tax. See the section Which accountant should I use? for help with this.

  • Bookkeeping Software

    If you register your own limited company it’s a good idea to use a good bookkeeping software. This will help you keep records of your invoices to clients and track sales, expenses, profit and sometimes help you fill in your VAT returns. You will need to provide the data from your software to your accountant so make sure you have a chat with them before choosing your software as they might only be able to work with certain software or better yet they might actually provide you with software. See the section Which accounting software should I use? for more info.

  • Register for VAT

    If you register your own limited company and your place of business is in the UK or you live in the UK you may need to register for VAT, or you may be able to choose to register voluntarily. If your turnover of VAT taxable goods and services supplied within the UK for the previous 12 months is more than the current registration threshold of £77,000 you must register for VAT. Also take a look at the Flat rate VAT scheme or standard VAT scheme?.

  • Business Bank Account

    If you register your own limited company then you need to get business bank account. Do not use your personal bank account for business purposes as this can get really complicated if the HMRC ever wants you to show and highlight business transactions versus personal. If you can’t show them business transactions then you could get penalised. See the section: Which bank is the best for my business bank account?

When do I need it?

  1. Register your company or with umbrella company

    As soon as possible after you have resigned from your permanent role I think you should register your limited company or register with an umbrella company. Some companies may not even consider you unless you have a registered company number. Agencies might not be able to send your CV to these clients if you don’t have this.

  2. Register for VAT

    This only applies if you register your own company. VAT registration can take up to 4 weeks. You will still be able to invoice clients but you wont be allowed to charge VAT on your invoices and you will still need to pay VAT to the HMRC for these invoices. This can get a little complicated because either you adjust how much you charge clients to compensate or you have to claim the VAT from your clients after you get your VAT registration number. So I recommend you register for VAT shortly after have registered your company so that you hopefully have your VAT registration number before your first invoice goes out. Note, you cannot open a business bank account without a Company registration number.

  3. Business Bank Account

    This only applies if you register your own company. You cannot get paid if you don’t have an account to get paid into. It can take a few weeks to get your bank account opened so give yourself enough time before you get your first pay check. Some agencies will wont to know your bank details before you start working for the client so I recommend you also get this just after you have completed registering your company. Note, you cannot open a business bank account without a Company registration number.

  4. Accountant

    After sorting the first 3 items the rest can wait a short while if needed but an accountant can help you figure some things out or help sometimes review contracts before you start. It’s probably a good idea to register with an accountant the moment you get through the interviews and get accepted or before.

  5. Professional Indemnity insurance (PI)

    Depending on the contract and the client this could be optional or may be covered by the agent or umbrella company. If not covered by them I would still recommend you get this for piece of mind. You won’t really be able to apply for this until you have a contract in hand as the insurance providers will ask you questions about the contract to determine the risk level and how much to charge then.

  6. Public Liability insurance (PL)

    You will normally get this as part of a package deal along with the Professional Indemnity insurance and I think it is cheaper to do it this way so wait till you apply for Professional Indemnity insurance.

  7. Bookkeeping Software

    Before you start invoicing clients or claiming expenses I recommend you sort out getting some kind of bookkeeping software so you can stay on top of your accounts. It can be a nasty surprise if you get your accounts wrong and you end up with less than you thought.

Umbrella company or Limited company?

Setting up and running a limited company can have a lot more administrative tasks than operating under an umbrella company but can be more tax efficient. Operating under an umbrella company means you don’t have to worry about being caught by IR35 tax but even if you are caught IR35 a limited company can still be more tax efficient because of the greater control over tax and VAT savings. Essentially, an umbrella company acts like an employer for freelancers and contractors. All you have to do is submit timesheets to the umbrella company who will then invoice the client you’ve been working for. This means that all the paperwork is done for you. You are then paid by the umbrella company as a PAYE employee – minus the umbrella fee. You will also need to submit any expenses to the umbrella company.

Advantages of an umbrella company

  • Paperwork is done for you
  • No accountancy or tax concerns
  • Less administrative tasks
  • A good option if you’re unsure about committing to contracting long-term

Disadvantages of an umbrella company

  • Umbrella companies charge for their services
  • Not as tax efficient as a limited company
  • Most will insist on a minimum time period you must stay with them or a minimum level of charging
  • It’s not the same as running your own independent company

Advantages of a limited company

  • Significant tax savings
  • Complete business independence – it really is your own venture
  • Running a limited company is becoming easier thanks to new online technology

Disadvantages of a limited company

  • More paperwork
  • More time spent on your accounting
  • Must ensure you keep up with your tax responsibilities

A piece of advice that I thought was good given to me by another contractor was that it can be better to start out your contracting career using an umbrella company and switch later on. There can be a lot of stressful things to sort out when you first start out as a contractor and using an umbrella company to start with can mean there are a few less things to worry about. Once you feel more comfortable contracting you can begin exploring all the details involved in running a limited company to see if it is right for you and whether the tax savings you make is worth the extra overhead. If you are interested in switching later, just take note on of the minimum time period terms of the umbrella company.

How to register a limited company?

It can be fairly easy now days to register your own limited company, there are 2 main ways of going about it. Company names must be unique and must be registered at Companies House but the first approach to registering a company can be via using an online site where you can check the availability of the name and they can also register the name for you with a quick 24 hour turn around. An example site is http://www.ltd-companies.co.uk/ but I have not used them myself or know anyone that has used them so please do not consider this a referral. You can find other sites that will do it by simply searching for “register company name” with your favourite internet search engine. The second approach is to get your accountant to register the company for you. To run a limited company you will need an accountant and most accountants can set up the limited company for you as well. It was my preference to get my accountant to set it up for me as they were able to guide me through some of the options. One of the options you have to consider is that you have to specify the business address and the registered office location. You may want to specify that your registered office address is the address of your accountant because this can make it easier and less paper work for you to deal with that has to go to the HMRC.

What is IR35?

My understanding of IR35 at it’s simplest is a tax status that can be applied to a particular contract you have or had with a client. This tax status will mean that the HMRC will view you working on that contract in the same capacity as a permanent employee of that client and thus your tax savings can be quite a lot less. The unfortunate thing I think about this is that you cannot know for sure if the HMRC will apply this tax on you at any point but you should definitely consult your accountant on this. As far as I know the HMRC could investigate you as far back as 5 years which could mean you owe them a huge amount of money if you get this wrong. Some accountants will review your contracts and tell you if they think your contract will pass or fail the criteria for not getting caught with IR35. If the contract fails then your accountant will calculate how much additional funds you should put aside to cover this tax. To get an idea on the difference on how much more tax you will pay if caught by IR35 you can use the following site: http://www.contractorcalculator.co.uk/ir35calculator.aspx. If your accountant does not provide services to review your contract then there are several companies you can search for online that will provide this service for you. Make sure you still inform your accountant on the results though so they can factor this into calculating how much money you should put aside for taxes. The following site does a good job at explaining the criteria for IR35 and if your contract will pass or not: http://www.ir35calc.co.uk/determine_contract_passes_ir35.aspx. I also find the following online test useful to review for myself if I think a contract with a new client will pass IR35 or not: http://www.contractorcalculator.co.uk/ir35_test.aspx

I believe we should all be paying our fair share of tax and so I do not advocate contractors trying every trick in the book to avoid paying tax but I also think that if you are operating under the right conditions then it makes sense to make it clear to the HMRC that you are doing so and avoid our taxes being wasted on investigating legitimate businesses. I think it’s important for this reason to have your contract reviewed by an expert but it’s also important to note that even if you do have an IR35 friendly contract, if it does not reflect the reality then it can be worthless. I believe a lot of contractors who operate with the right mind set in running their business and who get their contracts reviewed by the experts will most likely not get caught with IR35. I think sometimes the contractor is entering into a contract that should not be caught by IR35 and by simply negotiating if needed with the agent to make slight amendments to the contract that were recommended by the people who reviewed your contract will avoid the HMRC investigating you. Remember you are running a professional business and so I think you are within your right to negotiate the terms of the contract but be careful as I also think that sometimes agents or companies might drop the contract if you do not handle it correctly. I found the following web site useful for contractors in general but there is a link to a PDF on this page that I think contains good information on understanding IR35 and how to run your business with the right mind set: http://www.contractoruk.com/ir35/how_avoid_ir35.html

How much should I charge?

The best way to figure this out is to start looking at the contracting job market and see which roles best suite your level of skills and experience and see how much they are paying. Look at roles that you think are top end and also look at roles where you think you can easily do but think you are worth more. If possible spend a few weeks or even months looking at the market every now and then, what you are trying to do is to get a feel for your market rate value and not a calculated value. Another option I heard from an agent on a way to calculate it was basically take your current annual permanent salary but make sure to include any value from company benefits and divide by 252 days (no. of working days in the year) then add on an additional 35% on top of that (Salary + Benefits/252 + 35%). I found the calculated approach resulted in being quite a lot less than the market value approach. So I would combine the market rate approach and the calculated approach to get the best feel for your rate. It’s a good idea to have a top end value and lowest you are willing to go value in mind when searching for jobs and when speaking to agents. Another site that I found useful for comparing how much you would need to earn as a contractor to match your permanent is: http://www.contractorcalculator.co.uk/ enter your permanent gross annual salary and on the results page look under the Contracting options section.

How much tax will I pay?

There are a lot of factors to calculate an exact figure so you will most likely need an accountant to help you with this but to get a general idea I found the following online calculator quite useful: http://www.contractorcalculator.co.uk/Limited_Company_Versus_Umbrella_Calculator.aspx. This same sight has several tax calculators which gives you various levels of detail so I recommend you take a look at a few of them. To see a list of calculators go to: http://www.contractorcalculator.co.uk/Calculators.aspx. I would recommend you look at the IR35 calculator as well.

Flat rate VAT scheme or standard VAT scheme?

You are supposed to always charge 20% VAT on top of the services or goods supplied on your invoices to clients in the UK. You can normally also then reclaim any VAT paid on any purchases made. Calculating at the end of the day how much you owe in VAT and keeping all the records needed to prove this can be a lot to manage. The flat rate VAT scheme gets rid of the need to do all this calculation and record keeping. In essence all you have to do is still charge your clients 20% VAT and then only pay a flat 14.5% of this amount back to the HMRC (14.5% is what IT contractors pay, other sectors may differ). On the flat rate you cannot claim back VAT for purchases made which is why you only need to pay the reduced percentage back to HMRC as compensation. If you do not make a lot of purchases where you would normally be able to claim a lot back on VAT then the flat rate makes more sense and you can even save a lot of money because of the reduced percentage.

Which accountant should I use?

Choosing the right accountant for you can be important. Some accountants provide free accounting software you can use or you may have some already but they don’t support it. You may also want one that understands how contractors work and is familiar with IR35 and can offer advice and services around it. Its also a good idea to make sure they are an accredited accountant. Apparently anyone can call themselves an accountant so checking their creds is a good way to protect yourself from ones that could land you in a heap of trouble with the tax man if they get your accounts wrong. A site where you can look up good accountants in your area familiar with contractors is http://www.pcg.org.uk/cms/index.php?option=com_pcg_searchqa&task=qalist&Itemid=1204. Personally I wanted an accountant that offered a nice easy to use online bit of software, where I could easily upload my expenses, bank statements, generate invoices and give me a good break down of how much tax I should keep aside and how much I can actually pay myself. A friend of mine actually referred me to such an accounting company. They are http://www.crunch.co.uk. If you decide you also want to use Crunch then it be great if you tell them I referred you and you give them the ref: wh09253. If you do that then both you and I will get a £25 Amazon gift voucher.

Which accounting software should I use?

I am not that familiar with all the different book keeping software out there but I like the one I am using which is actually a custom piece of online software created by the company who operate as my accountants, http://www.crunch.co.uk. They have a really good interface for viewing your current breakdown on expenses, invoices, tax and vat. You can log expenses and upload copies of the receipts to them and it can even link to your bank statements to reconcile your transactions. The great thing about using this software is it costs me nothing as its part of the service I get with them. They also have very good support as you get your own personal account manager and from my experience they are very responsive and happy to help. Please quote the ref wh09253 if you decide to go with them.

Another software I noticed out there which looks good and is the number one accounting software for small business is QuickBooks http://www.intuit.co.uk/quickbooks/accounting-software.jsp.

As a side note I would also recommend you get yourself a small filing system. The tax man might one day come asking for certain documents or you may simply just want to send your accountants all your receipts and invoices at the end of the year. It really is worth keeping these things in organised and filed away right from the beginning. Doing this little by little all the time is much easier and less stress I think than trying to work your way through it all when it comes time to file your taxes.

Which bank is the best for my business bank account?

This only really applies if you have a limited company. Its a good idea to have a business bank account if you have a limited company because if the HMRC ever wants to see your accounts and cross match them with transactions you claim you have made then this is much easier and safer.

Its best to shop around and compare accounts. Most business bank accounts charge for these services but some will provide free services for certain period of time or number of transactions. Use comparison sites such as Moneysupermarket.com and Moneynet.co.uk to help with this. At the moment there are 2 main banks that keep hearing are good banks for small business at the moment. HSBC and Cater Allen. I have chose HSBC because they offered 18 months free banking services, have a good online and android phone app which I find useful as I like being able to do my banking on the run. HSBC also produces downloadable statements which is compatible with my bookkeeping software and can reconcile transactions quickly and easily.

Insurance required and how much insurance do I need?

  • Professional Indemnity insurance (PI)

    As a contractor you could get sued by a past or present client for negligence or a breach of duty while on a contract job. PI insurance helps you cover the cost of this and can also cover unintentional infringement of copyrights and trademarks, for loss of data or documents, and other similar claims. When you apply for this type of insurance you will be asked questions around the type of work the contract is based on in order for them to how risky the work is and how much you could end up being liable for. This will affect the amount you could end up paying for the insurance. For most small scale systems you end up working on I would say you wouldn’t need more than £1million in cover. If you work on large enterprise scale projects or work for companies that could loose a large sum of money if you mess up their production system then perhaps £2million will be required. I found that when I told the insurance companies I would be working for finance companies or banks, I found most could not cover me as these are to high risk. If this happens to you I recommend you speak to the agent who helped you find the contract to see if they provide cover or if they know where you could get cover from.

  • Public Liability insurance (PL)

    If you damage a client’s server, perhaps someone trips over your bag and hurts themselves or maybe you bump your coffee over and blow up the client’s pc. PL will cover claims both against when you are at a client’s office and back at your. As a software developer contractor I don’t think you will ever require more than £1million in cover for this. I found this cover was often included as well when I applied for Professional Indemnity insurance.

  • IR35 Insurance

    If you are operating under a contract that should not get caught with IR35 then it might still be a good idea to get IR35 insurance for peace of mind knowing that if you get investigated by HMRC for IR35 then your insurer will provide legal representation and some insurers will even cover the tax you owe if found that you do owe IR35. The 2 best insurance companies I know of for this purpose is http://www.pcg.org.uk or http://www.qdosconsulting.com/. From what I can tell PCG are very good at protecting you from being caught with IR35 while Qdos will actually cover the IR35 tax owed if you get caught. Personally I went with Qdos and they also offered me a really good rate for PI & PL insurance.

  • Employers’ liability insurance

    As a software developer contractor you will most likely not need this because you only need it if you hire staff.

  • Property and contents insurance

    As a software developer contractor you will most likely not have your own business premises as your home will most likely be your registered business premises. For this reason you will most likely not require business insurance. Business insurance covers things like business property, including premises, fixtures and fittings, stock, computers and equipment. You should instead make sure you get home contents insurance to cover your fixtures and fittings, computers and equipment. Try to add up how much all these items are worth then shop around on comparison sites such as Moneysupermarket.com and Moneynet.co.uk to help with this.

How to get a contract?

Agencies want to know you are serious about contracting and will not get cold feet at the last minute and embarrass them to their clients. For this reason its important you can explain clearly why you want to go contracting. Most contract work available needs to be filled really fast. Unlike the permanent vacancies, agencies and clients tend not to be willing to wait for to long for you to be available to take on the role. You will most likely have to resign first and then start applying about 2 to 3 weeks before your last day. Resigning before will also be a good sign to agencies you are serious about contracting.

As a software contractor you find contracts in a similar manner to finding permanent work. You can either approach companies directly or search for contracts available on job search sites like http://www.cwjobs.co.uk/ or http://www.jobserve.com and specify contract work under job type.

I have personally worked with contractors from many different countries, colour, gender and skill levels. As long as you are legally allowed to work in the country I would not be afraid to try. It helps to be self motivated and pleasant natured. Interviews can get very tough sometimes with many difficult technical questions asked but don’t give up if you don’t land the first job you go to an interview for. You not only need to suite what the company is looking for but the company also needs to suite  you. If you don’t get the job perhaps its a blessing that maybe the role wasn’t that good for you. The right role will come along, have faith. I got stressed and worried about looking for my first role and wondered how long it would take. This is normal emotions but not a reason to give up. So far its worked out for me and I hope whoever reads this blog all the best of luck and hope this blog has helped make the transition just that little bit easier and makes you feel a bit more confident.

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