How to become an IT Contractor

If you are considering becoming a contractor, or are a seasoned veteran, here are 5 success tips from the Contract Eye team to help you get the most out of contracting in 2011.

Make hay while the sun shines

As a contractor, you are likely to secure a significant rise in your take home pay, and may well increase your spending and lifestyle accordingly. One of the main benefits of moving from the world of permanent work into contracting is the increased potential to make good money, however you should always prepare for times when contract work is harder to find and put away funds for a rainy day. If possible, try to build up a fund to support your lifestyle for six months.

Spending other people's money

If you are a limited company contractor, make sure you transfer all your tax liabilities into a separate bank account. This includes the entire VAT element of all invoices you send out, and your outstanding Corporation Tax liability. Also, try to put aside a regular sum each month to settle your self assessment bill in January, as well as any payments on account which become due.

Find a good accountant

Without a doubt, your accountant is your most important ally as a limited company contractor. A good accountant will ensure you meet all HMRC and statutory deadlines on time, they will save you money, provide timely advice as needed, and make you feel reassured that your business affairs are being looked after.

Of course, finding the right accountant requires a fair bit of effort in its own right. Try our tips for choosing a contractor accountant as a starting point.

Keep in touch

Like many others, contracting is a people business. Many seasoned contractors secure much of their work via existing contacts (other contractors, agents they have worked with before, ex-clients) rather than job boards.

Try to keep in touch with other contractors, and harness the power of the web. Never before has it been easier to keep in touch with other people with minimal effort. Try our guide to networking.

Don't ignore IR35

If you are caught by the IR35 rules, you will be significantly worse off financially as a result. If you are a limited company contractor, make use of a specialist IR35 contract review service before starting a new role, and take out tax investigation insurance cover just in case. Both services are inexpensive, and could save you potential pain in the long run.

Although the Coalition has ordered a review of IR35 as "a priority", the rules are very much in place, so contractors should not be complacent about IR35 compliance.

You can read five more tips here