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Successful contracting tips for limited company contractors

As a former IT contractor, and more recently an online news editor, I have heard the experiences of hundreds of contractors – both good and bad.

I have found that those contractors who have enjoyed successful careers often have sound advice on how to reap the rewards of contracting, whilst avoiding the many potential pitfalls which lie in wait for the unprepared.

Here are four well-versed tips for current and would-be contractors:

Save for a rainy day

Unless you are very fortunate, or have an incredibly sought-after skill set, there may be times during your contractor career when you find yourself ‘on the bench’.

The temptation to enjoy the financial benefits of contracting may be strong when you start out as a contractor, but many seasoned veterans aim to save enough money to cover their living costs for at least six months – just in case.

Choose a good accountant

If you are a limited company contractor, your accountant is likely to be the professional person you deal with most. Seek recommendations from colleagues and research the marketplace for a solid, reliable accountancy firm – one that has direct experience of dealing with IT contractors.

A good accountant will not only take care of your company administration, but will also minimise your tax liabilities through activities such as tax planning, exploring the benefits of the Flat Rate VAT scheme for your company, and ensuring that you meet your financial and legal obligations and deadlines.

IR35 compliance

The IR35 rules were implemented to clamp down on perceived ‘disguised employment’, whereby contractors would work for a client via an intermediary (their own limited company), but still work in the same way as traditional employees.

In order to fall outside the scope of IR35, contractors need to ensure that their contracts indicate that they are genuinely ‘self employed’, and the way they carry out their contract work (their working practices) also show that they are ‘in business on their own account’.

Always send your contracts to an IR35 status specialist for review, and consider taking out IR35 insurance just in case you are selected for an IR35 investigation.

Networking

The people you have worked with on past projects are also your most valuable assets when seeking new IT contract opportunities. Make sure you keep in touch with colleagues – both permanent and contract, as more contract vacancies are filled via recommendation than any other method.

Keep your LinkedIn profile updated, and indicate when you are looking for a new position. Take part in industry forums and online groups, and even consider setting up your own company website to flaunt your skills.

James Leckie is the owner of Contract Eye, an online resource for limited company contractors, freelancers and consultants. You can visit the site at www.contracteye.co.uk

By Troy Stevens

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