1. Your agent isn’t your agent
Many contractors, especially first time contractors think of their agent as being on their side.However, the contractor and agent are only on the same side briefly, when they are trying to get work from a client.As soon as that happens there is often an almighty scrap for the biggest percentage of the money the client is prepared to pay for the contractor.
Agents are on commission and the more that they take of the client’s money, and the less the contractor gets, the better for them.Very often commission is on a rising scale, e.g. 10% for hitting X amount of money, 20% for getting Y and maybe as much as 50% for getting Z for a set period, usually a quarter.So, the less the contractor gets as a percentage of the client’s money the more the agent gets and the higher rate of commission he or she may get at the end of the quarter.
They are basically incentivised to get as much business as they can and as big a slice of the cake as they can from the client.That’s why they love first time contractors and they have been known to take as much as 50% of what the client pays from gullible first timers who see their agent as their agent, and on their side, instead of as the main rival for the client’s money.
2. Pick the right financial vehicle
There are several ways a contractor can operate.They can work through a Personal Service company outside of IR35, they can work through a Limited Company but pay IR35 tax, they can operate as self employed or they can operate through an Umbrella Company.
Some contractors operate as self-employed but many clients are no keen on that because if they are found to be inside IR35 when they were operating as if they were outside of it then the client could be liable for their tax.Very few contractors set up Personal Service Companies and pay IR35 according to the Government’s own figures.
The main vehicles for contractors are Limited Companies (sometimes called Personal Service Companies) if they think they are outside IR35 and Umbrella Companies if they think they are inside IR35 or they just want someone to do the admin and don’t want to take the chance of being caught by IR35.Different options suit different contractors.
3. Manage your finances properly
Freelancing is a risky business.That’s why many people don’t do it.They want to make sure the mortgage is paid every month and there is money for the bills.One way for freelancers to take the risk out of contracting is to create a cash pile before making investments.Too many contractors either spend the money when they get it or they make investments which are likely to be tumbling in price right at the same time as the contractor is out of work.
When you first start contracting, work out how much you need to survive for a year if you are out of work and then save that amount of money before making any investments in property or the stock market.If that is too long for you then save 6 months money.If you take these three pieces of advice you will have a long and lucrative career as a contractor. For More Detail Visit : http://www.itcontractor.com
Three crucial Pieces of Advice for Freelancers