A contractor provides services to a specific client under specific terms for a set fee, under a contract of services.

Contractors charge a client fees. The fees can be charged on a lump-sum basis, a daily rate or an hourly rate.

Many businesses typically use contractors for:

  • Building
  • Catering
  • Cleaning
  • Diving
  • Engineering
  • Gardening
  • Marketing
  • IT Support
  • Recruitment
  • Security Services


Why Do Clients Hire Contractors?

There are many reasons why businesses will turn to contractors instead of permanent employees, below are some of the main ones:

  • They are usually more flexible over hours than permanent employees
  • They are easier to hire and fire. This helps as a project progresses
  • They provide skills the current staff may not have
  • No need to pay them holiday pay, sick pay, or redundancy pay
  • They are liable for their own national insurance

Reasons For Contracting?

There are many reasons why people choose to contract:

  • Additional Pay
  • Flexibility
  • Experience
  • Tax advantages


Whether it is one of the above reasons that is tempting you to contract or another reason entirely, the majority of seasoned contractors are likely to tell you that contracting can be very rewarding.

Is Contracting For You?

Being a contractor is very different from being employed. You are now your own boss! While this appeals to a lot of people, it also means that you are responsible for everything moving forward. If you don’t take it seriously and prepare from the outset you are likely to be found out.

While we have already pointed out the reasons for contracting and that the majority of seasoned contractors are very pleased they took the plunge and switched from permanent employment, it would be careless of us not to point out that there are potential risks involved.

You should consider the following:

  • As your own boss there will be forms to fill in, laws to abide by and (likely) accounts to keep
  • Less Protection. As you are no longer an employee you lose all rights that an employee has
  • No Guaranteed Income. While many contractors take breaks when they wish and contract when they want, there is always a chance that a contract may end and you spend time out of work looking for a new one
  • Unpaid Holiday and Sickness. You will no longer be paid for holidays or sick days as you (probably) were as a permanent employee.

What Makes A Successful Contractor?

Meet Bob.

Bob is great at adapting to new conditions. He has no problem dealing with different people, different cultures, different tools and different ways of working.

As well as dealing with new people, Bob is great at making new friends and can form new working relationships easily.

Bob likes to help people. He is able to do this without criticising their mistakes.

Bob also knows when his advice isn’t wanted. This is very important given that some contracts require him to be the only contractor working in amongst numerous permanent employees that have set processes in place.

Bob is always on the look-out for any potential problems that his client may face further down the line. This is because a problem for a business presents an opportunity for a contractor to fix the problem.

Bob uses Agencies to help find work. He doesn’t just rely on Agencies though. This affords him the opportunity to approach clients for work directly, something that would not be an option if he had a restrictive agency clause in his contract.

By taking multiple pieces of work through different clients, Bob is acting in the same was as a genuine business and therefore removes any IR35 threat.

Bob keeps in touch with any clients he has worked with previously. He is able to do this by keeping details of the clients he has worked for and maintaining a ‘point of contact’ there.

Bob is sure to make any ex-clients and agencies aware of changes to his contact details. By doing this he doesn’t miss out on any potential opportunities.

Bob is good at negotiating a higher rate than that originally offered. He is very good at judging when, and how far, he can push a client when negotiating that higher daily rate.

Bob uses an accountant. He doesn’t just rely on his accountant though. He keeps a keen eye on what tax his business is liable for and how much he needs to leave in the company to cover VAT and Corporation Tax, along with personal Dividend Tax.

Bob is aware that being a contractor can bring uncertainty and time “on the bench”. Because of this he has always put aside at least twelve months’ living expenses so that should the worst happen he is fully prepared.

Bob has a great reputation at all of the places he has worked previously.

Bob is the perfect contractor. Be like Bob.

If you can’t be as good as Bob then try to improve on areas in which you are lacking.