Contractor Business Services UK

Chris Andreou

April 21, 2021

contractor business guide

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Contractors

Contractor Accounting, Software & IR35 Advice

Firstly, we'll start with the services that we provide which covers the critical things you'll need to start and operate your contracting business.

For those just getting started, we provide free company registration on Companies House. This is typically done within 24 hours of submitting your details to Forma. It can take under 5 minutes to provide all your details and we'll just need a proof of ID and proof of address for each of the company directors.

We cover all of your key company filing requirements like annual accounts, confirmation statements, corporation tax and ensuring you meet all filing deadlines.

We also help with your annual Self Assessment which is a requirement for all company directors.

Contractor Business Insurance

Depending on your contract agreement, you may be required to have business insurance cover.

There are two types of insurance you may be asked for as a contractor:

  • Public Liability: a fairly common and straightforward cover; if your business causes an injury or property damage to a member of the public, public liability insurance will cover you for the resulting legal and compensation costs.
  • Professional Indemnity: covers risks in association with your professional services such handling client data or working with intellectual property. It’s a must-have for many businesses and whilst not a legal requirement, many clients will insist that you have this coverage as a prerequisite to working with you.

We would advise against locking yourself into annual agreements (unless you get a significant discount) and to compare quotes - particularly if your pricing is over £30/mo.

We have a partnership with Superscript (formerly Digital Risks) and can offer a 10% discount on any business insurance policy with them.

You can read more about what business insurance you need and click the button below to get a quote in under 5 minutes with 10% off.

Contractor Business Bank Accounts

We've done some extensive reviews of different bank accounts available in the UK and our general advice is this - stay away from the large high street banks (including Metro) if you want an account setup relatively quickly.

A lot of new entrants to the business banking space have very quick onboarding, simplified account management and have introduced a range of banking products like overdraft facilities and loans.

Mettle

Mettle was launched by NatWest and RBS as a new challenger brand aimed at the micro business segment. The onboarding and account setup times aren't quite as fast as some other brands but they do include FreeAgent accounting software for free and we'll also give you a £10/mo discount on your package price if you have a Mettle, NatWest or RBS bank account.

Tide

Setting up a bank account with Tide is a breeze and works well for single director companies. Like us, they offer free company registration as well. The benefit here is that you won't have to add your verification details twice.

We can also offer £50 when you open an account with them and free transactions for a year (usually 20p per transaction).

Revolut

Revolut is perfect for those that need to send money abroad or who may have contracts that are paid in Euro's or Dollar's. They also have a range of integrations with Zapier which can help you send some smart alerts and triggers whenever you send or receive money.

We have a partnership with revolut to provide their grow account for free for a year - worth £300 year.

Registering a Limited Company Guide

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Registering a Limited Company Guide

Contractor Mortgages

Mortgages have definitely started to become more widely available for anyone who works as a contractor. If you have a few years of contracting experience then a mortgage provider will typically look at the last 3 years and use the average value of your income over the last 3 years. If your earnings have increased a lot over the last 3 years then they may also base your mortgage value on your previous 3 years of earnings.

Typically you'll be able to borrow between 4.5 to 4.75 times your gross annual income (i.e. salary before tax).

If you can explain a dip in your earnings (i.e. you had a baby or completed some professional training) then lenders can be amenable to adjusting the mortgage level they're willing to provide.

We highy recommend using Habito to find out more about your mortgage options.

Contractor Pensions & Investments

If you've got cash sitting in your business bank account then it's definitely worth looking at setting up a pension or investing some of the money.

If you have money sitting around in your account then you have a few options:

  • Invest in a pension - you'll get a host of tax benefits but your money will be locked up for a while
  • Invest in stocks/ shares through your limited company - you'll pay corporation tax on the investment value increase and then pay on the dividends you take
  • Take dividends and invest - this can depends on your dividend tax rate and you'll need to pay capital gains tax of 10% on an increase of over £12,500 in value

Pensions

PensionBee offer an excellent service for managing your pension. If you have a pension from previous employers then they'll help consolidate all of these pots into one place.

Their fees are very competitive and they offer a range of different

You can easily setup a regularly monthly payment from your business bank account to your pension pot as well and free tax topups from HMRC. They also have a range of risk profiles of assets to invest in.

You can find out more about your pension options when self employed and also get a free consultation call from the team.

Investments

MoneyBox offer a wide variety of investment classes for your company. We'd highly recommend speaking to your accountant before investing as you have.

With a variety of risk profiles and ETF's available, MoneyBox have some great investment options available.

Registering a Limited Company Guide

What's Inside:

  • What is a Limited Company
  • 10 step process for setting up a Limited Company
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Registering a Limited Company Guide

What's Inside:

  • What is a Limited Company
  • 10 step process for setting up a Limited Company

Get Free Advice from an Accountant

Book a free 30 minute call with an accountant. We'll help walk through setting up your business, switching accountant or any of your tax queries. All our accounting packages come with a free 30 day trial.

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What is an independent contractor?

An independent contractor is an individual who is engaged in a work agreement with a company or entity as a non-employee.

Factors that identify an independent contractor are:

  • They have a greater degree of control over their work
  • They offer a special skill set
  • They are able to get a replacement
  • They aren't entitled to employment benefits
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What are the different types of contractors?

There are different types of contractor jobs available across diverse sectors. Contractors may be hired to perform services such as:

  • Marketing
  • IT maintenance and support
  • Graphic design
  • Recruitment
  • Business development
  • Catering
  • Construction work
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19 Places to Find Contractor Jobs & Roles

When you get into contracting, it can get stressful when your project end date is just around the corner and you haven't secured your next role. This amps up even more once you finish a contract and you're looking for your next gig.

As a specialist contractor accounting business founded by contractors, one of the key questions we get asked is about where to find roles. So, we decided to compile a list of some of the best contractor job portals, platforms, recruiters and consultancies.

If you have anything else to add then please let us know at info@goforma.com.

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What is subcontracting?

As an independent contractor, there may come a point in time where you need to consider subcontracting-you might decide to take on work as a subcontractor, or hire a subcontractor for your projects.

Whichever option you're exploring, how do you decide if the benefits truly outweigh the cons? And are there important tips you need to keep in mind?

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Guide to employing or hiring contractors

You have an important project at hand, and you require a contractor's specialist knowledge to fill in the skill gap in your team. You're ready to hire-except that you're unfamiliar with the hiring process.

If this is your first time hiring a contractor, our article will guide you through the essentials.

We'll cover the following:

  • Sourcing for contractors
  • Assessing contractor CVs
  • Interviewing a contractor
  • Payments
  • Contract terms
  • Terminating a contract
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Is a contractor an employee?

Contractors can be self-employed, a worker or an employee. Those who are employed through an umbrella company or an agency could be considered a worker or an employee.

If a contractor is a sole trader or runs a limited company, he or she will then be considered a self-employed person.

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How do I become a contractor?

To become a contractor, you need to:

  • Do your research: The first step you'll need to do is to conduct in-depth research, and think through various important factors-from finances and tax implications, to lifestyle and business opportunities-to ascertain if becoming a contractor is the right decision for you.
  • Decide on how you'll operate: As a contractor, you may operate as a sole trader, through your own limited company, or work with an umbrella company or recruitment agency.
  • Develop a business strategy: Strategic planning isn't set in stone-but working out a plan is still helpful, as it is a way for you to consider multiple perspectives, identify potential opportunities and pitfalls and conceptualise back up plans you could fall back on.
  • Get your business finances and insurance sorted out: Setting up a business bank account, registering a company, determining the level of accounting support you need and investing in business insurance are important aspects you need to sort out before you begin contracting.
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Employing contractors

There are a few steps you'll need to consider with hiring contractors. These include:

  • Sourcing for contractors
  • Assessing contractor CVs
  • Interviewing a contractor
  • Payments
  • Contract terms
  • Terminating a contract
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What are the disadvantages of contracting?

The disadvantages of contracting are:

  • Uncertainty: Due to the flexible nature of their working relationships, contractors aren't guaranteed work after the end of assignment or project.
  • Responsibility: Not only is it the responsibility of the contractor to find work, they are also responsible for their own finances.
  • Employment rights: As a contractor, you generally wouldn't find yourself holding employment rights that permanent employees benefit from.
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Contractor Business Services UK

Firstly, we'll start with the services that we provide which covers the critical things you'll need to start and operate your contracting business.

For those just getting started, we provide free company registration on Companies House. This is typically done within 24 hours of submitting your details to Forma. It can take under 5 minutes to provide all your details and we'll just need a proof of ID and proof of address for each of the company directors.

We cover all of your key company filing requirements like annual accounts, confirmation statements, corporation tax and ensuring you meet all filing deadlines.

We also help with your annual Self Assessment which is a requirement for all company directors.

Read Full GuideRead Full GuideCalculate Now

Download Now:

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Is a contractor self employed?

Contractors can be self-employed, a worker or an employee. Those who are employed through an umbrella company or an agency could be considered a worker or an employee.

If a contractor is a sole trader or runs a limited company, he or she will then be considered a self-employed person.

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How to Become a Contractor

So, you're thinking of becoming a contractor.

There's probably one of three reasons driving this:

You've received a Job Offer

You've just received a job offer, and now need to decide on whether to set up a limited company, umbrella company or become a sole trader (or you may not have the choice in deciding).

You're in the right place.

This guide will walk you through the best company structure for you, accounting support, VAT, business services you need to consider and finding new opportunities.

You want to increase your pay

You'd like to increase your pay by switching from permanent roles to interim/ contractor roles.

Contracting can be very lucrative.

You'll need to be comfortable with a certain level of risk (short notice periods), increased monthly admin (as a Limited Company) and less benefits than being an employee (paid leave, sick days).

However, you'll earn more, get greater flexibility and hopefully grow a consulting business.

Project Flexibility

Getting multiple requests for your services? Amazing.

Setting yourself up as a contractor through a Limited Company means you can start expanding your client base rapidly and work on different projects a few days a week.

You can still set this up as a current PAYE employee of a company, and this can be a great stepping stone to launching your own business.

Let's talk about the right business structure for you.

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How to Start Contracting Guide

  • What is a contractor
  • Types of contractors
  • Contractor business structures
  • Contractor accounting
  • Understanding IR35
  • Contractor insurance
  • Banking for contractors
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What are the advantages of contracting?

The advantages of contracting are:

  • Flexibility: Contractors have a lot more control over their work life often deciding when they work, where they work and how they work
  • Increased earnings: Contractors are often paid more due to their skillset and the flexible nature of their working relationships. Additionally, contractors who operate through their own limited company can benefit from tax efficiencies.
  • Greater development: Often working with multiple clients throughout their career, contractors are exposed to a lot of opportunities to develop their skills and build on their experience in their area of expertise.
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What is a contractor?

A contractor is a professional that provides skills and services to a specific client under set terms. The terms can be for a set number of hours, a certain time frame or duration of a project.

A contractor is responsible for their own dealings and has discretion over the work they carry out.

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What is a Contractor?

You've been thinking about making the leap from employee to self-employed. If contracting is one of the options you're considering, this article is for you.

We'll run you through the basics, including what it means to be a contractor, how it differs from full-time employment and the type of business structures that contractors typically choose.

Contractors are self-employed individuals who provide services to a business. Generally, they're highly skilled, and are hired for projects that require specialist skills or to bolster a team during busy periods.

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Registering a Limited Company Guide

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