It is common practice for companies to take on IT Contractors when they undergo change. For example, when they undertake projects, downsize, upsize and introduce outsourcing. An IT Contractor can often bring in an additional skill or technology which is not available in house. It is fully anticipated that this trend will continue and grow for the foreseeable future.
The benefits for a Contractor over an employee include a higher rate of take home pay, flexibility, less office politics and often more stimulating work. This usually outweighs any potential job insecurity it brings. It does however introduce the need to find specialist accountants for IT contractors.
Often clients require that the IT Consultant operates through a limited company and this may be the first time you have done this. Once the excitement of becoming a Company Director dissipates there is an uncomfortable feeling of not knowing what to do, or what is coming next. This is where we can help you.
The majority of our clients are IT Contractors and Consultants and we have significant experience of contractor accounting for IT Contractors.
Normally the first thing to confront you after forming your company is the contract between your company and your clients (or possibly an intermediary such as a recruitment agency). This contract can run into many pages and is usually written in legal English.
This contract forms a vital piece of evidence to determine your IR35 status. You should get this reviewed by an expert in contractor accountancy, who will also give you advice regarding your contract and working practices before you sign. The tax implications of your employment status are considerable to you.
You also need to consider the insurance that you require for your business, some are compulsory, some are optional but you may decide that you want them. You will need to obtain a business bank account, and get your company registered with HMRC and will possibly need a VAT registration for your company.
Most IT Contractors find that the benefits outweigh the downsides as there is always permanent employment to fall back on if things don’t work out. IT Contractors often end up being in the same role for many years, which is perfectly acceptable as long as a few tax requirements are considered. These requirements can easily be met by working with a firm of good quality IT contractor accountants.
If you need a specialist IT Contractor Accountant to guide you through the tax and accounting requirements needed to do this then you should look for one that is convenient to your work or home as tax can be complicated and face to face meetings can be useful.
You can work through an Umbrella Company but working through your own Limited Company is the most tax efficient way of working. An umbrella company is a useful short term solution, or a practical way to work if you are inside of IR35.
We act as accountants for IT Contractors in and around London and the South East. If you are, or are thinking of becoming an IT Contractor talk to us as we will make your contracting more tax efficient and administrative simpler.
We can help you with all of this, and often if you are new to contracting it is helpful talk this all through with an expert contractor accountant over a cup of coffee.
Freelancer Accounting will provide you with a fixed fee accountancy services.