What You Need to Know If You Want to Start Contracting
So, you're thinking about contracting? Whether it's for a few months or as a career, there are a few things that you need to be aware of before you do so. Luckily for you, we've put together this guide to help you out.
One of the main things that you will most likely be concerned about is how will you get paid as a contractor. These are the three most common ways of getting paid:
The client will employ you directly on a fixed term contract and pay you on the same day as the rest of the workforce at an agreed rate.
2) Umbrella Company
They will become your legal employer and you will submit timesheets to them to get paid to a schedule that has been agreed. Working through an umbrella company will ensure that you can legitimately offset business expenses against your taxable pay.
3) LTD Company
This will give you full control of your revenue. You will invoice the agent or end client yourself and be responsible for your own tax and VAT returns and submitting end of year accounts.
If you choose to find your new contract through a recruitment agency, they will deal with the payments for you as they will effectively become the client. Here at RKA, we have been taking care of contractors for years, ensuring to provide a smooth process for our candidates.
Our contract payment process is as follows:
Submit your timesheet and your invoice (if working through LTD Company) to our payroll team
We will invoice the client according to your timesheet
The client will pay us directly
We will pay you as per your timesheet and, if relevant, your invoice
If the client is late paying us, you will still get paid. We pay all our contractors a week arrears every Friday, given that we receive your timesheet (and invoice) by the Tuesday of that week.
Now the next big decision to make is Umbrella or LTD company. If you fall under the new IR35 regulations that will be enforced in April 2020, you will need to get paid under an umbrella company, whereas if you do not fall under the IR35 regulation you can continue to contract through a limited company. Read our latest article for more information about the IR35 regulations.