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Changing from PAYE to Limited Company contracting can be daunting, but we know that so many of our contract community are pleased they made the change! Over the years we’ve helped numerous people get ahead in the world of contracting and freelancing within data, product, UX and engineering. In our experience, sometimes the best time to start is after a redundancy when there’s no concern about notice periods or risk-taking in terms of giving up a permanent job.

 

If that sounds like you then you might find our six expert tips for a hassle-free setup helpful.

Quick Check Guide for 2024:

  1. Choose a Company Name:Start by picking a unique company name and domain. Visit Companies House to check availability. Remember, don't spend too long on this step – your name needs to be functional, not beautiful!
  2. Professional Email Address: Set up a professional email address to maintain clear client communication lines. Consider Google Suite for a comprehensive package including email and document storage. Easy to use, smart and around £5 per month.
  3. Company Setup and Support: The contracting world moves rapidly and requires an efficient and expert setup process. We've discovered that using the expertise of professional agents specialising in this area tends to provide a smoother transition than relying on local accountants. For those seeking guidance on a quick and effective setup, we offer access to our network of trusted partners. These partners not only provide discounted rates but also offer bundled invoicing software and complimentary advice. For a seamless start, contact us at contracts@consortia.com, and we'll ensure you're connected with the best resources available.
  4. Business Bank Account: It's crucial to have a dedicated business bank account. While high street banks are an option, we now recommend digital banks like Tide or Starling for quick setup and seamless integration with accounting software like Xero or Freeagent. This ensures that your business finances are handled efficiently and professionally. [Tide](https://www.tide.co) | [Starling Bank](https://www.starlingbank.com)
  5. Choosing the Right Insurance: Ensure you have the necessary insurance for the project. As standard we ask for £1m Professional Indemnity, £1m Public Liability, and £10m Employers Liability. These are not just compliance measures but also indicators of IR35 compliance. Visit [Hiscox](https://quote.hiscox.co.uk/business-insurance) for quotes.
  6. Invoicing Best Practices: For those opting to manage invoicing independently, it's important to understand that while free bundled software can facilitate this process, there are specific guidelines to ensure compliance. Invoices must be sequentially numbered (for example, 001, 002, 003...) and should not start with the company name followed by a number. Each invoice should clearly include vital details such as the company name, registration number, address, VAT registration number (where applicable), invoice number, days worked, rate, VAT amount, and the total due. Importantly, all payments should be made to official business accounts, as personal bank accounts must not be used for invoice payments under any circumstances.

Remember, staying organised and informed about the latest practices is key to a successful transition into contracting. For more information, advice, or support on transitioning to contract work in the UK visit https://www.itcontracting.com/

Ready to Launch Your Contracting Career?

Your journey into limited company contracting is an exciting step towards greater flexibility and potential in your professional life. Whether you're just starting or looking to navigate your next contract our team of experts is dedicated to connecting you with the best contract job opportunities in data, product, UX, and engineering. With personalised advice, comprehensive setup guidance, and access to our curated network of resources, we're committed to ensuring your transition is as smooth and successful as possible.

Visit our jobs page for all the latest contract opportunities tailored to your skills and ambitions. Or, for a more personal touch, reach out directly to one of our team members. Read on to find out more from one of our contractors first hand experience. 

Insights from a Valued Contractor: Lasse's Experience

One of our valued contractors, Lasse, shares his experience transitioning from permanent employment to contracting:

Benefits of Contracting:

  1. Higher Salary: "I have been put in a role that gave me a 20% salary bump which was obviously very nice."

  2. More Control Over Personal Finances:

    • "I can now manually decide how much I put in my pension every month."
    • "I can deduct VAT from any products I use for work (mouse, monitor, workspace, etc.)."
    • "I can even put aside my pre-tax income in a savings account or money market fund. So any personal savings account will give me dividends off of my pre-tax income."
  3. More Flexibility in Terms of Employment: "In my previous roles, I always had a 3-month break clause which made it much harder to switch jobs. I now have a reasonable 4-week clause that makes a transition easier."

Challenges of Transitioning to Contracting:

"The hardest part about it was taking the leap. It is just daunting to go from a safe perm role to a more flexible role. Once you get over that bump though, it will be worth it."

Tips for a Smooth Transition:

"Managing tax and finance can feel complicated. I used the accountant that Consortia recommended, and it took all the stress off. Paying for an accountant is money well spent and your accountant can give you advice that would be very hard to come by otherwise."

"Listen to your guts. If you have a couple of months of salary saved up, you’ll be fine. Worst case scenario you'll go back to a perm role."

Embrace the benefits and challenges of contracting with confidence, knowing that support and resources are available to guide you through the process. Thanks to Lasse for his insights. 

 

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