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How to become an IT contractor

22 Nov 2016

We’ve already looked at what an IT contractor is, but how do you actually become one? Daniel Dubbert, the IT contracting operations manager with Hays Recruitment, has the answers.

Unfortunately, there isn’t a magic switch you can flick that will turn you into an IT contractor overnight. There are a number of considerations you’ll need to make to prepare you for the world of contracting from a commercial and legal point of view.

When becoming an IT contractor, these are three things you need to do.

Make sure there’s a market for your skills

You need to be certain there is a large pool of clients out there who are looking to hire for your skills.

Searching job boards and recruitment websites will give you an idea of the number of companies recruiting for different IT roles at any one time. If there are lots of permanent offers for a certain role that your skillset covers, you can assume contract offers will also be prevalent.

You should also look at popular blogs and websites to understand the trends that are in the market. Will your role still be hot in two years’ time or are there other skills you need to pick up to make sure you stay ahead of the curve? Continual investment in training is critical to being a successful IT contractor.

Finally, speaking to an experienced recruitment consultant can be a really useful way to get an expert perspective on the employment market. At Hays, we have consultants covering different specialisms and locations, so we will be able to give you a clear picture of the market relevant to your personal situation.

Set up your own legal entity

Firstly, it’s important to note that there are key differences in employment law in different countries. There may be conditions unique to your country that mean you should set yourself up in a particular way to be of the most benefit.

All things considered, most contractors choose to set themselves up similarly to a UK ‘limited company’ model, as this usually gives them a number of tax benefits. You will need to register your company with the relevant national agency and provide information such as your company name, address, director(s), shares and shareholder(s) etc.

You will also need to act as an independent company, even when using a recruiter, and market yourself appropriately, eg creating your own website to promote your services.

When working for a client organisation, it’s important to remember you aren’t like their permanent employees, even though you may be working side by side with them on a project. Of course, you should do your best to integrate yourself into the team, but you will always be set apart as you are working as your own company at all times. Making sure you always carry business cards with your company information, which can be a useful reminder of this fact – and you never know when you might get a chance to network.

Be prepared to deal with taxes and administration

Like any company director, you will be responsible for the taxes and administration involved in running your business. Things can go very wrong, very quickly if you fail to manage this side of things. Many people decide to hire an accountant to help them, or even share one with a group of fellow contractors. Their expertise is especially useful when dealing with complicated tax issues.

As well as this, you will need to consider saving money for when you have a gap in employment or if you need to take time out for an illness etc. Retirement planning is also something you will need to actively manage as an IT contractor.

You will also need to insure yourself and your business. As you are working in a complex technical environment, any mistakes made could be costly. For example, if an error causes an application to be unavailable for a period of time. You need this protection in case a client sues you as a result. These cases are rare, but it is still important to be covered and, in fact, clients often make it a condition in your contract that you need to be insured before working with them.

Working as an IT contractor can be very rewarding, both professionally and financially, but you will only truly be able to enjoy the benefits when you take care of all the extras that come with the job.

Daniel Dubbert is responsible for managing the IT contracting departments across all of Hays EMEA (France, Luxembourg, Belgium, Netherlands, Spain, Italy, Czech Republic, Sweden and Poland).

A version of this article originally appeared on Hays’ Viewpoint blog.

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