Preparing to become a contractor
I've spent the last week thinking about preparing to leave permanent employment and here are the top 5 things I've learnt or found.
Since I handed my notice in just over a week ago I’ve gone full focus on turning the idea of becoming a contractor into a reality. As a serial planner and organiser, I’ve started to do a few things to get myself ready for the job change.
1. List all the resources and software I use day-to-day
When you’re going it alone, you no longer have a team or manager around to dictate to you what resources or software to use. As a designer, I originally thought that my main concern would be ensuring I have a professional licence for Figma, but there is actually more tools and software I use each day in my job.
This week I’ve noted time spent using the following:
If you’re familiar with the names of these tools on the list, you’ll recognise that nearly all are organisational and management tools. Creating this ongoing list as I wrap up my perm role means that I know what tools I’ll need, and hopefully, it should be a smooth transition into working for myself. It also means I can also start planning financially what monthly expenses will I be incurring.
2. Speak to an accountant
Not the TikTok kind, I’m talking about a real one who can actually help you with money. Luckily for me, I have a friend who does just that so after a short phone call a lot of my questions were answered. That said I still did my own research to gain a deeper understanding, but speaking with an accountant put me on the right path.
If you don’t know an accountant, I was also recommended https://www.crunch.co.uk/ This is accounting software with online accountancy packages, I won’t be using it but useful to share none the less.
Speaking with an accountant will help you decide whether you want to form a limited company, become a sole trader and what the implications are of both. I’d already set up a limited company back in 2020 when I was making WordPress websites, so I plan to use that for my contracting business.
To set up my company I used Companies Made Simple. For £20 they did all the hard work for me — They set up my private company address and contacted companies house on my behalf.
3. Youtube is an underestimated tool
Perhaps because I’m a bit older, but if you asked me to describe what youtube is, I would say it’s a website where you watch silly videos of cats or people doing dumb stuff. But long gone are the days when Keyboard Cat graced our screens (R.I.P). Youtube is now a super useful resource where you can find the answers to anything you need help with, whether that’s learning guitar, or understanding how to set up a limited company.
I’ve discovered a channel called Honest Money by Darren. It seems that he hasn’t posted any new videos but his channel still has loads of useful content. Here are a couple of videos I found super useful:
4. Getting business savvy with books
If you know me, I believe in divine timing and fate. And it just so happens as I decided to turn to contracting, the book You're the Business: How to Build a Successful Career When You Strike Out Alone was published on the same day. Naturally, I purchased the book straight away and I’m halfway through reading it already.
This book is a great beginner guide to freelancing, contracting or starting your own business. There is a lot of useful information which is neatly packaged in one book. If you’re not sure whether to purchase it, you can sign up for Anna Codrea-Rado’s newsletter instead to get a feel for the amount of value and advice she provides.
5. Understand new tools like FreeAgent before I need them
From various conversations, it seems that if you can afford accounting software then go for it. I’ve been recommended FreeAgent by a few people so I’ve signed up for a 30 day Trial.
Like most people, I like to jump straight into a tool and play around with it and see if I can figure things out for myself. However, I’ve taken a more strategic approach due to the serious implications of getting financial information wrong for a company. Luckily FreeAgent sent me an email with a link to a 30-minute webinar where I could see how to manage the basics like expenses, bills and payments.
This where I found that any payments made by the company using a company card are not an expense! And this is what I mean about being careful, if I had not watched the video and read the information prior and I had tried to claim all company purchases as expenses, not only would my accountant have a lot of work on his hands to fix it, it could risk me getting a higher tax bill than I had expected or really needed.
Even if you don’t use FreeAgent, their knowledge base is really useful too: Check out FreeAgents knowledge Base
I hope this was useful. If there are any other resources you think would help me on my journey let me know as I’d love to learn more.
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