How to Become a Contractor

Making the move to contracting can be a daunting time and finding clear advice often proves to be a challenge. That’s why SJD have created our guide explaining all of the steps you need to take to become a contractor.

Do your research

This is the first and most important step. Before you begin, you should answer the following questions:

  1. Is contracting right for you and your circumstances?
  2. Is there a demand for contractors in your field?
  3. Will you be able to make money from contracting?

Find contract work

In order to maximise your chances of finding work, especially in the early days, there are a number of steps you can take to maximise your chances:

Build an award-winning CV

Your CV will often be one of the first impressions a potential client has of you. It is therefore important to ensure that it reflects you as well as possible. You should outline your previous experience and any skills you believe would make you an asset.

You can find more information in the guides below:

Top 5 CV Tips

Top eCV Keywords

Be great at interviews

Preparing for an interview will maximise your chances of securing your new contract. You can follow our guides below for tips:

Interview Strategies – One

Interview Strategies – Two

Decide whether to go limited or umbrella

There are two ways in which you can operate as a contractor: through an umbrella company or your own limited company. Both routes have their own benefits and drawbacks but the best route for you will depend on your unique circumstances.

You can also view our table below for a breakdown of the advantages and disadvantages:

Limited Company

PAYE Umbrella



The most tax efficient way of working

 Very easy to use - simply enter your timesheet and expense details and wait to be paid

Claim a wider range of expenses

 All tax and NI is deducted before you receive your money, so you will have no further taxes to pay

 Access to the Flat Rate VAT Scheme

Ideal for short-term contracts

You keep complete control of your financial affairs

 Idea; for contracts less than £25k per year

 Greater opportunity for tax planning

Someone else will be doing the paperwork



You will have to complete your own paperwork

 The more expensive way of working - you will receive a salary that is subject to full PAYE Tax and NI

Can be costly if you contract for a short period of time then return to permanent employment

You are reliant on the umbrella company to collect your money from the client or agent and use it to pay you 

Not ideal for contracts less than £25k per year

 You have no control over your contracting finances (for example, dividends)

For more information about deciding to go umbrella or limited, you may find our guide to using an umbrella company useful.

Take home pay

The amount you could earn is one of the biggest factors for contractors when deciding which route they should take. Although limited company contractors generally earn more, a greater level of responsibility falls to you. 

You can find a detailed summary of the earnings you could expect depending on whether you choose the limited or umbrella option. 

You can also use our take home pay calculator to work out how much you could earn through your own limited company and an umbrella. 

Find an accountant

Entrusting your finances to an accountant who understands your needs as a contractor is paramount. As the UK’s leading contractor accountant, you can rest assured knowing that your accounts are in good hands. 

To find out how SJD can help you as you begin your contracting journey, call the New business team on 01442 275789 or email

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SJD Accountancy

SJD Accountancy are the UK's largest specialist provider of fixed fee, Limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 15,000 clients.

We are the only national specialist firm of contractor accountants with offices nationwide. SJD Accountancy has more qualified staff than any other firm in our market with qualifications from the following major tax and accountancy bodies - ATT, AAT, CTA, ACCA, CA, ACA and FCCA.

  • Unlimited face to face meetings. This is a unique service only SJD Accountancy offers - unlimited face to face meetings across the UK - tax is complicated and sometimes only a meeting will do.
  • UK's largest contractor accountants with more qualified staff. No call centres, no outsourcing, no automated call handling. Simply telephone, email or meet your own dedicated accountant face to face.
  • Our Customer Promise. Respond to any question sent to your accountant or any dedicated department within 24 hours.  If we need more time, we will update you as soon as we can and we promise to keep you informed of the progress we are making in answering your question.
  • Outstanding reputation. We have won more awards for customer service and accountancy excellence than any other firm in our market, including: Best Accountant for Contractors, Accountant of the Year and Best Professional Service Team to name just a few.
  • All inclusive low cost fixed fee accountancy package which includes completion of accounts*, payroll bureau, dividends and corporation tax computations, personal taxation, free bookkeeping software, your own dedicated accountant* and all company returns for a fixed fee starting from £120 plus VAT per month. Check our packages for more detail.

If you have any questions about contracting or would like any further advice please call our new business team on 01442 275789 or email: Our new business team is open Monday to Thursday (8am to 8pm), Friday (8am to 7pm) and Saturday (10am to 4pm)

Appoint SJD Accountancy and never worry about your tax or accountancy affairs again.

Form your own limited company with SJD - our same day online company formation service includes company bank account set up, VAT/PAYE registration and advice on optimum share structure. 

You may also find the following pages, guides and case studies useful:

*If you would like us to complete your company year end accounts we simply ask that you have been a client of SJD for one year or have made 12 monthly payments. All accountants are part or fully qualified.