Depending on your level of experience, on where you are based and on the state of the economy at the time you start contracting, you could expect to earn twice as much, or even more, than a permanent Project Manager would. As much as £65 per hour or more in fact – which is only fair considering the loss of holiday pay, sick pay, pensions and other employee benefits. Our take-home pay calculator can show you how much more you could take home as a contractor
Money is not the only positive aspect of a decision to work on a contract basis. When the market is good, you could find yourself in a position where you can choose where, when and for how long you work – and subsequently, how much holiday you can take! And as an external contractor, you are free from internal politics and can often find yourself in situations where you are learning new skills and gaining valuable experience while you work.
But with this level of freedom comes the responsibility to make sure that you do actually find and complete enough contracts to maintain your required level of income. This is quite straightforward when there are lots of projects available which suit your skill set, experience level and location – but it can be tougher in more challenging economic times when projects are not as readily available, and the competition for the best contracts is that much higher. For further advice on finding and securing your next contract role visit out contractor careers centre.
The decision to move to contract is often a conscious one, but sometimes it happens as the result of redundancy, where you simply don’t have a choice if you want to keep the money coming in. Either way, as soon as the decision has been made, there are a number of things that you will have to consider. The most vital of these is the need to ‘project manage’ your finances yourself, as you will no longer just be paid by a payroll department somewhere within your employer’s organisation!
In general terms, Project Management is defined as being ‘the discipline of planning, organising and managing resources to bring about the successful completion of specific project goals and objectives’. Sounds pretty straightforward! But once you’re doing this for your client, who is looking after the ‘planning, organising and management’ of your business finances?
The first step is to decide how you will operate – the two most common options being to work through an umbrella company or to set up a limited company. There are pros and cons to each and you can find out more about this here.
If you do choose to set up a Limited company, SJD Accountancy can give you a wealth of information and advice – as well as providing a low-cost fixed-fee accountancy service which has been developed specifically for contractors.
Operating as a project management contractor
1. Operate through your own Limited company. It is very important to stress that these must be genuine, one person Limited Companies and not a ‘scheme’ dreamed up by what is nothing more than marketing organisations.
2. Work through a PAYE umbrella company and pay full income tax and full national insurance contributions on your entire earnings. For more details of umbrella companies, visit our sister company Parasol Group’s website.
A large percentage of ‘employment services’ companies offering to set up Personal Service Companies or put you in a special ‘scheme’ is wide open to attack by HMRC under the new guidelines, and it is unlikely that the major agencies would deal with them. Remember, if they don’t have Accountancy in their name they probably aren’t Accountants.
If you have any question about contracting or would like any further advice please contact us on the below form.