What do I need as a first time contractor?

Most first time contractors use an Umbrella Company in order to make their transtion to self-employment as smooth as possible.


Moving into contracting can be both daunting and liberating. Working for yourself naturally has positives and negatives, but overall once people move into contracting they don’t go back.

What are the positives & negatives of becoming a contractor?

Never one to avoid the pitfalls, in short contracting is both less secure than working for someone full time and also comes with added paperwork.

Security is something that can be both a blessing and a curse. Less security means that you can focus on a short-term project and when it’s completed move onto something else. This variety means higher engagement with your work, often building on previous projects to propel you towards being an expert in your niche.

Yet with more contracts and invoicing for your time rather than being paid as an employee, comes more paperwork. It’s also true however that with more paperwork comes a recognition from your end client that they need to pay you more than a normal employee too.

How can first time contractors maximise the positives?

The simplest way to contract is through an Umbrella Company. This is because working through an Umbrella Company is just like being employed by the end client. There’s no extra paperwork to complete and you won’t even need to worry about invoicing or paying your taxes.

Often contractors will use an Umbrella Company for their first year of contracting, whereafter they may opt to open a Limited Company (if they are allowed to under IR35 rules).

What is an umbrella company?

An Umbrella Company is in effect a payroll provider for contractors. Instead of letting them process your payroll, you actually become an employee of the Umbrella meaning they can pay you through PAYE and provide you with payslips.

Each week or month, you or your agency/client will tell the Umbrella what hours you have done and they will invoice the client for them. When the client pays the umbrellas invoice, they will pay you less their fee and any taxes due (fees range from £15-£25 per week).

Because you’re an employee you’ll also get other benefits like:

  • Statutory sick pay
  • Maternity/Paternity pay
  • Holiday pay
  • Insurance cover for any work you do (usually this would cost you over £500)
  • No Self-Assessment
  • Pension contributions

Some Umbrellas will even offer you employee perks like coffee vouchers or benefit subsciptions.

How do I find the best Umbrella Company?

F-ndr works with a number of accredited Umbrella Companies in order to provide you with the latest deals via our comparison engine.

A deal on our site is usually a limited time offer so it’s best to contact your chosen Umbrella to lock in the latest deals as soon as possible.


Leave a Reply

Your email address will not be published. Required fields are marked *