Software Architect / Microsoft MVP (AI) and Pluralsight Author

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Steps to becoming an IT Contractor


I spent time as an independent contractor and thought I’d put together some of main activities involved whilst breaking out on my own.  This may be of interest to others that are about to make the leap or who are thinking of moving from the permanent jobs market to the contracting market.

Why become a contractor?

Everyone will have their own reason for making this decision.  In my mind it comes down to  few things.

  1. Money
  2. Freedom (I suppose this is a by-product of #1!)
  3. Variety

As a contractor you will earn roughly double than that of a PAYE employee and whilst this is great it’s important to be mindful of the following.

No sick pay, no holiday pay, no employee benefits, no company pension.  Fluctuating income as you work between contracts – possibly weeks or months at a time.

That said, the coin you will be earning can make up for this and you may be able to take advantage tax relief in certain circumstances.

You’ll also move between companies every few months which will expose you to different sectors, multiple software products and tech stacks.

First Steps

Decide on whether or not you want to go through an umbrella company or form your own limited company.  I opted for the latter and wanted full control of the money coming into the company.


You’re going to have to pay corporation tax on funds coming through your LTD company, why have an umbrella  take more of your money?

Limited Company Formation

You can do this directly here via the governments site and complete the forms or you can pay a small fee to a company such as Rapid Formations which is what I did.  I got the cheapest option and got the documents emailed over to me.

Use your passport name when registering yourself as a company director.  This is important.  Don’t use any aliases.  Decide on your company name, don’t make it too crazy – think about how it’ll look on your invoices.

When you have done this you will be emailed a copy of your limited companies documentation which will include the certificate of incorporation.

Bank Account

You’ll obviously need a bank account to get paid from clients.  The main high street banks offer small businesses free accounts for 12 months or more.  Be aware that after this period lapses you will get charged a fee every month for the privilege of having the account.  To open the account you will need to certificate of incorporation (which you’ll get when you register your company) and some formal identification such as your passport and/or driving license.  The names much match across all documents exactly!



Some clients will demand that you have specific types of insurance in their contracts, it’s your responsibility understand what that they expect and cover your company appropriately.  This will cover you in the event that you destroy client data/systems.

Check out Hiscox.  I got a deal for about £40 per month.  You can switch this off in between contracts if you wish.

Finding Work

You need to think about how far your willing to travel in order to secure work. Don’t just restrict yourself to your local city (unless there is an abundance of contracts).

My main resource for checking out contracts was JobServe.  Connect with recruiters on LinkedIn.  Get to know recruiters.  Don’t fire and forget your CV, follow it up with a phone call and let the recruitment agencies know what your rate is, skills are and how far your’re willing to travel.

The reality is that most clients want their contractor ASAP (yesterday.)  If you’re on a standard 4 week notice period they’re probably not going to wait for you.

Billing and Accounts

When you form your LTD expect to receive quite a few mailshots through the post advertising professional services in the legal and financial space.  The chances are if you’re just starting out on your first contract, you’ll only be serving one client and thereby only be producing one invoice a week.

Explain this to any accountants you are thinking of using and negotiate a monthly or annual fee.  Let them handle your annual submissions to Companies House.

Maintain a spreadsheet each week of expenses and categorise them by date.  Keep every receipt you can for expenses incurred during your contracting activities.

This includes receipts for food, fuel, home as office, accommodation.  If applicable,  record the number of days you spend in your own time (i.e. your company time) undertaking any research and development activities.

Marketing Yourself

If you haven’t already done so, register a domain name, get yourself a website and start to generate content on industry specific topics that you’re interested in.  Do this regularly.


Setup social channels like Twitter, Facebook, LinkedIn and connect with others that are in the same space as you.  Share consistently on social channels.  Automation tools are your friend.

Build your brand (as cheesy as it sounds).  I appreciate this doesn’t generate the invoices but you’ll connect with like minded individuals and/or find business opportunities.

For example, during the development of Social Opinion I received valuable feedback from a VC that helped me understand what I should be putting into my slide deck – simply by connecting on LinkedIn and Twitter.

Skills, training and certifications

Invest in yourself to maintain a level of competitiveness.  It’s in your interests to keep abreast of emerging trends and technological shifts.  Certifications may not be your thing and I believe experience trumps certs every time but the odd certification or new qualification every year can help get you noticed.  Use things such as Pluralsight, Udemy and the Microsoft Virtual Academy.


At the point of writing, legislation has been changing with regard to IR35.

This is having a massive impact right now.  I was never affected by this but you must seriously consider IR35 when applying for prospective contracts as it will affect how much you take home.

As a contractor you would typically pay yourself a minimum wage to ensure you make national insurance contributions then pay yourself dividends as the company director which can save you a little on tax.

In essence, IR35 it’s the governments way of taking more money off you in tax as one man band LTD company.  There is an online questionnaire here to help assess if your contract falls within IR35 or now.  You can also find some other related information here if you’re interested.

So that’s it.  Hope this gives you a few pointers if you’re thinking of making the leap.

Good luck!

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