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:
Figma
Gmail
Notion
Dropbox
Slack
Grammarly
Harvest
Forcast
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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If you have any questions or just fancy a chat? Email me at liz@skyburgerstudio.co.uk or send me a tweet @lizhamburger