Financial troubles you can face as an IT contractorJoshMay 22, 20170 viewsIncome & Career0 Comments0 views 0 Making the switch from traditional employment to flexible work as an IT contractor can be a lucrative, fulfilling, and enjoyable career move, but you should be aware that being your own boss brings with it a host of new challenges and issues, such as additional financial and legal obligations. The basics of contract work As an IT contractor, you will provide your skills to clients and generally work on a short-term basis in a role such as a project manager, developer, systems administrator, or data analyst. You will be able to source job roles via recruitment agencies or by working directly with an end client, which is known as a direct contract. Sourcing the right roles The contracting sector is a competitive landscape, so you should submit your CV to a host of agencies around a month before you plan to go it alone. To increase your chances of securing the right job, you should: Call agencies you submitted applications to the day before. Chase up any positions you have recently applied for but haven’t spoken to an agent about. Search job sites to find new positions. Send off email applications. Repeat the process on a daily basis. It can be difficult when you are just starting out due to a lack of experience in flexible work, but with perseverance and bespoke job applications, you should be able to secure a suitable role. When you are ready to sign a contract, make sure that all the parties involved are fully aware of the factors involved, such as pay rates and duration, and that these terms are in writing. Financial pitfalls Conducting due diligence before signing a contract is one of the many actions that will help you to navigate the financial aspect of flexible work. For example, without a signed agreement, disputes can arise and you may not receive the payment you were expecting on time, which can have a detrimental impact on cash flow management and lead to financial concerns. It is also important to master the complexities of tax law as you will be responsible for filing records on an annual basis and meeting tax deadlines. Failing to meet these obligations can result in severe financial penalties, which can threaten the continuity of your small business. For contractors in the UK, legislation such as IR35 can also be complex. However, working with an umbrella company will enable you to get advice about all aspects of contractor pay. IT contractors inevitably have periods of time when they are “on the bench” following the conclusion of a contract, and this increases the risk of running out of money. It is important to make the most of the times when you are in work to build up a war chest to cover for these downtimes and establish a robust recordkeeping and invoicing strategy. Contractors are the most vulnerable when it comes to late payments, so always send invoices on time and follow up with reminders to ensure that third parties pay what is owed to you. Be your own boss Despite the challenges associated with flexible work, there has never been a better time for professionals with a tech background or IT training to pursue a career as an IT contractor. You will be able to attain a better work-life balance, use your skills and experience to secure well-paid broad and niche job roles, and enjoy the freedom of being in control of your own destiny.