Let us take the stress out of Self Assessment
Get your tax return sorted by experts for only £200 £100+VAT!
Take the stress out of Sole Trader Accounting, for just 1%+VAT of your money earned. No monthly subscriptions! With CrunchONE
Get 25% Off Crunch Pro and Premium for the first 3 months!

Making the move from permanent to contracting? Consider this checklist

Image of a hand writing on a notebook
Picture of crunch software on mobile

Professional Bio Templates & Examples

Create a compelling professional narrative for a proper, attention-grabbing introduction.
Website bios
Speaker intros
Professional Profile

Leaving the perceived comfort and security of a permanent job to become a contractor isn’t an easy decision to make, but it’s one that could see you reap the rewards of more challenging work, your own clients, higher pay and more flexible working arrangements.

The decision to quit your job and go freelance isn’t one to be taken in haste. There’s a few points you should read before taking the plunge.

Know thyself (and keep it moving)

Socrates was definitely onto something when he said, “know thyself” (even though we’re reasonably certain that his classical philosophy wasn’t intended for the 21st-century contractor community).

Take a good look at your portfolio of skills, work out what your speciality is and which skills – including transferable ones – you can best pitch to a potential client. The trick is not to over-egg or undervalue your credentials. The former will likely see you get found out (eventually) and the latter will see you left crying in your soup for selling yourself short.

Once you’ve worked out what your skill set is, you’ll need to maintain it. More often than not, clients expect contractors to hit the ground running with chameleon-like powers of adaptation, so you’ll have to be up to speed on all the latest standards, practices, technologies and techniques.

A contractor at the top of their game is one that stays abreast of all these things and more. They keep it moving.

Know the client (and their problem)

Contracting is a completely different animal to permanent employment.

Employers make a long-term investment in permanent employees whereas contracting is more piecemeal – it’s all about trying to convince a specific client that they should use your services to meet a specific goal.

You do this by demonstrating to the client that you have a near-encyclopedic knowledge of their business and the problem they want solving. The clincher is when you showcase your skills and experience that make you the best person for the job by a country mile. Clients hire contractors to fix a problem, so that’s what you need to sell.

Know when to take the plunge

Timing is everything, especially in the contracting world.

Just as Rome wasn’t built in a day, the odds are that your contracting empire won’t be either. So, take your time setting up as a contractor. Avoid quitting your permanent job impulsively (if you can help it). Instead, lay the foundations, build the walls and secure your position by carefully plotting your exit from the nine-to-five.

Work out a mental timetable for your resignation and eventual exodus from permanent work, making allowance for a tidy and professional winding-down of your current role. It could pay dividends down the line as your boss may be more partial to agreeing:

  • A shorter notice period.
  • A phased handover (where you work part-time hours in the last few weeks).

Before you hand in your notice, take a look at your contract of employment – especially the notice and termination clauses and any post-employment restrictive covenants. You won’t want to fall foul of either, so be sure to serve the right amount of notice and abide by any post-employment limitations, such as not soliciting or enticing clients or colleagues from your current employer (for however long your contract says).

It makes good business sense to keep your employer sweet throughout. At best, you may need a reference from them. At worst, you may need your old desk back if things don’t work out!

Know how to take the plunge

Get under an umbrella or go for a limited company? That is the question.

Will you seek the seemingly safer refuge of an umbrella company or will you go it alone as a limited company?

Get under an umbrella

The good news is you don’t have to take the contracting skydive as a solo operative – you can always do a tandem. But rather than having a skydiving instructor strapped to your back, you can fall back on an umbrella company which, for some, strikes the perfect balance between giving you the independence of a contractor and the convenience of an employee (essentially, the best of both worlds).

An umbrella company removes the stresses and strains of getting to grips with things like your accounts and taxes. It issues your work invoices to your recruitment agency (or end client) and, once payment has been made, you’ll be paid via PAYE.

You’re much less likely to feel out of sorts with an umbrella company because all your tax obligations are sorted for you in much the same way as when you were a permanent employee. This takes you out of the admin loop and frees you up to prioritise the business of getting clients, delivering results and making the moolah!

Using an umbrella company also means you’re free from IR35 worries, which is a huge plus in anybody’s books.

Go for a limited company

There’s a lot to be said for forming a limited company:

  • Higher take-home pay.
  • Ability to claim more expenses (than an umbrella company).
  • Limited liability protection in the event of things going awry.
  • Credibility with new clients. Some actively prefer not to engage the services of non-limited contractors.

If the thought of handling your own taxes fills you with more fear than Judge Dredd, you can always engage a specialist accountancy firm (like Crunch!) familiar with dealing with contractors.

The contracting question: are you a duck or a fish?

Taking the leap from permanent work to contracting isn’t for everyone. Some take to it like a duck to water, others like a fish out of water.

Ultimately, only you can decide if you’re a duck… or a fish.

guide cover for "8 great ways accountancy can help your ecommerce business"

Unlock your free ecommerce business guide!

Expert Insights
Actionable Tips
Strategic Advice

To receive our guide on valuable insights into the world of expenses for limited companies please submit your details below.

Please enjoy our guide on 8 Ways Great Accountancy Helps ecommerce Businesses Succeed. Click below to download our PDF guide.
Oops! Something went wrong while submitting the form.

By submitting you are agreeing to be contacted by Crunch.

Speak to an accounting expert

If you're unsure what level of support you need, our friendly team are on hand to help you pick the right package for you.
Self Assessment tax returns done for you, from just £200 £100+VAT
Take the stress out of Sole Trader Accounting, for just 1%+VAT of your money earned. No monthly subscriptions! With CrunchONE
Get 25% Off Crunch Pro and Premium for the first 3 months!
Share this post
Ross Bramble
Content Executive
Updated on
October 7, 2020

Knowledge Hubs

Take control of your accounts, today

Crunch’s effective software package includes being able to talk to an expert client manager and a Chartered Certified Accountant. You can count on Crunch to make you productive and profitable.
Picture of crunch software on mobile

Professional Bio Templates & Examples

Create a compelling professional narrative for a proper, attention-grabbing introduction.
Website bios
Speaker intros
Professional Profile

Unlock Your Free Limited Company Expense Guide!

Expert Insights
Actionable Tips
Strategic Advice

Save your seat! Live e-commerce webinar

Register and soak in the wisdom from top industry leader! June 27, 2024 1:30 PM
Dive into e-commerce basics
Expert industry insights
Practical tips and savvy tricks
Pro Tip
Looking for a dedicated accountant?

Our Enterprise packages offer tailored support for you and your business. You can focus on your business, we'll crunch the numbers.

Pro Tip
Boost your business finances with our Ltd Company packages!

Award-winning software with support from expert accountants

Pro Tip
Take the stress out of Sole Trader Accounting

Just 1%+VAT of your money earned. No monthly subscriptions! With CrunchONE

Pro Tip
Get 50% off your Self Assessment

Get your tax return sorted by experts for only £100+VAT!

Pro Tip
Using cloud-based accountancy software to manage your finances gives any small business a big advantage!

At Crunch we provide affordable cutting-edge, easy-to-use software with real human support from expert chartered accountants. That’s probably why 81% of our clients would recommend Crunch.

Pro Tip
Did you know - you have access to a Chartered Certified accountant for free on our paid subscriptions?

Book a call with our one accountants and get your questions answered. Just £25.50 +VAT for Crunch Free users.

Pro Tip
Get 50% off your Tax Return!

Crunch’s Self Assessment service provides an expert accountant to complete, check, and file your Self Assessment for you for just £100 +VAT.

Pro Tip
Did you know - We have a free plan that is great for sole traders and limited companies?

Why not see for yourself? It’s simple and easy to use and 100% free.