The process for becoming a building contractor in the UK is relatively uncomplicated, although it does involve some potential pitfalls you need to be aware of. Take the time to familiarize yourself with all legal requirements and similar details so you can avoid unexpected trouble down the road.
How to become a contractor in the UK
1. Assess the current market situation
Before you even begin, you need to understand your current market situation. Is there a significant demand for contractors in your area in the first place? Are certain specializations sought after more than others? There are many factors to consider here, and proper market research is the foundation of any successful contracting business.
2. Get familiar with taxes
You’re about to run your own business. This means that you’ll need to understand your tax situation in full detail. Working with an accountant can help, but it’s still your responsibility to understand everything you’re doing.
Pay special attention to VAT and IR35. Building contractors have various specific cases involving VAT and you will want to be sure that you’re not charging extra VAT on certain contracts. IR35, on the other hand, is a set of regulations which dictate who exactly is considered an independent contractor. It’s designed to prevent contractors from working as regular employees under the guise of their own company, and it has some serious implications for your taxes.
3. Register your business
If you want to be your own boss, the next step is to register your Ltd company. So, go ahead and think of your company name because you will need to register with Companies House and HM Revenue and Customs. You’ll most likely want to start your own limited company because it comes with tax advantages. On the other hand, if you don't fancy being a company director.
As a company director, you must register for Self Assessment, submit your tax return, and pay any tax liabilities
You can technically do the official registration sometime after starting your business – there’s a three-month grace period for that. But it’s highly recommended to take care of that as early as possible to avoid any bureaucratic hurdles.
4. Secure your first client
Now you’re ready to find your first client! This can be done in various ways. You can go online, post classified ads in local newspapers, or rely on word of mouth. All options have their advantages. It’s a good idea to set up your own website as well, as this will not only help you draw in new clients more easily but will also give you a more legitimate appearance in the market. And when you land your first client, you should give time and consider buying business insurance!
5. Explore opportunities for expanding
Once your contractor business has been running for a while, you’ll want to explore options for expanding it. There are multiple opportunities for that. You can look into expanding your own skill set, such as improving your soft skills, which helps with building relationships with other contractors who can pass you some contract work. Joining building contractor companies as a self-employed contractor can also give you extra cash flow to stay afloat. Look for job boards or phone them up. Another option is to use recruitment agencies to help you find contractor job.
Alternatively, you can hire new employees or branch out your services in different directions.
Instead of learning how to promote your new service, hire a marketing company that offers SEO services for contractors and can demonstrate a real example. Stay away from those who offer general marketing.
Whatever you choose to do, make sure you have a clear vision of the future and know where you want to be a few years from now. Now you have a better understanding of how to become a contractor in the UK.