The How’s of Contracting: Everything You Need to Know

Whether you're a seasoned professional or just starting, understanding the key aspects of contracting is crucial for success. In this blog, we reviewed the top searched “How” questions related to contracting, and we hope we have clarified some points to allow professionals to navigate through the contracting process with ease!

How Contractors Are Paid

Contractors agree on a daily or hourly rate with their client and receive compensation for the days or hours worked during a billing period. Typically, contractors submit an invoice to their agency or client at the end of each billing period.

If you are using an Umbrella Company, our team at Icon Accounting will manage both the invoicing and payment process for you. Your timesheets and worked hours are submitted through the Icon Accounting App or Portal, and we generate invoices on your behalf. Once the funds are received from your recruitment agency or end client, we promptly process your payroll and transfer the net funds to your personal bank account along with your payslip.

For those using a Personal Limited Company, the process is slightly different. You will still submit your timesheets and worked hours through our app or portal, and we generate invoices on your behalf. The payment will be handled through your company's bank account. You will have a dedicated account manager who will organize your payroll and advise on the amount you should withdraw to your personal bank account. They will also ensure that you operate in the most efficient manner and discuss the financial planning you should have in place while operating as a contractor.

This seamless process ensures that all your invoicing and payment responsibilities are managed efficiently, whether you choose an Umbrella Company or a Personal Limited Company with Icon Accounting. 

How do Contractors Charge

As a self-employed professional, your compensation is based on the time you work and the skills and experience you bring to your client's project. You can set a fixed daily rate or an hourly rate, depending on your agreement with the client. Your billing schedule will be confirmed by your client, and services like Icon Accounting can then invoice for the days or hours you work on your behalf. This flexibility allows you to align your rates with the specific demands and scope of each project.

How Contractors Work

When contracting, you will have a Contract for Services in place between your limited company and your client or agency. Unlike traditional employment, where you are 'in the service' of an employer, as a contractor, you 'provide services' as a consultant to a business. The terms of your role, including your responsibilities and the project's scope, your working arrnagement agreed and your compensation, are outlined in the contract for services. It's crucial to adhere to these terms during the days or hours you work to ensure compliance and satisfaction for both parties.

How Contractors Get Paid

Your payment process can vary based on whether you choose an umbrella company solution or a personal limited company. Regardless of the structure, it's essential to follow your client's invoicing and payment schedule. At Icon Accounting, your dedicated account manager will provide this schedule to you. Generally, the process involves submitting your worked hours or days, along with timesheets if necessary, through the Icon Accounting App or Portal. We then generate invoices on your behalf to request payment. Once the funds are received from your recruitment agency or end client, we promptly process your payroll and transfer the funds to your bank account.

How Contractors Find Work

According to our latest survey, LinkedIn is the top tool contractors use to find new opportunities. Therefore, it's vital to maintain a strong personal brand on LinkedIn. Ensure your job roles, skills, and network of colleagues, fellow contractors, and recruiter connections are up to date. Networking is also key; as an independent contractor, building and maintaining professional relationships is crucial. For more networking tips, check out our blog on essential networking strategies for contractors here. 

Navigating the contracting world can be straightforward with the right information and support. By understanding these fundamental 'How' questions, you can better manage your contracting career and achieve your professional goals. For further guidance and resources, stay tuned to our blog for the latest updates and tips!