This is a question we often get asked as we are specialist freelancer accountants and look after the accounting and taxation affairs of many freelancer and contractors.
First thing is find out whether there is any demand for your services? Do you work in an office where they use other freelancers or contractors? Maybe chat with them to see how they find the market. Register with a recruitment agency who specializes in the area of work you do, who covers the geographical area s that you will be prepared to work in, and also ask them about the state of the market, then wait for the offers to arrive.
One you have tested the market, perhaps have an offer of work, then it is time to consider how you should set yourself up from a tax and accounting perspective.
Your options are sole trader, partnership, limited liability partnership, limited company or umbrella company.
Most freelancers and contractors would use a limited company as some companies will not allow you to contract as anything else or use an umbrella company.
Umbrella companies can be useful if the contract is inside of IR35 or is a short term contract, they tend to be very practical vehicles for getting contractors, contracting quickly, the downside is they are not particularly tax efficient especially if you are outside of IR35.
The option most freelancers or contractors take is form their own limited company and use that vehicle for their contracting. A company can be formed relatively quickly but will need its own business bank account and the appropriate registrations with HMRC for corporation tax, payroll and VAT, so if you are wanting to use a limited company for your contracting then it is better for you to start this process three to four weeks before you need the company so that it is ready for you to use with all the necessary registrations completed. You may also need your contract and working practices reviewed for IR35 purposes, which is something which as accredited professional contractor group accountants we have received additional training in, as well as being Certified Chartered Accountants.
If you are thinking about contracting talk to us as we will be able to advise you on the most appropriate vehicle to undertake your contracting and set it up correctly, so you can make your contracting more enjoyable and financially rewarding.