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So, you want to become a successful contractor, but aren’t sure where to start? With many companies looking to tap into contractors, there’s never been a better time for you to get into contracting.
Besides, the opportunities are just as promising: greater flexibility, a wider variety of work, a better work/life balance, and even a higher pay rate.
However, no matter how rewarding it can be, contracting can be challenging, especially if you’re coming from a full-time work background. Most of the time, contractors have to advocate themselves, negotiate their payrate, develop a pipeline of work, and fully come to grip with their tax arrangements. For a new contractor, it’s easy to feel intimidated and lost while considering all these factors.
In this blog, we’ll provide answers to the most frequently asked questions from newcomers to contractors to help you get off to a strong start.
What is the difference between a contractor and a subcontractor?
You may often hear these terms: contractor and subcontractor, and get confused about the difference. Both terms refer to non-permanent workers hired to complete specific tasks or projects, yet they have distinctions when it comes to business operations. Let’s dig further into the difference between contractor and subcontractor.
A contractor is a self-employed individual or entity hired to provide services to a company as a non-full-time employee. They operate under their own business name, supply their own service, and may work for multiple clients. Contractors are also responsible for their own insurance, taxes and benefits.
On the other hand, a subcontractor, is often employed in situations where business has already contracted with a primary contractor to undertake a project. The primary contractor may then hire additional workers, known as subcontractors, to complete specific portions of the project.
Subcontractors effectively have a contractual relationship with the primary contractor, not directly with the business owner or the company that initiated the project. This arrangement allows primary contractors to leverage specialised skills or additional resources to fulfill their obligations under the main contract.
Navigating common challenges: How to become a competitive contractor
Being a contractor is one thing, but becoming a competitive contractor where clients go after you is another thing.
What do I have to do to be competitive?
The world of contracting, by its nature, is competitive. You need to be strategic and creative to stand out in the crowd. Embracing a lifestyle of continuous learning and improving your skills through training and certifications can get you ahead. For example, if you’re a project manager, getting certified by the Project Management Institute (PMI) can help elevate your profile.
Aside from that, your past projects should speak for itself. Build up a portfolio of trusted clients and gather positive reviews and testimonials from them. Provide excellent service so your clients can vouch for your service.
It’s always valuable when employers have the ability to offer formal or informal training during your engagement, but this isn’t always the case. If formal training isn’t available, you should take advantage of free online educational tools such as edX, Udemy, Khan Academy, Coursera, Udacity, FutureLearn, and iversity.
What makes the best contractor?
Developing your skills and undertaking various training can easily go to waste if you can’t properly articulate or apply them to your clients. Delivering high-quality work on time is a valuable asset you need to work on to become the best contractor.
Here are some practical tips you can do to stand out from the rest:
- Be punctual and reliable. Consistently meet deadlines and follow timelines to meet your clients’ expectations.
- Be proactive. Communicate effectively and respond to your clients’ needs quickly. Address their concerns or issues promptly and maintain a client-centric approach to build lasting relationships.
- Be tech-savvy. Use the latest tools and technologies to improve efficiency and deliver high-quality results.
- Be adaptable. Make sure that you can adjust well when changes or challenges arise. Propose solutions without compromising quality, the project timeline or the budget.
With these practical tips, you can position yourself as a competitive and best contractor in the market.
Where should I go for work?
Recent findings from Gartner show that almost every business (91%) is either starting or actively pursuing digital initiatives. This shift is driving a growing demand for expertise in several key areas, such as:
- Data analytics: Roles such as data analysts, data scientists, and data engineers are essential for interpreting and leveraging data to drive decision-making.
- Cyber security: With cyber threats on the rise, there is a growing need for professionals like security engineers, architects, and administrators to safeguard digital assets.
- Customer support: These are call centre professionals, including agents, managers, and resource planning analysts.
- Risk management: Specialists in operational, financial, and commercial risk are needed to handle business complexities.
- Finance: There is a consistent demand for talent in finance, including analysts and those skilled in financial planning.
One thing is for sure: regardless of the job title, organisations are seeking more flexibility and the ability to scale quickly, which is where contractors can come into play. As a contractor, you add value by providing your specialised skills and supporting businesses in their growth journey.
If you’re new to contracting or looking to shift into these in-demand areas, focus on acquiring relevant skills, training, and certifications needed to transition effectively.
How will I be working?
There’s a stark difference between the ways of conducting work between full time work and contracting. You may be asking yourself:
- Am I able to work from home?
Working from home is now more possible than ever. There are now many technological tools that can give you the ability to work from any location. It can’t hurt to raise this during negotiations; you may find employers much more accepting of this than in the past. - Do I have to provide my own equipment?
This depends on the nature of the job and the client. Many contractors are expected to provide their own laptops or tools, while others may distribute these at the start of the contract and request their return at the end. If you are using your own equipment, make sure it can integrate with your client’s systems and restrictions. - Am I able to work for other clients?
As long as it doesn’t interfere with your current job, most contractors are free to undertake as much additional work as they can handle. However, check your contract for any clauses that might restrict you from working with competitors to avoid legal issues. - Is the work I do with a client my intellectual property?
If you’re working for a technology firm, it might be tempting to repurpose your code for other clients. In most cases, this is not allowed and could breach your contract. Some contractors might be able to get around these restrictions if they’re using code made outside of their billable hours, but it’s still risky.
How should I structure my tax?
One of the most challenging aspects of contracting is setting up your payment structure. There are different ways you can proceed with this, depending on how ‘hands on’ you’d like to get with your tax and other unique circumstances.
What type of company is best for a contractor?
Choosing the right business structure for your contracting journey depends on several factors, such as the size of your operations, growth plans, and the level of personal liability you’re willing to accept.
Depending on where you’re planning to register as a business or contractor, you have to look for the best structure that can lead to substantial tax savings and legal advantages. Here are some other things you need to consider as well:
- Liability protection: Compare and assess how much personal risk you’re willing to take on versus the level of protection each structure provides for your assets.
- Tax implications: Understand how each structure impacts your tax obligations, including potential advantages like pass-through taxation.
- Operational flexibility: Consider how much control you wish to retain and how different structures accommodate your business’s operational needs.
- Growth potential: Evaluate each structure’s capacity to accommodate the growth of your business, both in terms of size and revenue.
Regardless of what structure you choose, it’s best to seek expert advice. Taxes can be tricky, and regulations change frequently. Getting help from a tax advisor or accountant who understands the specific challenges faced by contractors can help you remain compliant.
Is it worth engaging a contractor management firm?
If you’re looking to simplify your contracting operations, working with a contractor management firm can be a strategic move. By partnering with a reputable firm, such as CXC, you can offload many time-consuming administrative tasks, such as invoicing, payments, and even dealing with regulatory changes. This way, you can focus on delivering high quality service and expanding your client base.
In addition, CXC can manage the entire process for you—including onboarding, engagement, payroll, and management of your contract work. This ensures a streamlined approach for all stages of your engagement.
Mastering contracting: How to become a successful contractor
To become a successful contractor, you have to start somewhere, be diligent, and have the right strategies in place to set yourself apart from the crowd. With these expert tips provided, we hope you are more confident than ever to navigate the world of contracting. While it may be difficult at the start, having a sheer amount of determination and mastery of your craft can pave the way to success.
Start by providing quality work to your existing clients. Word-of-mouth referrals work wonders and can be a powerful tool to grow your contracting career. Be professional and deliver your output on time. Invest in training or obtain certifications where necessary to solidify your expertise.
And don’t forget your legal obligations. Select the business structure that aligns with your operational needs and complies with regulations to avoid any legal troubles.
How CXC can support your contracting needs
New to contracting? It can be overwhelming at the beginning, but you don’t have to do it alone. CXC is here to make your contracting journey as seamless as possible. With over 30 years of experience, we understand the challenges contractors are facing and offer tailored service to meet your unique needs. Here’s how we can help you:
Receive the best contracting experience
Your contractor experience is our top priority—from the time you are onboarded and throughout your engagement with us. We always keep a human touch while providing the tech tools and process automation to ensure a positive experience.
CXC Contractor Experience
Removing administrative burdens
Handling administrative tasks and tax structures can slow you down. CXC takes care of payroll tax, super, paying your salary, and insurances. You’ll have access to our online portal, MyCXC, to manage your pay slips and details.
Join our global network of contractors
Working remotely can sometimes get lonely, but it doesn’t have to be that way. Be part of our vibrant community at Out of Office (OOO) by CXC. Connect with your fellow contractors around the world, share insights, and collaborate on projects. Plus, you’ll gain access to remote job opportunities from our trusted partners.
Speak to our team for a seamless contracting journey.
