Why become a Project Management Contractor?
Many large organisations have now grasped the benefits of working with external contractors as opposed to employing full time staff – and the hiring of Project Managers is no exception. A contract-based Project Manager provides employers with a truly flexible ‘call on demand’ resource which can be brought in for specific projects when required, be they short or long term. There are many reasons why you might choose to work on a contract basis, but money is definitely one of the key ones. In fact, contractors almost always earn more than their employed counterparts, which is only fair considering the loss of holiday pay, sick pay, pensions and other employee benefits. Our online take home pay calculator can show you how much more you could earn by contracting through your own limited company
Accountancy Services for Project Management Contractors from RMI
If you’re working as a contractor through your own limited company, there are a wide range of financial issues to consider, so you must give yourself enough time to manage your tax affairs properly - so you don't pay too much or too little tax, or miss a deadline and face penalties from HM Revenue and Customs. So even though you are a Project Manager yourself, you might want to look for some specialist external support!
Becoming a Project Management Contractor
If you are still unsure whether contracting as a Project Manager is right for you then the following links will provide you with the information you need to make an informed decision
- Why Become a Project Management Contractor?
- Working as a Project Management Contractor
- Getting Paid - the Options
- Finding a Contract
Depending on your level of experience, on where you are based and on the state of the economy at the time you start contracting, you could expect to earn twice as much, or even more, than a permanent Project Manager would. As much as £65 per hour or more in fact - which is only fair considering the loss of holiday pay, sick pay, pensions and other employee benefits. Our take home pay calculator can show you how much more you could take home as a contractor Money is not the only positive aspect of a decision to work on a contract basis. When the market is good, you could find yourself in a position where you can choose where, when and for how long you work - and subsequently, how much holiday you can take! And as an external contractor you are free from internal politics and can often find yourself in situations where you are learning new skills and gaining valuable experience while you work. But with this level of freedom comes the responsibility to make sure that you do actually find and complete enough contracts to maintain your required level of income. This is quite straightforward when there are lots of projects available which suit your skill set, experience level and location - but it can be tougher in more challenging economic times, when projects are not as readily available, and the competition for the best contracts is that much higher. For further advice on finding and securing your next contract role visit out Contractor Careers Centre. The decision to move to contracting is often a conscious one, but sometimes it happens as the result of redundancy, where you simply don't have a choice if you want to keep the money coming in. Either way, as soon as the decision has been made, there are a number of things that you will have to consider. The most vital of these is the need to 'project manage' your finances yourself, as you will no longer just be paid by a payroll department somewhere within your employer's organisation! In general terms, Project Management is defined as being 'the discipline of planning, organising and managing resources to bring about the successful completion of specific project goals and objectives'. Sounds pretty straightforward! But once you're doing this for your client, who is looking after the 'planning, organising and management' of your business finances? The first step is to decide how you will operate - the two most common options being to work through an umbrella company or to set up a limited company. There are pros and cons to each and you can find out more about this in our services section. If you do choose to set up a limited company, RMI Accountancy can give you a wealth of information and advice - as well as providing a low cost fixed-fee accountancy service which has been developed specifically for contractors.
Working as a Project Management contractor through your own Limited Company
It's often said that contracting through your own limited company is a daunting task, but nothing could be further from the truth. In fact, administering your own limited company, with the support a dedicated firm of accountants like RMI Accountancy, is simple, efficient and inexpensive. It is also the most tax efficient way of working, meaning you will take home more money - as much as £15,000 more on a £350 daily rate when compared with using an umbrella company. Other benefits include:
- Ability to claim a wide range of expenses - accountancy fees, equipment, software...
- Access to the Flat Rate VAT scheme.
- You keep complete control of your financial affairs, which means that you don’t have to risk your money with any third party administrators.
Working as a Project Management contractor through your own limited company does require a little more work than using an umbrella company as there is a certain amount of paperwork involved, but only about 10 to 15 minutes per month. Here is a quick overview of what’s involved:
- Firstly, you'll need to check name availability and form a company, but this takes just five minutes and can be done here by visiting our company name checker.
- You’ll then need to open a business bank account, and RMI can also help with this.
- Once you’re up and running you will need to send in a spreadsheet each month, just as you would if you were using an umbrella company
- From time to time you will need to send cheque's off to Her Majesty’s Revenue and Customs. When that time comes, we will help you to understand exactly how much you need to send.
Getting Paid - The Options
Following the April 2007 Budget announcements there are only two real options for Project Management contractors:
1. Operate through your own limited company. It is very important to stress that these must be genuine, one person Limited Companies and not a 'scheme' dreamed up by what are nothing more than marketing organisations.
2. Work through a PAYE umbrella company and pay full income tax and full national insurance contributions on your entire earnings.
A large percentage of ‘employment services’ companies offering to set up Personal Service Companies or put you in a special 'scheme' are wide open to attack by the Revenue under the new guidelines, and it is unlikely that the major agencies would deal with them. Remember, if they don't have Accountancy in their name they probably aren't Accountants.
Finding a Contract
This is always the challenge of course – and there are two main routes.
- Through specialist recruitment agencies
- Through networking. Personal contacts will be a vital tool here! Many Project Management contractors tend to try this option first and it basically involves getting in touch with anyone and everyone that you've worked with in the past and letting them know that you're looking for contract work. Start handing out those business cards and make sure that your name is always in the frame when a client is looking for someone with your skills and experience. Even if the people you know are not the actual clients, your past colleagues will be happy to recommend you if they become aware of a position which will suit you – assuming of course that it’s not ideal for them as well!
- Through a job board such as project manager jobs.
You should make sure your CV is as up to date as it can possibly be, and that it is saved in a universally-recognised format such as Microsoft Word, or as a PDF file - so when you start to email it out to prospective companies, you can be sure they will be able to read it. It's also a good idea to have some business cards. They are useful for meeting situations whilst sorting out your first contract and are always worth having as you continue in your contracting career, as you never know when an opportunity might present itself in the future. For further advice on how to perfect your CV and perform well in that all important interview visit our Contractor Careers Centre
Accountants for Project Managers and Project Management Consultants
The Wikipedia definition of Project Management is the discipline of planning, organising and managing resources to bring about the successful completion of specific project goals and objectives. However, there is no mention of all the other pressures project managers are constantly under, such as: ever changing government regulations, competitive pressures, clients who change their minds mid way through a project. To cap it all, if you're an owner managed consultant or contractor you have to allow sufficient time to manage your tax affairs so you don't pay too much or too little tax or miss a deadline and face penalties from HM Revenue and Customs. As in many industry sectors, more and more employers would rather hire external consultants and contractors as it provides them with a truly flexible ‘call on demand’ work force. It’s a win-win relationship as the consultants and contractor's also have much more flexibility, freedom from internal politics not to mention higher rates of pay. Consultants and contractors almost always earn more than their employed counterparts which is only fair considering the loss of holiday pay, sick pay, pensions and other employee benefits.
If you’re interested in the savings you could make to maximise your earnings, have a look at some of these pages
- Pay less tax – advice on how contractors can pay less tax
- Going limited – why it’s so much more tax efficient
- Take home pay calculator – the net pay you could make through a limited company
- Expenses – which expenses can you claim?
- Finding contractor work – struggling to find work? Here are some handy hints to help you on your way