If you are going to start your own business as a freelance service provider in a certain field of expertise - whether it is engineering, land survey, building construction or information technology, it is important that you are able to account for your expenses, as well as your profit. To make sure you are going to charge a reasonable fee that will provide you with a good profit, then you need to have your own contractor rates calculator.
These are some of the advantages of using a contractor rates calculator:
- It gives you a clear picture of your current expenses and income.
- It helps you simulate your expected expenses and target income.
- It gives you an idea on how much you should charge for your services.
To develop your own contractor rates, you have to decide if you will be part of a contracting limited company or a contractor umbrella.
- To establish a limited company, you need to comply with all government requirements in the establishment of a business. If you plan to have a long term contracting career, then establishing a limited company is a good option. Limited contractor companies require you to have the expertise to handle the administrative responsibilities such as payroll, accounting and the fulfillment of other government requirements such as tax remittance. You may also hire a contractor consultant to help you in developing your own contractor rate calculator. You have to take note of consultancy rates to make sure your business can cover such a cost. The advantage of having your own limited company is that you get to decide what is best for your company.
- If you are just starting out in your contracting career, you can become part of a contractor umbrella company instead of going through the hassles of putting together your own limited company. This can be a temporary move, just so you can get a feel of the industry before you decide whether it is more fitting for you to establish your own company. Under a contractor umbrella, you do not have all the burden of running a company. Rather, you are part of a pool of contractors. The contractor umbrella handles all the administrative paperwork, and you do not have to worry about the details. Contractor rates are cut when you are part of a contractor umbrella, because a portion of your income goes to the umbrella company to recover their administrative costs. Transactions go through the umbrella company, so payments may be delayed as compared to a direct transaction between client and contractor. The contractor umbrella company handles contractor billing, so timing will have to be considered.
Being part of an umbrella company is good for those who are starting, because it is a good way to become part of a network. Contractors become competitive and more creative and cost efficient in providing services.