Qdos Contractor - Contractor Insurance

For many professionals, when beginning their journey into being self-employed, they are stumped at the first hurdle. What do they call themselves? With names and labels for one man companies being bandied around the business sphere tenfold, sometimes it is hard for a business first timer to brand themselves as an established professional.

The two terms that are most common for those self-employed business people are either a Contractor or a Freelancer. Although these two terms may seem to be given to the same thing, the differences are in fact clear and important when looking at professional description.

The key differences between the two professions become noticeably apparent when looking at both the contractual and financial aspects of the work. What is meant by this is what people will expect to pay for each either a Freelancer or Contractor, and for how long and by what means they will expect to engage in them. The short answer is that the contractor or freelancer’s role is generally to actually perform work, and these are usually differentiated by the engagement model used (the contract).

Contractor

A contractor is an experienced and skilled professional who works via their own limited companies, and is basically one who provides a specialist service to a company in return for a fee. Contractors are used by organisations that wish to acquire a given skill set for a period of time, but which do not want to employ someone permanently. As such, a ‘contract’ is usually full time but for a set period only. Contractors can work remotely from home, in the case of IT contractors for example, or actually arrive at a permanent destination (like an employee) for the duration of their contract. It must be noted here that contractors are not employees, and because of this face certain advantages and disadvantages. Contractors, as one man limited companies, do not reap the benefits of an employee when working for a company (sick pay, insurance and bonuses for example) rather working as an outside company within their firm. As a result of this, the need for contractor insurance is high, as without an overhanging insurance umbrella provided by an employer, they are liable and therefore vulnerable in the event of a claim. On the flip side to this however, contractors are not tied down to the same tax bracket of employed professionals and pay far less tax as a result.

Freelancer

The terms freelancer and contractor are often described as the same, but when actually breaking down the professions, they become very different. Unlike freelancers, contractors work through their contracts full time for one client who acts as an employer on their own premises. A freelancer usually has their own location (commonly they will work from home). Another discerning factor between freelancers and contractors is that a freelancer usually has multiple clients, whereas, as mentioned, a contractor will be tied down to a single role for the duration of their contract. Freelancers will work on an hourly or result basis and could have many different pieces of work on-going for a number of different clients. An example of this would be a ‘Freelancer Journalist’, who would not work for one employer, but write stories and sell them to a number of different publications. Freelancers generally command similar rates of pay to contractors, but will only earn the same as a contractor if they bring in enough business across all of their clients, to enable them to work a similar number of hours as a full time contractor does.

Freelancer or Contractor

Before you decide to dedicate yourself to becoming an IT Contractor, there are a few useful tips that can come in handy to ensure your success. Dealing with clients, protecting yourself with IT Contractor Insurance and working to deadlines are just some of the things you will need to do as a freelance IT specialist.

Skills – Many IT contractors will have studied for an IT related degree or course, giving them a good in-depth knowledge of the subject. IT and technology are constantly evolving and changing, so it is wise to keep up to date with new techniques, programs and software. Keep learning and adding to your skill-set to have a competitive edge against other IT contractors.

Protection - It is important to make sure you are properly covered with IT Contractor Insurance, should anything go wrong throughout the course of a contract. If you unintentionally infringe on a trademark, lose a client’s data or are unintentionally negligent on a project, IT Contractor Insurance can help you out in the event of a client making a claim against you.

As well as IT Contractor Insurance, it can also be useful to cover yourself with Public Liability Insurance (if you own a Limited Company), Employers’ Liability Insurance (if you have any employees) and Tax Liability Cover too.

Networking – Many jobs and contracts are advertised online or through word of mouth. Involving yourself with as many IT contractor-related online groups as possible is a good way to learn about new positions and keep informed of relevant news. Facebook, Twitter, Linkedin and Tumblr are all excellent social networking platforms to keep in touch with other contractors and clients in the IT industry.

As well as purchasing Contractor Insurance, there are some other very important polices to consider.

Public Liability Insurance is an optional insurance, but is increasingly necessary for many contractors. Public Liability covers you for any claims made from third parties for damage, injury or death, as a result of negligence from you. The policy covers third party costs and expenses. Any claims for compensation, legal costs and costs for damage will be covered by this policy. This type of Contractor Insurance is often a requirement for many clients – so it makes sense to ensure you are properly covered.

Employer’s Liability Insurance is another useful Contractor Insurance policy to have in place. It indemnifies you for any legal liability for illness, death or injury to employees, including claimant’s expenses and costs. It is a legal requirement for any employer to have a policy with at least £5m worth of cover, although Limited companies with just one employee are not legally required to have this policy in place. Many contractors choose to have Employer’s Liability for peace of mind and to benefit their IR35 status.

Although Contractor Insurance is the most popular cover, there is another policy - Freelancer Tax Protection, which can be necessary for many freelance contractors. This competitively priced insurance is a comprehensive tax enquiry insurance policy, and is run on a ‘claims made’ basis.

Office Protect Insurance is last in this list of important Contractor Insurance policies. Office protect is a package of policies which offers protection against the risks for small companies. It is suitable for a range of industries, including IT, accounting, legal, managing, business and more. This simple and effective policy comprises of Office Contents Cover, Legal Liability Cover, Computer Cover, Business Interruption Cover and Legal Expenses Insurance.

As a contractor, you will take care to keep risks to a minimum, but you can never predict what may happen throughout the course of a contract, so it is better to be safe than sorry. There are many types of Contractor Insurance policies available on the market, here we will look at various policies, what cover they provide, and if they are necessary for you. Most contractors will never need to claim on their Contractor Insurance, but it makes sense to have it there, as a safety net, if you should need it.

The most important insurance to have in place is Professional Indemnity Insurance (also known as Contractor Insurance). This policy covers freelance contractors in a range of professions – it can sometimes be a requirement to have it for certain contracts. Policies can be tailored to include work provided before the Contractor Insurance was purchased – this is called retroactive cover. Taking out this type of cover will protect you against a range of mishaps or if a dispute with the client should happen. You will be covered legally and financially for negligence – making costly errors or providing incorrect advice, for unintentionally infringing on another’s copyrights or trademarks and for any damaged or lost data or documents. With Contractor Insurance, you will also be covered for defamation and dishonesty. This policy is available at a very affordable rate, and is highly recommended for IT contractors, business consultants and energy sector consultants.

As well as Contractor Insurance, another useful policy for contractors to have is Tax Liability Cover (also known as TLC35 or IR35 Insurance). This policy covers all costs and penalties that can arise from an enquiry by HMRC. The policy insures retrospective tax years and works on a ‘claims made’ basis. Tax Liability Cover includes NIC, interest, penalties and full representation if you should be subjected to a PAYE compliance review, and IR35 dispute, an NIC dispute, a VAT dispute or any other kind of HMRC enquiry. It provides total peace of mind for freelancers, and your tax liability can be worked out according to how long you have been contracting and what your daily rate is.

As a self-employed freelancer, you will benefit from greater freedom over what you do and where you work. It is up to you to ensure your own success as a freelance contractor. Some of the responsibilities you will have will include registering with HM Revenue and Customs, submitting your tax return annually and accounting for your own National Insurance and tax payments. You will also need to take out the relevant insurance, such as Contractor Insurance or Public Liability Insurance.

Before starting your business, it is possible to receive some financial backing to help – there are more than 6,000 grants available for businesses in the UK. They can be an excellent way of getting up and running.

One of the best things to do to market yourself and your services is to get a website. This doesn’t have to be a fancy, expensive site from a web agency that costs the Earth – there are many attractive free websites out there that can easily be tailored to suit your style and needs. Setting up a free website is much more cost effective and will allow you to easily update news and information yourself, meaning you will only need to pay a small annual fee for your website’s hosting. IT contractors with Contractor Insurance should already have some knowledge about creating a website.

Your website should contain your company name, logo and a clear description of your services. That is why it is important for you to choose a business name that gives a good first impression and relates to the services you provide. The National Business Register will contain business names already in existence, so you can search to see if your name is available. Your logo should be unique, memorable and reflect your services. Whether you have it designed or make it yourself, you should make sure it meets the properties listed above.

Providing excellent customer service is one of the most important things to do as a freelance contractor. Even if you are having a bad day, clients will be impressed if you always remain helpful, professional and positive. You will earn a good reputation and may receive more business through their recommendation.

Although you will always try your best when working on projects, everyone makes mistakes, so it is wise to have Contractor Insurance in place in case something did go wrong.

Being self-employed means you will have to do a lot of multi-tasking, and it is important to recognize your strengths and weaknesses. Focus on your strengths and flaunt them, to show potential clients your competitive advantages. Don’t forget your weaknesses – nobody can be good at everything, but you can develop new skills and expertise in useful areas. New skills can be learned online, through books or via short courses or evening classes.

It is important to always be on the lookout for new business and potential clients. Social networking platforms bring an array of opportunities for the contractors of today. It can sometimes be a struggle to find new clients and contracts, and often the amount of sites and online-groups can be quite overwhelming.  Here are a few useful examples:

Facebook can help you keep in touch with friends and fellow contractors that can offer help and advice.

Twitter allows you to follow specialist recruitment firms and industry related organisations. Keeping an eye on their tweets can lead you to useful articles and possible new jobs. You can also keep track of your Contractor Insurance provider for any updates or news on IR35 or other important issues for freelancers.

Linkedin is the World’s largest professional network – completing your profile can showcase your talents and skills to potential clients. On Linkedin you can connect with important contacts, search for jobs and join groups that can lead to important discussions and new contracts.

Tumblr allows you to create your own blog, with in-built sharing and tagging capabilities. You can personalise the look you want your business to convey, and post text, photos, quotes, videos and more.

Youtube can also be a useful marketing tool – many advertisers have utilised viral videos to great effect. Uploading videos that are interesting and relevant gives you greater exposure.

It is important to manage your time effectively as a contractor. Creating a yearly plan can be extremely useful to clarify what you want to achieve and how you will achieve it. Your plan should be clear and concise, containing information about market research, a description of your skills and services, an account of your marketing and networking strategies and financial forecasts. You should outline how you plan to develop and grow throughout the year.

Contractor Professional Indemnity Insurance has become more important in today’s society, where people are more likely to sue and seek compensation. It is an insurance policy designed for freelancers and contractors in a range of industries, providing cover for financial consequences of professional negligence.

Anyone who is self employed and sells their skills or knowledge should consider taking out Contractor Professional Indemnity Insurance. Cover canbe very affordable, from as little as £147 per year.

More and more freelance contractors are purchasing Contractor Professional Indemnity Insurance, as it can provide total peace of mind for someone who is self-employed. Claims made against contractors can be financially crippling, as well as damaging hard-earned reputations, so having the right cover in place is essential.

Many clients will require a contractor to have Contractor Professional Indemnity Insurance in place. It will be specified in the contract if the client thinks it is necessary. It can be important for contractors to have this insurance in place beforehand in order to secure contracts.

Contractors working through agencies may not be covered by their insurance – they will need to purchase their own Contractor Professional Indemnity Insurance cover.

Contractor Professional Indemnity Insurance can aid your IR35 position. Having this kind of policy helps to make it clear to HM Revenue and Customs that you are self-employed. Contractors should also make sure their contracts are assessed regularly from an IR35 perspective.

Your Contractor Professional Indemnity Insurance policy can be tailored so it meets your exact needs. The level of cover you take out can be determined by the nature of your work, your contract rate and other factors – you can discuss this with your client and insurance broker to find out the best level of cover for you.

Contractor Professional Indemnity Insurance can be taken out to include work done in the past. This is called retroactive cover, and can ensure you are protected from the moment you began contracting.

Business contractors include business analysts, business consultants, management consultants, project managers, interim managers, marketing consultants, HR consultants and business consultants. Roles in these professions are highly responsible, so it is advisable to have Contractor Insurance in place. Here we outline a few tips to help contractors succeed in the business industry.

Protect yourself with appropriate Contractor Insurance – it can be extremely useful if you make a mistake throughout the course of your contract. Examples of possible mistakes include: giving advice or making a recommendation to a client which goes disastrously wrong, or aiming to rationalise production, which ends up increasing company overheads. Both examples would result in a claim made by the client; meaning Contractor Insurance would be needed. Contractor Insurance helps by ensuring all legal costs are covered in the event of a claim, protecting your finances and your reputation.

Make sure your skills and knowledge are as good as they can be. Recognise your weaknesses and play to your strengths, aiming for continuous self-improvement, so you have a competitive edge against other business contractors. If your role involves communicating with people, try to be as friendly and confident as you can. If your role requires you to find fresh ideas for business or marketing, take a look at famous successful companies, such as Apple (or any other industry-relevant companies) for inspiration. Make sure you are professional and presentable at all times, ensuring you have good communication with your client. A breakdown of communication can lead to a higher chance of a dispute occurring, leaving you in a vulnerable situation if you have no Contractor Insurance.

Stay in touch with other business contractors for support and possible job leads. There a many ways to keep in touch and connect with new people and groups on social networking platforms – make sure you are on Twitter, Facebook, Linkedin and Tumblr. They are useful for keeping you informed on industry news, finding updates about IR35 legislation and Contractor Insurance, contacting other contractors, spotting job opportunities, joining recruitment agencies and following important companies.

Before you decide to dedicate yourself to becoming an IT Contractor, there are a few useful tips that can come in handy to ensure your success. Dealing with clients, protecting yourself with IT Contractor Insurance and working to deadlines are just some of the things you will need to do as a freelance IT specialist. Skills – Many IT contractors will have studied for an IT related degree or course, giving them a good in-depth knowledge of the subject. IT and technology are constantly evolving and changing, so it is wise to keep up to date with new techniques, programs and software. Keep learning and adding to your skill-set to have a competitive edge over other IT contractors. Protection - It is important to make sure you are properly covered with IT Contractor Insurance, should anything go wrong throughout the course of a contract. If you unintentionally infringe on a trademark, lose a client’s data or are unintentionally negligent on a project, IT Contractor Insurance can help you out in the event of a client making a claim against you.

In today’s lawsuit-prone environment, it makes sense to protect yourself in case the worst happens. PI Insurance provides financial and legal cover for contractors working in a range of professions. For some job roles, it is required by law. PI Insurance protects contractors from claims made against them due to alleged failure in their services, advice or performance. The insurance will pay for expensive legal fees and can cover compensation costs too. PI Insurance is appropriate for:

unintentional defamation

breach of duty

property damage

bodily injury

misleading conduct

dishonest and loss or damage of documents

Here we have a look at some of the possible mishaps and problems that could happen, and why PI Insurance is so important.

Herbert is a web designer who accidentally used copyrighted images without having a licence. He didn’t have PI Insurance in place, so had to pay out for copyright infringement.

Betty the marketing consultant contractor was designing and developing a name and logo for a client. Accidentally, her logo design infringed on another company’s trademarked logo. They decided to sue; luckily, Betty’s PI Insurance covered the costs for a solicitor to defend her.

Gordon is an architectural contractor, who didn’t add his measurements up properly. This meant that houses were built in the wrong place, causing disastrous consequences. The PI Insurance Gordon had in place ensured all damages were paid for when the client sued.

Alana is an experienced IT contractor, who didn’t doubt her abilities. However, she made an accidental coding error on a company’s website, causing a loss of a substantial amount, before the damage was rectified. She was sued for a very high amount, but had to incur the hefty cost herself, as she had no PI Insurance in place.

Jack is a freelance design engineer, who was asked to design a new biscuit container. He made an error, meaning the measurements weren’t correct, and he was sued for damages. His PI Insurance cover saved the day, settling his claim.

There are many rewards and risks associated with being a contractor, with challenges and benefits that differ from being an employee. It is also advised that freelance contractors have appropriate Contractor Insurance in place. Contracting can suit some people more than others, and it is important to undertake proper research before starting out as a contractor.

Here we have a look at the Pro’s and Con’s of working as a contractor. Benefits:

As a contractor, you have more freedom over where you work: you could travel around the country for contracts, or work nearer to home – whatever suits your lifestyle.

With the specialist skills you have acquired and put into practice, you have the potential to earn more from contracting than a permanent employee would.

Between contracts, you will have the extra time to spend with family, friends, or go on holiday.

Being a self-employed sole proprietor or owner of a Limited company is great for building confidence. You will also learn how to market your services and build important contacts.

Along with responsibility and independence, you can do exactly what you want to do, planning your career path and finances.

Disadvantages:

As a contractor, you won’t receive the same benefits as an employee: this means no holiday pay or sick pay.

Although some contractors might enjoy travelling for their work, many may find it inconvenient to travel very far.

There can be a lack of job security as a contractor, as there can be ‘dry spells’ after completing a few contracts, when little or no work comes along. 

Working for yourself, you will have a high level of responsibility to ensure all paperwork is dealt with and appropriate Contractor Insurance is in place, as well as working on your marketing and sales skills to find new work.

You will also need to have your contracts reviewed to ensure they comply with tough IR35 legislation. Having Contractor Insurance in place can help your IR35 status.