It's only logical to consider the financial side firstIt is a common assumption that taking your existing skills to a new company is the fastest way to get the appreciation or pay rise you desire, but how long will it be until the honeymoon period wears off and you are back to feeling stuck and undervalued?
This is when many of us take a good look at our qualifications, expertise and contacts and wonder whether a consultancy role would suit us better. We could be providing legal, technical or artistic services to a company on a short-term basis, or we could work for a consultancy company and bring our clients into the fold; either way, it should equal more money or more flexibility or both.
Things to consider when moving into consultancy
Before jumping into consultancy with existing contacts, it is important to consider the legal and ethical constraints. Under your current contract, you could be prohibited from poaching clients or they could already be in a binding contract with your current employer. Likewise, friendly contacts who appreciate your work now might get cold feet when you ask them to put their faith in you alone.
When thinking of going solo, it is essential that you consider your future client funnel. Having three or four solid clients now could turn into two or one or even none by this time next year; therefore, you need to ask yourself where you are going to find new clients.
There is also the issue of financial security. Many of us never see the fluctuations in our company’s bank account and do not realise that other business areas float our departments during crunches. Once we are self-employed or working on commission only, this safety net will be taken away; therefore, the big question is whether you have enough savings to support both yourself and your company when business falls off.
Playing by the rules
Regardless of the type of work you do, working as a freelancer in the UK has some possible tax benefits. Being employed and providing a service on a freelance basis are often taxed in different ways, especially if you work through an agency.
You should be aware of IR35 legislation, which is in place to detect cases where an individual accepts payments via an intermediary when they would otherwise be considered an employee. Salary-style arrangements for a single client fall into this category and a nasty brush with the taxman is the last thing your new venture needs.
In the ever-changing technological landscape of work, there is no reason you should be chained to an office or an employer if you know how to market your skills. No one says this will be easy; however, if you can get your current clients on board and have a financial safety net, consultancy could be the right path for you.
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