Common business issues faced by IT contractors

This is a catch all category for items that are not specifically mentioned in the remainder of these guides.

Contracts, contracts, contracts

Is your contract adequate for purpose in terms of outlining your responsibilities, your employer or counterpart’s responsibilities, and is it appropriate to define you as a Contractor rather than an employee? Solid advice from an Accountant or Lawyer and using a service provider that provides a majority of their business services to SME’s, such as Tax Agility, should get you a contract that is initially compliant with HMRC guidance regarding the demarcation between employee and contractor. However, the legislation regarding these matters is constantly changing and it is your responsibility to ensure that you are on the right side of the law with regard to this.


Do you have or need Professional Indemnity Insurance? What should this cover? We have covered this in a separate write up regarding Financial considerations for IT Contractors but a further point with regard to business risk is that often the providers of such Insurances are quite happy to collect a new premium by Direct Debit annually. The cost of this may rise slightly over time but the payment usually becomes the payment for coverage under the policy that was originally signed up for. However, the risks that you may wish to be covered for may well change over time – who wouldn’t in reality wish to be ‘covered’ by a policy these days that did not include coverage for the hacking of the Contractors laptop for example.

signing a contract

Longer-term considerations

Do you need further long term protection? For instance, pension arrangements, or long term illness or injury cover, or ‘keyman insurance’.

There are risks attached to becoming an IT Contractor and one of the primary ones has to be what happens if you become unwell or unable to go to work for some reason. In reality this could be a test of whether your personal arrangements are lined up with the spirit of IR35, which suggests the drafting of a contract of service which allows you the right within your service contract to replace your service provision with the replacement of your own labour with that of another, but in reality few IT Contractors had actually thought through how this would actually play out.

However, some provision needs to be considered too for how you would pay your Fixed monthly costs in particular; mortgage cost, utilities, insurances, car running and finance costs, and possibly school fees if you became incapacitated from working and completing your contract.

Self Development

Are you developing your skills to move to another level of fee income or to maintain your current status in the near/medium term?

This is absolutely crucial to ensuring that in the medium and long terms your movement to becoming an IT Contractor is a fruitful one. There’s a number of different streams that you can become competent in outside of your core IT skills. Some consideration based on the current supply and demand for services in these areas should be given to developing Project Management skills and competencies, Database Management tools and Data manipulation skills, Finance for non-Financial staff learning and courses, Website Analytics and IT security.