Guide to Freelancing - PCG

More documents

Recommendations

Info

Your engagement on a project will usually involve an upper level and a lower level contract. The upper level contract is the contract between the agency and the client and the lower level contract is the agency‟s contract with you. Both of them should feature proper business terms and conditions. PCG publishes a list of agencies using PCG approved contracts. If your agency isn‟t on the list you can refer them to the PCG Approved Contract Scheme or ask if they would be willing to use PCG‟s approved contract templates. In terms of how the agency pays you, this is usually done on the basis of timesheets signed by a representative of the client. The exception will be fixed-price work, although even here the timesheet may be the recognised indicator of progress. Many clients also have project time sheet systems. Typically a freelancer will raise an invoice on a frequency agreed at contract negotiation time, usually weekly or monthly, which is reconciled with the signed-off timesheets. It is in the interests of all parties that timesheets be filed regularly and accurately as they are the basis for clients‟ and agents‟ cash flows and ultimately your income. Finally, if you are asked to supply information relating to the Agency Workers Regulations, check the guidance in the policy section of pcg.org.uk. Negotiating rates The agent will usually be paid commission as a percentage of your hourly rate, anywhere from 5% to 25% (although it can be higher), depending upon industry and sector. So the agent gets paid only if you get work. Some clients have agreements with agencies to supply freelancers on a fixed level of commission. In this case, the agent‟s margin is usually non-negotiable, so if you want more money it will need to come from the client. You therefore need to push home your competitive advantage during the initial discussion with the client. If the client really wants to hire you, this puts you in a stronger position to negotiate a larger share of the money being paid to the agent. Like all sales meetings, it helps if you have researched the potential client – it will impress if you clearly understand what they do and their market. Also make sure you ask all necessary questions to understand the task you are looking to undertake and clarify the nature of the relationship between the client, the agency and you, for example, with whom you should be discussing contractual issues versus project issues. At this stage it‟s worth finding out how much commission the agency charges as this can sometimes have an impact on the client relationship. Let‟s say you are getting paid £25 per hour and the client is paying £50 per hour for your services. All clients expect to pay an agency margin but, because some agents have two-sided non-disclosure clauses, the client may, in this case, think you are a £40-an-hour freelancer. This will have an impact on the level of expertise the client will expect you to have. This, in turn, could have a significant effect on the relationship you have with your client during the contract. Contract negotiation is not just about getting more money. You may want to secure an IR35 friendly contract, which can reduce your tax and NI liability. You could also consider negotiating the right to work from home, more project control and so on. A rate will often be slightly higher if you accept payment terms of 30 days rather than seven. If you are nervous about the thought of going for lots of interviews or negotiating, remember that it is just a normal part of freelancing and gets easier with practice. Do not take it personally – you are no longer an employee, so this is a straightforward business-to-business negotiation. See the top tips on negotiating rates at www.pcg.org.uk/resources. PCG Plus members can take advantage of Freelance MBA resources from Ashridge. Copyright PCG September 2011 Guide to Freelancing Version 7.0 62
Legal Considerations: Agencies are often subject to a number of laws designed to protect low paid temporary workers from abuse. Though as a freelancer, typically running your own business, you are usually not the intended target of such legislation, it is worth taking the time to familiarise yourself with the rights you are entitled to, and with the way these laws might affect your relationship with an agency. The Agency Workers Regulations (usually known simply as „the AWR‟) are laws which guarantee certain agency workers similar working conditions and protections (particularly in terms of pay, holiday, and working time) as if they were employed permanently. They do not affect the genuinely self-employed or freelance individuals who are „in business on their own account‟, so for most freelancers, they will not apply. For more information visit employment status on page 12 of this guide In order to ensure that they do not have to provide you with any additional rights under this law, an Agency may take steps to ensure you are definitely a business, by providing a business-friendly contract, or by ensuring you fill out a questionnaire for example. It is also in your interest to be treated as a business as it may help prove to the tax authorities that you are definitely a business, as opposed to an employee. For more information on the AWR, visit www.pcg.org.uk/agencies, where you can download a full guide to the law. Other legislation which may affect you includes the Conduct of Employment Agencies and Businesses Regulations. They are often known simply as the „Conduct Regs‟, or sometimes, confusingly, the „Agency Regs‟ or „EAA regs‟. These regulations are designed to protect those who work via an agency from unfavourable contractual terms such as “handcuff clauses” or „temp to perm fees‟. Freelancers can choose to “opt out” of this protection. Many choose to do this as it provides a further pointer that they are genuinely operating a business. Some do wish to be protected by the „Conduct Regs‟ and if so there are various obligations an agency must fulfil. For more information on the „Conduct Regs‟, a guide for PCG members is also available to download here and at www.pcg.org.uk within the resources. HOW I WORK WITH RECRUITMENT AGENCIES I use the phone a lot to build and maintain relationships with agents. I also use the online portal Jobserve. I think it‟s important to be very clear about how you will market yourself. When I started out I had a long list of things that I could do but was in danger of being seen as a jack of all trades and expert in none. Chris Bell, Freelance project manager My "silver bullet" was to market myself as a project manager. Clients understand what this means. Once you are in the organisation you can turn your hand to lots of other things - once they get to know and trust you. You have to establish yourself first with a new client to gain trust through what you can do and bring to the party. I treat my business as a business and run it as such. It sounds trite, but how many of us take time out for training to keep our skills up to date or regard time spent at networking or other events as valuable marketing expenditure to expand our contacts and grow our opportunities for renewals. Thinking of yourself as “Jo Smith Ltd” and doing all of the things that companies do to increase their presence in the market place does, literally, pay dividends. You can download more advice about planning a freelance career at http://www.nationalfreelancersday.org.uk/downloads/Freeing_up_potential.pdf Copyright PCG September 2011 Guide to Freelancing Version 7.0 63
Page 3 and 4:
SECTION 1: INTRODUCTION 1. About th
Page 5 and 6:
SECTION 1 Introduction This section
Page 7 and 8:
“I can‟t tell you how much admi
Page 9 and 10:
THE FREELANCE CHECKLIST Time estima
Page 11 and 12:
FREELANCE CHECKLIST CONTINUED... Ti
Page 13 and 14: Once you go freelance, you enter a
Page 15 and 16: What the IR35 Intermediaries legisl
Page 17 and 18: Specify your working relationship b
Page 19 and 20: Although it‟s perfectly possible
Page 21 and 22: • The registered office is the co
Page 23 and 24: Comparison between dividend and cap
Page 25 and 26: PARTNERSHIPS A partnership is a sim
Page 27 and 28: UMBRELLA COMPANY An umbrella compan
Page 29 and 30: SECTION 3 THE BOOKS This section co
Page 31 and 32: Do they come well recommended? If p
Page 33 and 34: KEEPING RECORDS What records should
Page 35 and 36: GET A BUSINESS BANK ACCOUNT Before
Page 37 and 38: Invoicing clients outside the UK If
Page 39 and 40: Debt collection top tips Be courteo
Page 41 and 42: 5. Pay all three taxes (PAYE, Emplo
Page 43 and 44: HOW TO PAY BILLS AND EXPENSES When
Page 45 and 46: Travel If you run a limited company
Page 47 and 48: SECTION 4 Paying the taxman This se
Page 49 and 50: WAYS OF ACCOUNTING FOR VAT Cash acc
Page 51 and 52: You can deduct one percent off the
Page 53 and 54: Upper Earnings Limit (UEL): £817 p
Page 55 and 56: Sole traders, partners and members
Page 57 and 58: SECTION 5 Running the show This sec
Page 59 and 60: 10 Top tips from experienced home w
Page 61 and 62: WORKING AT THE CLIENT‟S SITE It m
Page 63: WORKING THROUGH RECRUITMENT AGENCIE
Page 67 and 68: Building rapport is ESSENTIAL. If y
Page 69 and 70: Website In the 2010 National Freela
Page 71 and 72: Freelancers often complain about th
Page 73 and 74: A good way of doing that is to send
Page 75 and 76: The value of the final pension you
Page 77 and 78: 6 Risk prevention This section cove
Page 79 and 80: EMPLOYERS‟ LIABILITY INSURANCE Al
Page 81 and 82: PROFESSIONAL INDEMNITY INSURANCE Pr
Page 83 and 84: PRE-DISPUTE TAX COVER HMRC Officers
Page 85 and 86: BUSINESS INTERRUPTION INSURANCE Bus
show all

Guide to Freelancing - PCG

Create successful ePaper yourself

Delete template?

Save as template?