How to Become an Engineering Contractor

By Mark Lamb, Head of Key Accounts

Want to know more about how to become an engineering contractor, but not sure where to start? If you’re a permanent engineer looking for advice on how to start contracting, this blog is for you.


With the help of one of our Contract Recruitment Specialists, who has over 12 years’ experience with engineering contractors, we have compiled a list of things you will need to think about and action before you begin your first contract.

Weigh up the pros and cons

If you’ve always been a permanent employee, there are several things to consider when making the move into contracting. When you leave permanent employment, you also lose all the comforts of a permanent job, such as holiday pay and sick pay – as a contractor, you’re only paid for the time you work. However, contractor pay is attractive, and the flexibility is ideal for those who don’t always want to work 9-5.

There are both reasons for and against contracting, and it completely depends on your personal circumstances. Read our blog on the life of a contractor for a full comparison of contract and permanent employment.

Do some market research

How much contractors are paid is determined by several factors – experience, location and market demand are just some of the things that may influence your rate. Some of the rates you may have seen advertised could be completely different to what you could realistically earn.

Do some research on job boards and find out what rates are being offered for roles similar to your profile and ask your connections about current pay rates in the market. Doing so will ensure you’re realistic and know exactly what to expect when it comes to looking for your first engineering contract.

Working away

It’s very unlikely that you will find an engineering contract on your doorstep – the right contract can sometimes come with lengthy commutes or require you to lodge for the duration until the work is complete. Whether this is feasible will of course depend on your individual circumstances, but it’s a question that will come up during any conversation with a contract recruiter, so ensure your mind is made up.

Set up a limited company

Great, you’ve decided that contracting is the route you want to go down, so now you need to get set up.

Most engineering contractors we work with Ganymede are paid through a personal service company (PSC) which is the most common way to contract as it’s the most tax efficient. In order to do this, you would need to set up your own limited company. Working as a PSC and running a limited company, you’re invoicing for your work as a business, not an individual, and therefore are accountable for all the admin involved, including corporation tax and other deductions.

You will not be able to start an engineering contract as a PSC without your certificate of incorporation, business bank account details and proof of identity, so ensure you have all that ready before you begin searching for your first contract role. You will also be required to obtain relevant insurances, we’ll cover this later in this blog.

IR35 Status

You don’t necessarily need to know every small detail about IR35, but you will need to understand whether your contract will be inside or outside of IR35, and exactly what this means.

The IR35 status of your contract will have an effect on the amount of tax you pay, as those inside IR35 are taxed the same as a permanent employee. For a full explanation of IR35, what it means and how it may affect you, we recommend visiting Contractor Calculator.

This blog has outlined both the decision-making process for becoming a contractor, and the initial steps required for you to be eligible to work on your first contract. Hopefully, by now you’re much clearer on what you need to do and are ready to begin searching for an engineering job. The last piece of the puzzle is finding a great engineering contract recruiter – that’s where Ganymede comes in.


Contract Engineering Jobs

Ganymede is more than just an engineering recruitment agency – we have a dedicated contract team that can help you to find a job and provide advice about contracting and the engineering marketplace. To begin searching for an engineering job, click the button below.

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