Your first month: compliance checklist
Essential Setup
Your first month as a contractor is chaotic. Use this checklist to avoid common mistakes: missing payments, tax surprises, IR35 drift, and isolation.
Week 1: Setup and onboarding
Legal: Signed contract with clear IR35 status, payment terms, notice period. Store a copy securely.
Admin: Limited company registered (or umbrella set up). Business bank account open. PI insurance in place. Accountant onboarded (even if just for advice).
Client: First day onboarding complete. You understand: who to report to, what you're delivering, what "done" looks like, how to submit timesheets or invoices.
Taxes: Understand: are you inside or outside IR35? What's your monthly tax reserve target (25–35%)? Where does that money go (separate account)?
Week 2-3: Building your operating system
Financial: Set up separate accounts: trading (for operating costs), tax reserve (for CT + personal tax), VAT holding (if VAT-registered). Put first invoice payment into the right account immediately.
Invoicing: Issue your first invoice. Keep a copy. Note payment date. Set a reminder to chase if not paid by due date.
Time tracking: If billing by day rate, track days worked. If billing by deliverable, track progress against scope.
Communication: Establish cadence with client: daily standup? Weekly update? How do you raise problems?
Week 3-4: Settling in
Working practices: Establish your supplier behavior immediately (if aiming for outside IR35): use your laptop (not client's), deliver written updates (evidence of supplier role), control your method (not client micro-managing).
Relationships: Get to know your team. Be professional and friendly. You'll want them as references. Don't over-integrate (don't join team socials if you're supposed to be external).
First problems: Something will go wrong — late payment, unclear scope, technical issue. Handle it professionally. Document it. Don't panic.
End of month review
Financial check: How much have you invoiced? How much have you received? What's outstanding? Set aside 30% for tax immediately.
Work check: Are you on track with deliverables? Is the client happy? Are there any IR35 red flags (client over-controlling you, putting you on org chart, expecting exclusivity)?
Personal check: Are you OK? Is this sustainable? Did you take any days off (remember, unpaid days count as bench time)? Any health/mental health concerns?
Common first-month mistakes to avoid
Spending the tax pot: You get paid £10,000. You think that's income. It's not. Set aside 30% immediately. The rest is yours to spend/save.
Ignoring IR35: If you're supposed to be outside IR35, start building defensible working practices now. Don't wait until month 3 to worry about it.
Over-integrating into the client: It's tempting to act like an employee (attend all meetings, work client hours, use their email). Don't. You're a supplier. Maintain boundaries.
Isolation: You're working in a team but you're external. You might feel lonely or excluded. This is normal. Plan social time outside work. Talk to other contractors. Join communities.
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