The idea of becoming a contractor can be pretty scary to start off with, as you have a lot more responsibilities to take on in order to make sure that your business is successful.
But at a time when employee benefits are being reduced, final salary pensions are disappearing and salaries are being dramatically cut – there’s never been a better time to join the world of contracting. Also, with the help of a good accountants for contractors, you can rest assure that you’ll be advised properly when it comes to your financial planning.
As with most things in life, there are of course some downsides to being self-employed. Firstly, you do not have the same benefits as a permanent employee, such as being entitled to holiday or sick pay.
There’s also the fact that you need to have the motivation and determination to get out there and find your own work, and then stay on target when you do get a contract, ensuring you stick to deadlines and don’t let you clients down.
However, most contractors would agree that the advantages far outweigh the negatives…
Benefits of contracting
Contracting can be extremely rewarding and there are so many advantages to working as a contractor:
• As a contractor dealing with a variety of different clients, will give you the ability to build up a wide-ranging CV and to establish an extensive list of reference contacts.
• Working for different organisations gives you the ability to advance your career and your knowledge, without being limited by a single employer’s processes, procedures or business ethos.
• Depending on the type of contractor you are, you will gain added experience of different types of products and/or services, which can widen your experience and make you more attractive and interesting to future clients.
• As a contractor, you have the freedom to work when you choose, where you choose and for however long you like.
• The company that you work for is not your employer, but is instead your client, meaning you have far more control over your contract than what a permanent worker would have.
• You will have a lot more flexibility and control over agreeing working conditions and negotiating payment terms.
• Taking holiday will be a lot easier, as you will not be in the position of having to juggle your days off around other colleagues. You can also choose to have as much time off as possible, instead of the standard few weeks in a year.
• An average contractor rate can easily be double that of a full time employee, or even more.
• Contractors are paid very high rates, due to the fact that they are skilled and flexible, as well as the fact that most contracts are normally short-term.
• As a contractor you are able to work as much over time as you wish, as well as taking on a number of clients at the same time.
• Unlike permanent workers, you are able to claim back on expenses that are made wholly and exclusively for the purposes of your business, and, as you only get taxed for your profits, this can lower your tax bill.
• If you contract through your own Limited company, this is the most tax efficient way to work and can see you taking home more money than if you were to trade through an umbrella company. Working through a Limited company also means that you have far better tax planning opportunities, which can reduce the amount of tax you pay. By using a contractor calculator, you could work out a rough figure of how much you could potentially earn as a contractor.