So you’re thinking about becoming a contractor?
The world of contracting is very different from the world of employment. Whilst it’s undoubtedly more risky, it can be incredibly rewarding and beneficial.
A contractor is a person who works for someone else to help them complete a project. You’ll work under a fixed contract, for a fixed period of time.
You’ll effectively be selling your time and expertise. Contractors are usually paid by the hour, or will sometimes be paid a fixed fee for a contract or project.
What are the benefits for your client?
Companies often prefer to use contractors for several reasons:
There’s no long-term commitment involved – contractors can be hired at short notice and fired easily if things don’t work out.
They’re more flexible over working hours than permanent employees.
They can provide skills and expertise the company’s employees may be lacking.
They save the company money. Since they’re not permanent employees, the company doesn’t have to provide holiday pay, sick pay, employer’s national insurance or redundancy pay. This often means they can pay you more per hour whilst still spending less money overall.
What are the benefits for you?
There are plenty of advantages to being a contractor:
You get to be your own boss. Working for yourself can be much more satisfying and enjoyable than working for somebody else.
Your working life will be more varied. As you move between contracts and companies you’ll build up a wide and diverse range of experience.
You’ll have more freedom. You’ll get to choose when, where and how much you work and when you go on holiday.
You’ll make more money. Contractors are usually paid a higher hourly rate than employees.
You’ll pay less tax. Contractors who take the advice of a specialist contractor accountant can vastly reduce the amount of tax they pay.
Are there any downsides?
Contracting isn’t all a bed of roses. The advantages come with a degree of risk that makes contracting an unappealing option for many people.
Before making the leap, make sure you weigh up the possible disadvantages:
You’ll have less security. Contractors don’t benefit from the same protection as employees.
You’ll be on your own. You may sometimes be lonely, and nobody will pay you when you’re ill or on holiday.
There’s no guarantee you’ll get work. When one contract ends, you may find yourself without another one to move on to.
You’ll have to do your own admin. You’ll have accounts to keep, forms to fill in and regulations to keep on top of.
So is contracting for me?
As a contractor, you’ll be your own boss. All your successes will be your own. You’ll have freedom, flexibility and variety.
Becoming a contractor could be an exciting and advantageous step in your life – just make sure you weigh up all the pros and cons before making the transition.