Benefits of contracting

Financial benefits - make more money

One of the most compelling reasons for contracting is that you can generally make considerably more money for doing the same job.

The average contractor rate can be double that of a full time employee or even more. No wonder Doug ‘the Lifer’ who’s been here for 15 years has the hump!

Depending on the sector you work in and your location you may be able to demand very high rates of pay. This is often due to the skills required, flexible nature of the contract and the fact that some roles can be relatively short-term.

This is especially the case with specialist, in-demand skills. See - all those hours programming computer games in your bedroom weren’t wasted after all!

If you operate via a limited company you’ll also pay much less tax than the average full-time employee on your income.

You can pay yourself very tax-efficiently via a small salary and dividends and can offset many of your business expenses against your income to reduce your tax bill.

Just do us a favour: don’t go showing off that new shiny iPad you’ve just bought as a business expense! We want one!

Back to top

Lifestyle and flexibility

Ah, life choices! If only I’d become a doctor! Why didn’t I move to Alaska when I had the chance? I really think I would have enjoyed life on the ranch! So many ‘what if’s!

Well, one of the great things about being a contractor is that it gives you life choices.

Rather than feeling chained to a desk for life or having to work for that nasty boss for an eternity contracting gives you the ability to work for who you want, where you want and for however long you choose.

You’re your own boss, captain of your own ship, master of your own….., ok, you get the point. But, seriously, think about it for a minute. Isn’t the freedom to make choices incredibly empowering?

So many people spend their whole lives in unhappy and unfulfilling jobs. What a waste! You only have one life so do something you love! Ok, sermon over!

Some of our clients take extended breaks in the Southern Hemisphere around Christmas to get way from our horrible weather (Yes Ken, we are jealous!).

Others, work on contracts with flexible hours or days so that they can spend more time with their young families.

These kinds of arrangements are often very difficult or impossible to arrange if you are full-time employee as they set a precedent (don’t you love some HR people!).

Also, changing contracts is easy and is not seen as ‘job hopping’ on your CV. So, if you find yourself on a contract you don't enjoy you can change to a new one in a short period of time. You don’t have that sinking feeling you’re stuck in that horrible job forever!

Back to top

Better working relationships

Did you hear what happened to poor Betty in accounts? You won’t believe what Dave in Marketing has done again! Don’t you just love office politics and gossip!

Let’s face it – if you’re a contractor or thinking about contracting then you’ve probably concluded by now that working your way up that greasy career ladder isn’t for you. Can’t say we blame you!

Few of us really enjoy office politics, having to cosy up to the right people or put up pretence for 8 hours a day in the hope it might get us noticed one day.

One of the great things about contracting is that you can free yourself from all this. You’re there as a professional to do a job for a client. The company you work for is not your employer. This puts a completely different complexion on the relationship.

As long as you act with integrity and do your job well you don’t need to concern yourself with what certain people think about you. You also don’t need to take the **** that others put up with in the hope of an elusive pay raise or promotion. That’s incredibly liberating!

You can also more easily negotiate different payment terms and can have more flexibility in working conditions. Want to take a long weekend in Cornwall in 3 weeks time – tell the client you won’t be billing them for those three days!

Obviously there are limits to this. If you contract for a big company there will be some restrictions imposed on you and your working day. But, please don’t let this limit your mindset or your choices. Never forget that as a contractor you really are the boss!

Back to top

Skills development for your future

In these difficult and uncertain times one of the most important things you can do to safeguard your future is to build up your competence, skill set and experience.

You should think about what the ‘in demand’ skills are in your industry and focus on acquiring and continually developing those skills. Sorry Tim, windsurfing skills in Corfu won’t cut it – while fun those skills won’t make you a more valuable IT Consultant!

Seriously, though, this is important. There is no ‘job security’ for life anymore. Example: we read the other day that the average tenure for over 45% CEOs and senior executives in Fortune 500 companies is less than 3 years.

Think about that for a second – that means that some of the best full-time employees and most adept at climbing the career ladder are only lasting 3 years. What does that say about the prospects for everyone else?

What this highlights is the need to build a unique range of skills and experience. Contracting presents a compelling opportunity to do this.

It gives you the opportunity to work in different sectors and experience different cultures. Contracting also enables you to build up a wide-range of demonstrable skills and lets you establish an extensive list of reference contacts.

Here’s the catch though – you have to work at it. You have to see yourself as a business that you ‘sell’ to the market. A good contractor will become known within their own field for their excellent work and will build a network of trusted relationships.

As with many things in life work ethic and attitude is key. If you approach contracting as ‘just a job’, go through the motions, don’t work hard to develop your skills and don’t actively build your network of contacts then you will find it harder to succeed.

However, if you focus on the above from the outset and work hard to build your expertise and reputation you will find that contracting provides many lucrative opportunities.

Back to top

What about the downsides?

As with all things in life there are downsides! Don’t you just hate that! Why oh why can’t I have my cake and eat it? It’s sooo unfair!!! (said in a whiney, teenage voice!!).

Ok, tantrum over. But, contracting is a lifestyle choice and you should be prepared for some of downs as wells as ups!

Firstly, you’ll be responsible for finding you own work and making sure the money keeps coming in. You can’t just go onto autopilot and wait for the monthly salary.

You’ll also be responsible for negotiating your own payments terms and managing your finances. However, as your accountants we're always here to help and you're not alone.

You’ll also need to do more financial planning and think about things like a pension and putting some money aside for that old ‘rainy day’. Again, though, our partner St. James’s Place Partnership can help with that.

You’ll need to be resilient and able to cope with uncertainty. Your next contract may not come straight away and you may have a few lean times. However, as you get paid more when working you should aim to put a little aside to cover you in gaps between contracts.

Also, as we’ve said, by working on your skill set and contacts from the outset you’ll be greatly improving your prospects and the opportunities that come to you.

You won’t get the same benefits and ‘perks’ that permanent employees receive. There is no sick or holiday pay. So, you must manage your finances to cover for these.

Finally, you must be willing to work differently. Some people can find it lonely not having ‘traditional’ colleagues. However, you’ll always have people like us to turn to and besides we believe the lifestyle and other advantages about far outweigh the drawbacks.

So, that’s our take on the benefits of contracting and downsides. Yes, we’re biased but we genuinely believe contracting is the way forward and will continue to grow.

Contracting may appear more risky than a permanent job but let’s face it there no such thing as a permanent job anymore. Indeed, the indications are that contracting and flexible working will continue to grow and become the norm in the future.

So, why not get a head start now? And, with My Accountant Friend’s help, how could you possibly go wrong? Sign up today and take the plunge!

Back to top