Introduction
Contracting can be extremely rewarding from a financial perspective, although there are some further advantages and disadvantages which this article addresses.
Advantages
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More Money – contractors typically earn more than their counterparts in permanent employment.
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More variety – contractors often change roles at least every two years leading to a richer set of experience.
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Flexibility – more control over where and when you work
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Holidays – clients are tolerant on contractors taking more holidays, simply because they don’t pay you when you take time off. See Taking Holidays and Time off.
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Less office politics – contractors don’t need to network their way to higher positions and get involved in long term politics.
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Training – full control over self training. If you want to go on a training course you can. There is complete control over your professional destiny.
To determine the contract rate you need to move from permanent to contracting use our Permanent to Contracting Calculator.
Disadvantages
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Frequent applications – moving on frequently and having to re-establish yourself at another organisation can be frustrating.
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Downtime - during market slumps contractors can often find themselves out of work. [Keeping your skills updated and having a good process for finding a contract can eliminate these downtimes.]
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IR35 – Being caught by this tax law can significantly reduce the money advantage of contracting. It can be easy to avoid IR35 though.
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Skills – Keeping skills constantly updated can be time consuming and require considerable effort outside of normal office hours.
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Administration – can sometimes be a little cumbersome when starting, although is low hassle after a couple of months.
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Holiday pay and sick pay – Contractors don’t get paid when they take time off for holidays or due to sickness. The risk of long term illness can be covered by Contractor Protection Cover.
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Security – there are few protections available to you, and clients can terminate you at very short notice. In reality, this rarely happens unless you oversell yourself into a client site.
Published: Monday, August 07, 2006
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