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Contracting Advantages and Disadvantages
There are many advantages and disadvantages to becoming a contractor. You will probably earn more money when in work, but you will have to spend time looking for contracts, you will be your own boss and have independence but you will not be guaranteed a source of income each month.
There are advantages and disadvantages to anything you do but the majority of people who go contracting make greater strides in their career than those who sit in the same permanent role for 10 years. Experience is invaluable, and if you choose to go contracting you will undoubtedly pick up a lot of experience along the way.Contracting Advantages
Greater Remuneration – As a contractor you should receive more for your services than those in permanent employment. Clients pay higher rates for skills they do not possess in house and also because services are only being provided for a limited period of time.Tax Savings – By using an umbrella company or going into business with your own contractor limited company you can save large amounts of tax, therefore making contracting even more profitable!
Being your own boss – As a contractor you are not required to accept work from a client. You have the freedom to pick and choose your contracts.
Work Variation – Contractors normally take short term contracts of 3, 6 or 12 months in duration. By taking short term contracts you will gain a wealth of experience, possibly get some big name companies on your CV and help to keep yourself entertained! Never agree a contract of more than 24 months in duration (unless the client is paying big!) as you will be unable to claim site based business expenses (see Site Based Rules).
International Opportunities – If you contract at a high level you may be offered international assignments
Build Business Contacts – Undertaking contract work allows you to build business contacts. If a client likes the work undertaken you may be asked to undertake another assignment.
Skills Training – Contracting can give you the flexibility and vision to train in cutting edge skills to further your career.
Contracting Disadvantages
Work Security – Your contract may be cancelled (depending upon the terms of the contract) or simply not extended.Greater Administration – If you run your own contractor limited company you may have to undertake business administration after hours in order to keep your company on track
Applying for Contracts – Finding a contract can be a frustrating and time consuming process
Short notice holidays – When you agree a contract you do not normally take holidays in the middle it. If the assignment is long term you may be able to agree a break with the client but this should be arranged well in advance. Short notice holidays are a) not often approved b) not a good way to impress a paying client!
Holiday Pay/Sick Pay – You do not get holiday or sick pay as a contractor so make sure you take your vitamin pills.
Skills Training – Although you have the freedom and flexibility to undertake training as a contractor you will be the one who a has to shell out for it.
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