Advantages and challenges of contracting

When approaching the idea of contracting, or any big change in their career, people often collate lists that clearly outline the advantages and disadvantages. It allows you to have a clear outlook at how contracting will change your working and personal life.

This is exactly what you need when you’re getting your head around a contracting career and you’ll thank yourself for doing it down the road.

Brookson bring you just a few of the advantages and challenges of contracting that you may not be familiar with compared to full-time employment.

Advantages

Contracting encompasses nearly every industry and are always in high demand, valued for their high level of knowledge and extensive skills in specific subjects. But apart from the obvious, the contracting life provides several benefits that often aren’t apparent from the get go.

Variety

A great advantage to contracting is the variety of work you’ll be undertaking from job to job through the year. Since you’re your own boss you get to choose the type of work you do and can reject a job if you feel like it’s not worth it for you. The conditions of the job could be unsuitable for you, you may have to travel quite a distance and don’t feel like it’s worth the time.

No office drama

The stresses of the office are often a big part of why people make the move into contracting. Some offices seem to always have drama going on, week to week and can prove distracting. With contracting that’s completely gone as you’re separate from your clients and their full-time employees. You don’t have to involve yourself in office politics, you’re your own boss and you don’t have the pressures of excessive hours to get ahead of your colleagues.

Control

Being in full control of your work and personal life can be liberating for many, allowing you forge their your own path. Without a boss to tell you where and how to work you’re free to do things your own way, put your own stamp on the job.

With control being in your hands, you’re able to work with clients on a level field without having to bend over backwards to please them where it may hinder you in other areas.

Challenges

With any career, there’ll be several challenges you must face to persevere, the same can be said with contracting. If you’re making the switch from full-time employment then you may find a few of these challenges new to you but with the right help you’ll be able to make a success of your contracting career.

Downtime

You must be prepared for downtime between contracts that can often be considerable lengths depending on the industry and availability of work. This can be surprising to many new contractors as some are not used to the break in work that can, at times, last weeks or even months. It’s down to you as a contractor to plan for these occurrences, and unless you’re in an extremely high skill demand industry then you’re going to encounter them. With full-time employment, the work is consistent, it’s always there as a safety net but at a vastly reduced pay rate.

IR35

With the move into contracting you’ll most likely be unaware of the tax legislation that contractors working through a Limited Company must deal with on an ongoing, basis such as IR35. Getting caught in the IR35 net would result in you paying tax and National Insurance like an employee, rather than taking your director’s fee and dividends. It was established to stop ‘disguised employment’ where a person would have all the security of a full-time employee, yet is as a director of their company working as a contractor, reaping the tax benefits.

It’s up to you as a contractor receiving these tax benefits to ensure that you’re taking the necessary steps to ensure you are compliant in the eyes of HMRC. To be in full confidence that your finances are in order, it’s a good idea to work with specialist contractor accountants such as Brookson, that have full knowledge and experience in dealing with legislation such as IR35 and any worries that you may have.