Advantages of contracting
If you are already self-employed, then you can see how much you can take home here: https://www.osamcquillan.ie/resources/blog/income-tax-bills-for-2018/
Whatever sector of industry you work in the are many advantages to being self-employed, so we set out here the most important advantages. To summarise, you can make more money, have better flexibility, more freedom, and exposure to more areas of work thereby making you more attractive as a future hire if you ever want to go back to full-time employment. Lastly you can plan better for your tax liabilities.
Mind you, it's been a while since the world of employment offered anything approaching permanent employment, and for most people a 6- or 12-month contract gives as much security as any job. With benefits to employees being eroded, guaranteed pensions being cut and salaries being reduced, contracting may suit all parties. The employer gets access to more a skilled workforce, and contractors get better money, exposure to cutting edge skills and get the flexibility to move from job to job as it suits them.
First up is the financial benefit, and of course these are number one in many people's mind when they first consider contracting or freelancing:
Depending on the industry and the role being filled, the daily rate can be close to twice what the employee earns
The rates that contractors can earn are paid due to the short term nature of the assignment, and also because of the flexibility and high skillset required for particular positions
The market determines the level of pay and can be particularly attractive where a company cannot fill a vacancy for a particular skill for a pre-determined length of time.
Operating as a contractor or freelancer through your own limited company is the most efficient way to organise your affairs from a tax point of view. We can look after the formalities and paperwork in relation to the accounts and tax. You will have better opportunities to keep your income out of the tax net using perfectly legal means - such as increased pension payments and offsetting all your business expenses against your taxable income. As your accountants we can help you with these aspects of running your business.
You get paid for every hour you work as a contractor, and there is often institutionalised overtime built in to a particular contract payable at very good rates along with benefits such as subsidised canteens and the like.
As a contractor you are far more independent than an employee.
You can choose what companies to work for, to determine your own days, weeks or month, and also where to work - either in your home country or overseas.
Changing contract is usually far simpler than moving jobs
You can take your holidays whenever you like and for as long as you like.
Who you work for becomes your customer, and you are a supplier, which changes the dynamics of the relationship.
You can also negotiate terms to suit your personal circumstances.
Career development is now much more in your own control - you can take those training days, and go to exactly whatever courses you choose, instead of having to request holidays get the training that you need to become one of the best paid people in your industry.
If you work for many different companies, you can gain exposure to a great many skills and gain experience in your industry
For example you can work in different sectors so that you gain wide experience across a great many areas.
You get to see how different companies work, with different nationalities different ways of doing things.
You will build up your network of contacts which in turn will stand you in good stead when it comes to looking for the next move. You may find that former colleagues and other contractors will recognise your expertise and experience and recommend you to their companies.
If you build your reputation in your area, you may find that the companies are coming to you to seek your unique set of experiences to work in their business as your reputation grows.
Doing assignments in diverse companies means you will gain exposure to different company cultures and management styles and structures.
As you get this exposure working with different products / services you become more attractive to new customers.
If you become recognised as an expert in your area your daily rate will increase, and the type of experience you get in these higher paid positions leads to even better daily rates as you enter a positive upward spiral.
Other advantages are that you may get opportunities to travel overseas. If you grow tired of contracting you go back to a permanent role. When you return to employment you will be perceived as someone with their own mind and with an independent outlook. Without doubt there are less politics in contracting as full-timers don't perceive you as any threat to their position, and at the end of the day what have you got to lose in taking time to contract and see what it is like.
It is not a bed of roses, and of course there are disadvantages to contracting:
As a contractor you have to ensure that there is work at the end of your current contract, and that you keep the money flowing in to your bank.
You will have to negotiate your own payment terms as to how long you have to wait to get paid.
You will have to manage your own accounts - bank, VAT, PAYE and so forth will all have to looked after - which is where we can help if you appoint us as your accountant to look after your bookkeeping and taxes - see more at http://www.osamcquillan.ie/register-with-us/
You will still be exposed to uncertainty about where the next contract is coming from - although the equivalent for the employee is worrying about whether he/she is about to be made redundant.
You will generally have to form a limited company, which we can help you with. This is a quick process once you know what you are doing. See our guide here: http://www.osamcquillan.ie/eazy-company-formations/
There is no holiday pay or sick pay for contractors, so you will need to have savings to cover you for these events.
Lack of colleagues can be daunting for some people, and there is definitely less support and fewer friendly faces to turn to for help and advice. To counteract this you should build up a network of fellow contractors and experts to help you navigate your way through contracting.
Contractors can be the first to be let go in a slump, however conversely when there is a hiring embargo, contractors are often the only option companies have.