We regularly get contacted by candidates who, after years of working in permanent roles, are considering becoming a contractor! This can be a very good move but needs to be done only once you’ve informed yourself of the Pro’s and Con’s to both!
There are factors that need to be considered before making the jump to contracting, so we thought we’d share our thoughts and provide helpful information to compare some of the benefits of permanent vs contracting.
A main benefit of a permanent job is stability and the employment protection that comes with it, e.g. knowing that you have a regular form of income. In contracting roles the employer can end a contract at any time with little to no notice at all leading, we feel, to one of the biggest cons of contracting!
We all know how hard it can be to climb the ladder at work no matter how hard you try, which can be disappointing. Contracting gives you the opportunity for variety, especially if you get a good reputation as this can carry you through contract after contract, giving you ‘climbing the ladder’ opportunities in your career a lot quicker.
If you like to see your achievements and the long term effects of your work then a permanent role may be the better option for you. As a contractor you can be brought in for only ‘stages’ of a project, leaving once your bit is complete, so ultimately you don’t get to see the end result.
A permanent employee can find it hard not to get involved in office politics, with a contracting role you are attracted to just going into a company, doing a good job and then moving onto the next contract meaning your less likely to get caught up in any of that.
Another thing to consider when making the decision to move in to contracting is financially how you would want to work – you can trade as a Limited Company, use Umbrella Services or PAYE through an Agency. Things to consider:-
This can be the most tax efficient method but with this comes the headache of everyday administration and legal requirements all limited companies have to abide by.
If you don’t want the administrative hassle yourself, but like the thought of a company set-up rather than a payroll arrangement, then an umbrella company could be the best way to go – all you would need to do is send your timesheets and expenses and they will do the rest.
PAYE through an Agency
This is where you are employed by the agency and added to their payroll, paying full tax and national insurance contributions with every payroll that is processed. The benefits are that there is no administrative hassle and all you would need to do is send in a timesheet at the end of each week.
Finally, it’s very important that you check what the market is like before making the move to contracting! The last thing you want to do is leave your permanent job and then struggle to find work so do your research first and see what roles are out there. It can be a tough decision but it’s always worth having a backup plan just in case things don’t go your way. We are always researching the industry so give us a call and we can discuss your contract / permanent requirement.