The pros and cons of life as a contractor
Giving up the security of your job to become a contractor is a major decision. However, if you’ve been dreaming of becoming a contractor, this could be the right time to do it.
The EU referendum has created an extraordinary amount of uncertainty in the economy. Many employers are delaying long-term investment decisions, including recruitment, until there is more clarity.
Some businesses may opt to hire contractors instead of permanent employees to meet short-term requirements, creating opportunities for aspiring contractors. However, you need to consider various factors and potential pitfalls before you decide to take the plunge and become a contractor.
Contractors can earn as much as 50% more than employees in similar positions and they can also reduce their tax liability, but they don’t get employment benefits. Contractors are not taxed at source, so they need to put money aside every month to pay their tax dues at the end of the year.
As a contractor, you can choose the contract jobs you want to do and take time off whenever you want. However, you will have to keep searching for new contracts to maintain a regular flow of work. Financial reserves will help you to meet your expenses when you are between jobs.
A contractor enjoys extra earning power and lower taxes but doesn’t have any employee protection rights. This means you will not get any paid leave and may have financial problems if you fall sick. Besides, an unhappy customer can terminate your contract without notice, leaving you unemployed.
You need to think carefully about how you will deal with situations like this before you decide to become a contractor.