If you’re considering putting your skills to use as a contractor you’ll naturally want to consider the pros and cons before making the decision. After all, contracting is a big change to paid employment so you need to consider the pros and cons before making the move.
Although there are plenty of benefits to contracting, from freedom and flexibility to more money for your time, you must also consider the drawbacks which can mean that it isn’t the necessarily the right option for everyone.
To help, Umbrella Search has put together this handy guide outlining everything you need to know before making the leap to contracting in 2024.
Benefit 1: freedom and flexibility
Have you dreamed about becoming your own boss? Then contracting could be the right move for you.
As a contractor, you will come in as an expert in your field to plug a skills gap or help on a specific project before moving on to the next client. This means you can enjoy working as your own boss and the freedoms and flexibility that are part and parcel of this.
When you become a contractor, you will choose which projects you work on, when you take them on and which clients you work with as well as how long for. This is very different to a 9-5 job and is one reason many contractors want to make the move to contracting.
Benefit 2: earn more money
Everybody wants to be valued for their time and skills, and the good news is that when you become a contractor you are in charge of how much you charge your time out at, meaning you’re in charge of how much you earn.
Although your contractor rate will understandably depend on your skills and experience, generally contractors earn more than their employee counterparts. That means you can enjoy your work whilst taking more home at the end of the month which is a great benefit of working this way.
Benefit 3: control your career development
Generally within employment, your development and progress is controlled by managers or senior employees. This means that although you may wish to progress in a specific area or move up the ladder, you aren’t always able to do so.
However, contractors are in control of their own development and progression. This is great news for those who want to progress or develop in specific areas or fields.
Benefit 4: more variety
Many employees feel fatigued or bored of doing the same job with the same company for several years.
If that’s the case, contracting could be a great option for you. After all, contractors typically work on a handful of contracts each year, giving you a great level of variety.
This means contractors get an excellent level of exposure to a number of different projects with different clients which not only helps to keep you stimulated, but also allows you to continually keep learning new things and broadening your knowledge.
Con 1: lack of statutory benefits
Although working for an employee in a 9-5 job isn’t for everybody, it does bring the added benefits of covering the employee with statutory rights which includes things like sick pay, annual holiday leave and maternity/paternity leave.
After all, the self-employed do not benefit from statutory rights which means that if you can’t work or need to take a break, you will not be paid.
However, one way around this is to contract through an umbrella company. With this route, the contractor works as any contractor does, choosing their own contracts and clients, however they become employed by an umbrella company who then covers them with statutory rights.
This means you can enjoy all the benefits of contracting, but have a well needed safety net if needed.
Con 2: Paperwork and finances
Although you will typically earn more as a contractor than an employee in the same role, contracting does come with some administrative and financial tasks which can be tricky and take up time.
For example, the contractor must invoice the client, chase any late payments, track and submit their expenses and file their tax returns. Employees, on the other hand, have all this taken care for them.
Tax returns in particular can be complex and take up a significant amount of time, leading many contractors to utilise the services of accountants which then comes in as an additional cost.
However, the good news is that contractors that use an umbrella provider will have all of this taken care for them, giving you more time to focus on the contract work.
The umbrella company will take care of paperwork, invoicing, processing expenses, and as they pay you a salary, they take care of all your tax and National Insurance affairs for you, freeing up more of your time to focus on what matters.
Considering contracting? Umbrella Search are here to help
Having read Umbrella Search’s guide to the pros and cons of contracting, you may be considering making the move to contracting. After all, there are many benefits to contracting, giving you freedom, flexibility, more money and putting you in charge of your career progression and direction.
However, if you want the contracting lifestyle without the drawbacks, including taxes, paperwork and lack of statutory benefits, then using an umbrella company could be the best move for you.
If you think this is the best way to go, Umbrella Search can you find the best umbrella company out there for you. Just get in touch with our friendly team and we will help you with the rest. Whatever you’re looking for from an umbrella company, we can help you find it.
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