The Benefits of Working as a Contractor
More and more professionals are opting to become contractors in the UK because of various benefits. Before learning about the benefits, it is crucial that you understand the concept first. A contractor is often called a self-employed worker or freelancer. If you are a contractor, it means you are working independently.
As a contractor, you sell your services to a company through a contract. Instead of receiving automatic pay at the end of the month, you can invoice the company for the services performed depending on the agreed terms. To help you determine if this is the right career for you, here are the benefits of working as a contractor:
High earning potential
Many professionals switch to contracting because the remuneration tends to be higher compared to a regular employee. Contractors also benefit from tax status, which will enable you to take more net pay. Remember that in the world of contracting, if you promote your special skills, your earning potential will tend to be even higher.
As a contractor, you will enjoy choosing clients and assignments. This means that you can only work on assignments that you are really interested in. In the end, there will be a greater output if you love what you are doing.
Permanent employees are restricted to the typical “9-5 life” with limited time off. If you become a contractor, you will be your own boss. This means that you can work flexibly. Depending on your specialization, you can even negotiate where you want to work.
You can also decide to have longer vacations or holidays because you are not restrained by time. Since your daily rate is higher compared to salaried employees, you can afford longer travels between your jobs.
If you find contract work in other countries, it will give you a CV boost as well as an opportunity to experience other cultures. In this competitive economy, an international experience can go a long way.
Contracting is ideal because your skill development is within your hands. Since you have greater flexibility, you have plenty of chances to take courses or just explore other areas of interest.
So, what’s next?
If you decide to become a contractor, there are two ways you can do it – operating as a limited company or working under an umbrella company. Setting up a limited company means you will become a director and shareholder. Although this is the most tax-efficient way of contracting, it means you have more legal obligations and paperwork requirements to handle.
For beginners, operating under an umbrella company is an ideal solution. You do not have the full responsibilities like a limited company plus the company that you sign on will handle everything making it easier on your part. In the end, an umbrella company will give you more personal time.
Regardless, a limited company or umbrella company help many contractors make a smooth transition. You might want to get the help of an accountancy service to ensure that you are not paying more contractor tax than you should. Before anything, you have to do your own research because it can mean the difference between a successful transition and failure.