For many people, while the prospect of working freelance may be attractive, the responsibilities that come with such a career choice can be off-putting. However, working as a contractor can be a rewarding and fulfilling occupation, and there are a number of ways in which the administrative burden, for example, can be eased.
Starting a career in contracting
The steps necessary to set up as an independent contractor vary according to the field of work in which the business will operate. In very simple cases, registration as a business and setting up financial accounts and taxation may be all that is needed. In other cases, professional licences may be needed or there may be other requirements from the local or national authorities. Advice on the necessary steps can be obtained, for example, from an experienced professional in the field, such as an umbrella company.
As with any career move, there are pros and cons attached to the process of becoming a contractor. Some of the most significant advantages and disadvantages are summarised below.
Advantages of a career in contracting
- In terms of the pros, flexibility is a big attraction for many individuals. The ability to provide services for different companies and to negotiate working hours and payment means that a contractor is more able to shape his or her work to their life-style.
- Hand in hand with this, the financial reward for contract work is frequently higher than that of being a full-time employee at a company.
- Furthermore, many expenses can be offset against income to reduce taxation.
- The comparative freedom to select contracts also leads to benefits in terms of being able to work selectively in areas of interest, and to develop skills is a particular field, if so wished.
- Moreover, contractors work under their own management, and do not need to deal with internal company politics or competition for promotion, for example.
Disadvantages of a career in contracting
- A contractor is not usually guaranteed regular working hours, and may find there are gaps between contracts. Similarly, contracts are more prone to cancellation than would be the case with internal company employment.
- The administrative work for a contractor is also higher than for an employee. Company registration and financial reporting and taxes are just examples of the paperwork that need to be kept up-to-date and accurate.
- There is also a need, in contracting, to continually market your skills and your company. This is frequently necessary to maintain a steady flow of work.
Many of these disadvantages can be eased to some degree by working with an umbrella company. For example, the expertise that can be found through such an arrangement can help in tackling difficulties with the administrative load, or in identifying suitable contracts on which to work.
A career as a contractor can bring many people greater personal freedom and greater financial rewards, but it also brings greater responsibilities and potentially greater insecurity. Working with contracting professionals such as an umbrella company can help to mitigate some of the negative effects, while potentially reinforcing the positive aspects.
Latest posts by Ken (see all)
- Why your business needs kerb appeal - February 18, 2019
- The trading business doesn’t require too much attention - January 15, 2019
- How to plan your career in the investment industry - January 9, 2019