Moving from PAYE to Contracting… The Pros and ConsPosted Tuesday, February 26, 2019
While you’re probably familiar with the term Contracting, you might not be fully aware with what it entails or how it specifically works.
The initial decision to make a change might seem daunting but a move to Contracting can offer you exciting new possibilities and challenges!
There are plenty of advantages to Contracting, but there are differences to being a permanent employee so you’ll have to consider how to operate efficiently and compliantly as an Independent Contractor.
At Contracting PLUS, we always recommend a Limited Company solution. A Limited Company either an Umbrella company or your own Personal Limited Company will offer you a compliant and easy to use structure through which to Contract – whether you’re working with one client or with multiple. It’ll also make sure you’re protected, with Company insurances in place (at no extra cost to you if you work with Contracting PLUS).
If you are considering Contracting for the first time here are some benefits and challenges to be aware of;
The Benefits “Pros”
Earn more money with premium rates of pay
Companies who engage contractors on short to medium term projects need highly skilled individuals who can hit the ground running.
Not only can you earn a higher gross rate of pay as a Contractor, but operating through a Limited Company also offers tax benefits. Contracting PLUS will give you plenty of advice on how to make the most of your contracting income while remaining fully compliant.
Flexibility in how and when you work
Contracting offers great flexibility in how you structure your working week, month and year. As a Contractor you’re often operating on a project basis so there can be flexibility in what hours you choose to work and where you undertake your work from.
Greater career control and opportunity to work on high profile projects
As an Independent Contractor you bring with you a highly sought after skillset. Contractors have the opportunity to work for multiple companies over shorter spaces of time meaning that you can choose the projects that really interest you.
Ongoing skill development
As you work with new companies, new teams and new technologies you inevitably gain varied and wide industry experience meaning you are constantly challenged and developing. The ability to adapt quickly will make you more attractive to companies operating on a tight schedules!
The Challenges “Cons”
As a contractor there are no guarantees of the next role or a guaranteed income month to month so it is important that you budget income for any time off between jobs. Proper planning can minimise this uncertainty.
Less Job Security
While the world is moving towards a more flexible workforce, there is still a gap between the security of a full-time job and the perceived insecurity of Contract work. Developing your skillset on an ongoing basis will allow you to remain competitive and if contracting long term you should consider how best to protect yourself and your earnings. Our Contractor Pension and Protection team can advise you on pensions, income protection and saving plans.
Loss of Benefits
As a Contractor, you won’t necessarily be part of the “inner circle” of the company. You also won’t receive the typical employee benefits such as holiday pay, sick pay, bonus, etc. Your higher rate of pay however will reflect this.
As an employee, your employer looks after all necessary tax deductions before transferring you your net salary. As a Contractor, you’ll need to invoice for your hours worked and ensure the necessary taxes are paid to the Revenue Commissioners. An Umbrella Company provider, like Contracting PLUS, will look after all of this for you – you’ll simply need to let us know how many hours you’ve worked and we’ll take the hassle away!
If you want to have a more in-depth and honest conversation around the pros and cons, call Jennifer Doyle on 1800 545422.