If you are being kept awake at night, and find yourself battling with the decision to go contracting on a frequent basis, it may be time to make the leap into contracting.
To help you decide, we’ve put together a helpful guide that draws up the advantages and disadvantages of contracting vs fixed employment.
A 2016 report by MGI (McKinsey Global Institute) shows that 97 per cent of contractors are happier than permanent employees. This shows that independent working has become more favourable over fixed employment.
Our clients make challenging decisions every day so we’ve picked their brains to help you draw the scales and make an informed decision.
Advantages
Increased Income: Contractors can typically command a higher rate of pay per hour/day than an equivalent permanent employee. The tax savings associated with operating through a limited company tend to be much higher than those in a permanent position.
For more information, take a look at our Take Home Pay Calculator to work out how much you could be earning as a Contractor.
Tax Efficiency: Contractors can work more tax efficiently as certain tax rules that would apply to fixed employees don’t apply.
Flexibility: You are practically your own boss so you can dictate the aspects of your work life. This also means that you can balance your work and home life, deciding when to take a job and when not to.
Variety: As you are your own boss, you can choose what contracts to take, from who and where.
Experience: As contracting can allow you to change from one sector to another, you can quickly build up an impressive CV, adding to your skill set. This means that you may be able to charge higher rates.
Disadvantages
Admin: As a contractor, you will have more responsibilities which means more administrative tasks. At Gorilla, we use innovative cloud-based software so you can access your accounts through any device, making it hassle-free.
Uncertainty: As a contractor, you will not have the same rights as a fixed term employee. Contractors are not entitled to a notice period which means less security and uncertainty.
Employee Benefits: As a contractor, you don’t receive the same benefits from your client as a fixed term employee would. You are unable to receive sick pay and holiday pay, but as most contractors are typically paid a higher weekly/daily rate, this should cover it.
You can download the free Gorilla Advice Pack which covers the terms attached to working as a contractor. We advise you to give us a call on 0330 024 0506 to discuss your options or you can send us an email on info@gorillaaccounting.com.
