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Moving from permanent employment to becoming a contractor is a transition accompanied by man...
Moving from permanent employment to becoming a contractor is a transition accompanied by many advantages, such as increased flexibility, more significant earning potential and the opportunity to be your own boss. We recognise the fantastic opportunities that a career in contracting brings, which is why we’ve put together this blog to help you understand the benefits of working as a contractor and how to become a contractor.
But before we delve into the benefits, let’s answer the all-important question, what is a contractor?
Contractors act as a temporary solution for organisations looking for an immediate resolution to their hiring challenges, be it staff shortages or filling a skills gap within the business. Working across a broad range of industries, from Financial Services to Retail and more, contractors provide specific skills or services required by a company for a set period. From marketing support to assisting E-Commerce strategies to other niche skill sets, contractors lend their expertise to help businesses hit new heights.
As a contractor, you may be hired for a specific number of hours, a set time frame, or for the duration of a project where specialist skills are sought-after by the employer. Contractors can be self-employed, work independently as sole traders, or run limited companies. Independent contractors will source and establish their own client base and work for themselves. Whether employed or independent, contractors can work on one or multiple contracts simultaneously and often work with various businesses with an extensive range of transferable skills.
Typically, contractors are experienced professionals who have honed in on a specific skill and mastered their craft in an area they know businesses regularly require. Due to their level of expertise, ability to get started on a project immediately, and cost-effectiveness, many companies seek contractors as an alternative to hiring a permanent employee. With the demand for contractors as prominent as ever, there's never been a better time to consider shifting from permanent employment.
Now you know what a contractor is, you're probably wondering what incentives convince people in permanent employment to move into contracting and what the benefits are. This section will help you better understand why you should consider transitioning into contract work by looking at the benefits of working as a contractor.
For many people, working as a contractor is ideal because of the freedom associated with it and the flexibility of a work-life balance. As a contractor, you can fit work around your personal life and decide when you want to take a holiday to how many hours you want to work during the week.
If you prefer to work from home to avoid a long commute or work better in the evenings and want to distance yourself from the typical 9-5, contract work provides this flexibility. Ultimately, as a contractor, you can take control of your schedule and give yourself the work-life balance best suited to your needs.
As a contractor, you can pick and choose the projects and assignments you work on and in which industry you desire to work in - the variety will leave you spoilt for choice. In addition, this ability to vary your work and choose what you do and don't want to do enables you to focus your efforts on projects that genuinely capture your interest, as opposed to working as a permanent hire where you may be asked to work on assignments that don't appeal to you.
Having variety in your contract work ensures each day is different, keeps you motivated and opens the door to new opportunities. The latter leads us nicely to our next benefit.
Typically, contractors will have the transferable skills required by various businesses and industries, meaning contract work can provide the keys allowing you to open the door to new opportunities. Throughout your contracting journey, you will make valuable connections across different industries and work with various companies - some of whom you will form long-term partnerships with and support on multiple projects during your contractor career.
We'll touch on how to build your personal brand later in the piece, but essentially as you begin to develop and grow your network with businesses and people within your chosen niche and hone in on your specific skill set, you'll rarely find yourself scarce of new opportunities.
Contractors are often paid more per hour or assignment than permanent employees for the same work. Companies that hire contractors will pay the market rate or even exceed this, as it's more cost-effective than taking on a permanent hire. As businesses save on paying contractors the benefits and overhead costs they would an employee, they will often be prepared to offer you more, knowing your expertise will deliver their desired results.
Due to the flexibility to work on various projects simultaneously, the more you work will inevitably increase your earning potential. Additionally, your tax status as a contractor will result in you taking home a higher net pay than an employee. Ultimately, when it comes to your earning potential as a contractor, the higher demand for your skill set will result in more opportunities for work, which will result in you reaping the financial rewards.
Regardless of the industry you work in, many dream about the opportunity of being their own boss. By becoming a contractor, you're essentially doing just that.
Contractors are their own bosses, which is a significant benefit to people who prefer to work independently, have a high degree of control over their work and enjoy managing their own schedule. In addition, unlike employed workers, who are obliged to work when their employer insists, contract work allows the individual to pick and choose what projects they work on, which businesses they work for, when they work and from where.
There's no denying that contract work is fast pace and you have to put in the time and effort to truly notice the benefits. However, by being your own boss, you can take the necessary time off you need to recover and support your mental well-being. Moreover, by becoming your own boss and shifting to working as a contractor, you'll soon realise how beneficial the move can be to your professional and personal life.
By now, you will have a better understanding of the benefits of becoming a contractor and how rewarding and fulfilling a career path can be for those with the skills and drive to make the switch from permanent employment. But how do you become a contractor? We've compiled a list of five things you need to do to set yourself up for success when considering working as a contractor.
1. Research the market
Before you embark on what will hopefully be a successful career as a contractor, you must research the market you're about to pursue. Contracting is competitive, so you need to establish whether there's a demand for your skill set within the market you intend to enter or if your credentials are required by an area you were unaware of before you considered switching from permanent employment.
You should compare the earning potential and determine whether the transition to contract work makes financial sense for you at the current stage in your career. Additionally, you should research the regulations of becoming a contractor and consider how you will manage things like your accounts and taxes.
When considering moving from permanent employment to contracting, it's essential to carefully assess your skills, financial situation, and personal preferences. In addition, you should have a solid understanding of your market and be confident in your ability. Of course, we appreciate that considering moving into contract work is daunting, but it shouldn't put you off from doing into contracting. Help is out there - as we'll get onto later in this section.
Understanding the legal requirements behind contracting is another crucial step you need to take. The IR35 was created in April 2000 to identify contractors who worked as "disguised workers" and evaded paying the proper tax by offering their services through an intermediary. The Act also attempted to expose companies that employed individuals to "misrepresent" their employment status by treating them as independent contractors.
Your IR35 status will change depending on your working circumstances from contract to contract. The end client will decide whether your employment puts you within or outside public sector positions. Large and medium end-clients in the private sector will be in charge as of 6 April 2021. Regardless of the industry, you should be aware of IR35 in case HMRC queries your status, or you have the chance to contest an end-choice.
Contractors can often be paid in one of two ways: through a limited company or an umbrella company. Umbrella corporations are frequently used by contractors who don't want to deal with administration or paperwork or have short-term contracts.
In contrast, a limited business has the advantage of providing additional tax planning alternatives, which might result in higher take-home pay than an umbrella company. In addition, directors of limited companies may also deduct some costs that an umbrella company cannot.
4. Build your personal brand
If you want to be a successful contractor, having the in-demand skills alone will only take you so far, so you must find ways to stand out. Building your personal brand is one way to achieve this and help bolster your client network.
Create a CV and a portfolio of the projects you have worked on and the clients you have supported. Be sure to share this on the free online resources you have at your disposal, such as social channels like LinkedIn - which can act as an online CV that potential employers can contact you through. You should also consider attending networking events to get your name out there.
Think about creating an elevator pitch for your personal brand. There is a chance to meet someone who might require your services as a contractor anywhere and at any time. So what could you say in this scenario? It's crucial to have a succinct elevator pitch ready to introduce yourself and describe what you do at any given moment. Having an elevator pitch that summarises your personal brand could be the difference between you finding your next opportunity or losing out on contract work.
The industry is primarily fuelled by contract recruitment agencies, who are excellent at placing skilled candidates into roles quickly and efficiently. Registering with several recruitment agencies is one of the easiest ways to put yourself out there as a contractor.
Contract recruitment specialists are experts in specific sectors and can support you with any worries or doubts when considering moving into contracting. Registering with a specialist agency could help you find the contract role that gets your career as a contractor up and running more quickly. Additionally, you can post your contractor CV on job boards to help get your personal brand in front of employers looking for your niche skill set.
At 3Search, we know how difficult it can be to grow your network when starting a career as a contractor. So whether you have doubts about moving away from permanent employment, be it because of managing your taxes, understanding IR35 or if you simply need clarification about how to get started, we can help. Our specialist contract recruiters can provide you with more information about everything mentioned in this blog and further support your journey into this new career path.
When you partner with 3Search, we will help you hit new heights by providing you with the best recruitment experience you will ever have. So, if you're interested in becoming a contractor, view our latest contract jobs or contact us today via our website or call us on 0204 551 8800.