Making the transition into the world of contracting can be a
pivotal moment in your career. Whether you are an experienced professional
seeking more autonomy or a recent graduate exploring different job paths,
understanding the ins and outs of contract work is crucial.
What is a contract job?
Contract jobs, also known as contingency or temporary work,
are essentially short-term employment agreements between a contractor and a
client. Unlike permanent positions, which offer long-term job security,
contract roles come with various predetermined durations. The compensation
structure usually involves hourly rates or fixed fees for specific tasks or
projects.
Contractors are essentially independent workers. This
independence means you have greater control over your schedule, work
environment, and career trajectory. However, it also requires careful financial
planning and the ability to adapt to the fluctuating nature of contract work.
What is the easiest way to find contract jobs?
Specialised Recruitment Agencies: Many agencies
specialise in placing contractors in various industries. They have the
expertise to match your skills with available contract positions, saving you
time and effort.
Online Job Platforms: Platforms such as LinkedIn are
excellent starting points for finding contract work. Creating a comprehensive
profile highlighting your skills and experience is essential to attract
potential clients.
Networking: Building and nurturing a professional
network is invaluable in the world of contracting. Attend industry events, join
relevant LinkedIn groups, and inform your colleagues that you are open to
contract work. Personal connections can lead to fantastic opportunities.
Do I need to set up my own Limited Company?
There are two popular business models for contractors –
setting up a limited company or operating under an umbrella company. Both have
advantages and disadvantages, and deciding which direction is right for you is
a key consideration of contracting.
Becoming a director and shareholder of your own limited
company is the most tax-efficient way of contracting as it allows you to have
complete control over your financial affairs. However, operating a limited
company does involve legal obligations and paperwork requirements, so it is
important that you understand these aspects thoroughly to ensure your business
operates within boundaries of the law.
Alternatively, you may choose to operate under an umbrella
company. They will take this responsibility off your shoulders by sorting the
invoicing, paperwork, and collection of money on your behalf.
However, it is worth mentioning that with the umbrella
company model, you do effectively become an employee again, and are therefore
eligible for PAYE and national insurance contributions.
Getting to grips with IR35
IR35 is a piece of tax legislation which affects contractors
directly. Its primary objective is to prevent contractors working as disguised
employees by taxing them at a rate comparable to that of traditional employment.
The legislation affects all contractors who do not meet
HMRC’s definition of self-employment. If you are working as a contractor but have
the same, responsibilities, control, and benefits as a permanent employee, you
must declare yourself inside IR35 as you are not entitled to a different tax regime.
If you declare that you are working outside IR35 but HMRC
deems this to be false, you could face a large tax bill and penalty. Hence, if
you declare that you are operating outside IR35, it is crucial to confirm that
both your contract and your working practices demonstrate your status as an
independent contractor.
What are the benefits of contract jobs?
Flexibility: One of the primary draws of contract
work is the unparalleled flexibility it offers. You have the freedom to choose
the projects that align with your interests and skills, set your schedule, and
even work remotely. This flexibility can lead to a better work-life balance,
which is increasingly important in today's fast-paced environment.
Variety: As a contractor, you will likely work on a
variety of projects and collaborate with different clients and teams. This
diverse experience not only keeps your work exciting, but also enhances your
skill set to broaden your professional network.
Higher Earnings: Contractors often enjoy higher
hourly rates or project fees compared to their permanent counterparts. While
this comes with added responsibilities, the potential for increased income can
be substantial.
Independence: Contracting offers a level of
professional independence that is hard to find in traditional employment. You
have the autonomy to shape your career path, explore new opportunities, and
take charge of your success.
In conclusion
Starting a career as a contractor can be a rewarding and
liberating choice. The flexibility, variety, and professional independence it
offers are enticing advantages. If you are ready to embrace the challenges and
rewards of contract work, start building your online presence, networking
within your industry, and exploring contract job opportunities. Your journey
into the world of contracting awaits!
Here at Blueprint Recruitment, we specialise in supplying
contract, permanent and temporary resources for projects throughout the UK and
internationally. If you are thinking of switching up from your permanent
position or fancy a new contract challenge, why not head over to our Sectors
tab to explore our current opportunities!