Why Working as a Contractor is Better Than Permanent

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Top Ten Reasons why Working as a Contractor is Better Than Permanent

Last updated on Tuesday, May 27, 2014

Written by Churchill Knight

Up until less than a decade ago, permanent roles were arguably the most prominent way of working. However, contracting roles are becoming ever more popular and there are now estimated to be 600,000 contractors (operating via a limited company) in the UK.

If a contracting role comes along, you might wonder how much better it is compared to a permanent role which has security and the opportunity for long term training. We've put together a top ten countdown showing you why contracting is better than permanent employment.

10. Skills Development

Working in a number of roles throughout your contracting career can benefit your skill set immensely for a number of reasons. By working for a number of companies, you’re diversifying your skills based on the industry. You could develop your skills as a professional in your field by opting for contract work over permanent employment. As a highly skilled individual, you will be in high demand and working as a contractor provides you with a wealth of professional options.

9. Varied Working Environments

An 18th Century English poet called William Cowper once said “Variety is the spice of life.” This is especially true of working as a contractor. You could be working for a high level IT Consultancy, for example, for the first 6 months and a charitable organisation the next. Obviously this means you aren't stationed in one company for a long period of time and potentially don’t see the effects of your work, but more opportunities means more variety and professional experience on your CV.

8. A Great Looking CV

The more contracts you take up, the more diverse and broad your CV will look. When looking for contractor candidates, potential clients look for a solid foundation of skills and experience in a CV. This means, as long as you do a good job and the clients you work for are happy, you have a good level of references to use when finding other work.

7. Control of your Finances

If you decide on the limited company option, you can separate your personal finances from your business finances. This means greater organisation and greater control of your finances. You also have more flexibility with a limited company over an umbrella company. Read more on the limited vs umbrella option.

6. More Opportunities to Network

One contracting job undoubtedly leads to another as word spreads of your abilities. This means working as a contractor gives you more chances to network with clients from a huge variety of industries. Referrals are a big part of the contracting industry, and doing a good job for your clients is sure to make word of your professional abilities spread. This will lead to more potential contracts and a strong network of contractor and client contacts.

5. Industry Expertise

Contractors generally have a high level of skill in a certain field and therefore are seen as an industry expert. This can clearly affect the type of jobs that are offered to you. If you opt for contracting over permanent employment, you could benefit from an increased professional status, especially if you were to operate as a Director of your own limited company.

4. No Office Politics, Just Results

Unless you’re working as an interim manager, contracting takes away the need to worry about office politics. You’re judged on your work and that’s all you need to worry about. In this way, contracting can be much less stressful than permanent employment. In fact, over 80% of contractors feel happier being a contractor than they did when they were a permanent employee.

3. Business Expenses

One of the best reasons for being a contractor is being able to claim expenses. As we previously discussed in our 'Top Ten Most Valuable Expenses a Contractor Can Claim For' blog, there are a variety of tax deductible expenses a contractor, unlike a permanent member of staff, can claim for. As a contractor you can benefit from tax relief on expenses such as home office costs, mileage, accommodation and training.

2. You're the Boss

If you decide on the limited company option, you make the decisions. You can decide when you work, what you work on and if you have an opening in your day for other interests and activities. In the end, contracting gives you the freedom to decide your working life, as long as your clients are happy with your work.

1. Higher Take Home Pay

If you’re considering contracting, this could be the clincher.

As a contractor, you take home a significantly higher take home pay (legally) than if you were to remain a permanent employee, depending on how you set up. This is because a limited company contractor for example, can take home up to 85% of their earnings if they operate outside IR35 legislation.

If contracting sounds like a good career move for you, find out how much your take home pay would be if you had your own limited company using our take home pay calculator.

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