The Three Things That You Should Know Before You Plan To Be A Contractor
Contractors are private individuals or a company that is taking various job tasks or being hired by various companies to perform various tasks based on their expertise. Although they take lesser labor and they don’t have the benefits that a regular employee has, there are many people that are doing these types of work since it offers flexibility and more freedom to the contractor. Aside from that, companies love them because, with these guys, companies no longer need to hire more regular people, build more facilities for production and so on just to meet demands. All those things can already be done by contractors that have all the tools needed to start immediately.
Thinking about being one means living with the downside and appreciate the good side. Because the industry is plagued with informal hires and dodgy contracts and not to mention not having the right regulation in terms of liability and taxes despite being a growing force. Instead of going to the better route it only got worse. The problem wasn’t one-sided, because there were companies and contractors that took advantage of the situation, this is one of the reasons why IR35 was made. It may not have addressed all the problems but it did make everything formal and by law that somewhat regulated the industry.
They have lesser tax: Many people are actually raising their eyebrows that contractors get cheaper taxes. If you look at it from a different perspective and try to understand the situation you might even say that it’s justified. Think about it, before there are contractors that were only hired by word of mouth, but ever since IR35, companies will get into trouble if they’re caught. So if the contractor isn’t registered, the contractor will be forced to. Besides they don’t get the same benefits as a regular employee, they get less to nothing and they have to manage everything on their own.
Its self-management: Most people that are doing self-contracting work are managing their business and running one does have a lot of things to think about and not just the tax. Unlike you, you’re employed in a company that most of the things that the government requires from you are already taken care of by the company. If you’re an individual contractor you have to run around and take care of your own contractor tax. If you aren’t an organized person you will learn it the hard way.
There’s more freedom: Although it’s a business of your own, the fact that you’re relying on projects makes the job less secure. There’s no security of tenure and the things that will determine your success will be the number of projects that you will have and this isn’t always as expected. If you are a contractor you can only go two ways, either your success will help you reach for the stars or it will sink you rock bottom. It’s always going to be a constant struggle to stay afloat but as long as you have the right business and the right execution you should do just fine, but it doesn’t erase the fact that it’s less secure.
Being a contractor has fewer benefits, its mostly a thankless job and a lower pay, but despite that many people are doing it and are drawn to it because of the flexibility and the freedom that it creates. Although it’s an exciting “leap of faith” kind of a thing for most people, it’s not actually that bad if you just know what you’re really getting into and you know how to be successful at it. You just need to remember that you have to do everything on your own like your contractor tax and various contractor obligations stipulated in IR35.