Permanent Role vs Contract Work

stewil18

What are people's feeling about contract work and starting yourself up as your own limited company?

I am currently in full time employment working in projects for a well respected company and to be fair pull in a reasonable wage - not earth shattering, but still it pays the bills and keeps the wolves from the doors. My major gripe is the travel, commuting a 100 miles a day is taking its toll and travel expenses are becoming an issue as the months go on.

I updated my CV on Monster on friday, just as a 6 monthly exercise to keep it up to date etc. Since then I have 3 calls from agencies courting me with contract work, while only 6 months in duration - the pay earned would be at least 1.5 more than what i earn in a year at my current company.

Obviously setting up as a limited company would allow me to claim for travel expenses and b&b's and the like so commuting becomes less of a financial drain on me.

But, and i guess this is the rub, i lose the stability (well as stable as you can be currently) i lose the benefits and chances are i find myself looking for work every 6 months/1 year.

Have people on here gone down this route? How did you fair? What problems did you run into? Did it work out for you?

I must admit i am tempted to give contracting a try as the rewards can be so much better financially, but i'm also wary of leaving a secure job for this lifestyle.

InsideInsurance

1.5 times is low to be honest, the two most common methods of setting the achievable rate is:

Salary divided by 1,000 to get your hourly rate
Salary divided by 100 to get your daily rate

Personally I use number 2 which is slightly more optimistic but is a good rule of thumb.

Yes I did take this route. Faired fine so far with every contract being renewed multiple times. Never had a break in contracts and each switch has been due to my desire to move on rather than a client not renewing.

There is a personality aspect to it though. Contracting is not suitable for everybody. You need to quickly learn how to play the game of being a contractor. You have to accept in some clients you will be hated and seen as the scum of the earth and treated as such. You will very rarely get the interesting or sexy work to do. Office politics are different, you arent looking for a career anymore and not in competition with others for that next promotion.

Outside of work, you need to be sensible with the money as you typically will at least double and can triple your take home pay due to tax advantages. Too many I have seen growing accustom to that level of income and not putting anything aside for gaps in contracts or forgetting to accrue for taxes etc.

I dont want to paint all doom and gloom, there are some companies that are good with contractors and you are almost treated like a member of staff but too many will paint a rosey picture and whilst it can turn out to be great (as it has for me) you do need a considered approach.

Do you not have a few contractors at your current place that you could go chew the fat with and get their view given they'll know your position/ sector better than strangers on a forum?

marybelle01

I have my own limited company and contract for various lengths of time when in between my normal work (which is oddly erratic!). I have been doing it for two decades now. My personal opinion is that it depends on two things. The first is the extent to which you can guarantee an acceptable level of work. What that means depend on you. In my line, I can walk into work within days at any time I want, and the demand for skilled/experienced staff is such that we can demand a much higher rate of pay than employees to start off with, so with tax benefits too I can't compain about the pay or the income. The other thing is discipline, not just what InsideInsurance said about saving for things like gaps in employment or sickness, but also things like holidays. I have seen a lot of people forget the nitty gritty things like everyone needs a break! You won't have an employer to tell you that you have to take your holidays, or you are too sick to come in to work. You have to make those decisions for yourself and you really do have to cover yourself to do so.

stewil18

We do have contractors at my place and to be fair they are treated well and i know they are paid well too.....from a previous conversation my guess is they are on taking home at least twice what i am.

And to be fair the reason i've come on the forum to ask is simply to get opinions like what you've given, chances are you are going to give me more realistic answers than someone face to face - i don'[t want someone to tell me what i want to hear. Plus a few of the contractors are quite entenched within the structure here and could easily get back to my seniors, so i'm wary of opening up to them.

Interesting point on the perception side of things and how you are viewed.

Definitely something to think on.

InsideInsurance

As I say, it varies, I have been fortunate and all the places I have contracted have been fairly pro contractors, eg invited to team events, paid for training etc with the only constant exception being to the annual company paid for party. My current clients are similar but I also dont get to go to a quarterly department strategy meeting.

I have known of clients that were very anti-contractors though both at a "corporate" level in that contractors couldnt go on team/department away days, team/department training or anything of the company spending money on them doing anything but hardcore work. Likewise at a "team" level them not being invited to social events (even though no company money spent), lots of snide comments about how much they earn compared to their employee colleagues. Plus there is being given the real dross of the work to deal with, generally picking up someone elses mess and being expected to fix it in unrealistic timescales etc.

You absolutely do have to get "value" from your contractors but just because you are paying more cash for them the total cost difference isnt as much as the cash difference and you are also buying convenience of people you can hire and fire as you want. They are ultimately still people though and people who are better engaged by their employers/ clients work better.


To be successful you need to be good at winning contracts, got to be good at spotting the good contracts, need to hit the ground running and learn how to make sure others find you invaluable but also have a thick skin and dont take things personally. If you can do all of these then you can generate much more money from your skills (though to some level of sacrifice of career)