As promised, posting after having started my little experiment in contracting.
Contracting is probably the best way of finding multiple jobs on top of “stable jobs”, speech marks because we all know that there’s no such thing as a stable permanent job anymore. Unfortunately, given the current economic situation – and the foreseeable future – being laid-off is a more frequent circumstance than it used to be in the past.
I am dabbling in contracting myself and am still on my contracting journey.
Contracting can be worth your while, because you can be anywhere, you invoice the company your hours, and then you cash out. Taxes are your responsibility (if you’re outside IR35); unless you choose to go with the structure that the contracting company are giving you. I would say for a first-time contractor, going with inside IR35 (You are essentially an employee for tax purposes) will make you feel a lot better as you dip your toe in the overemployment contracting world.
Make sure you take a good look and make note of the structure of their timesheets and invoices. Time-sheets are online tables where you place the number of hours you worked for that week. You submit the sheet and then get paid the next working week – i.e, you are always paid one week later for the week you worked.
Once you feel like you have a good insight into how they divide up your money, you should be able to copy this in the future, if you feel like you can set yourself up as a limited company, and work with an umbrella agency who will set you up to put your invoices through. Note that they WILL take a cut of your pay, because they are providing you with a service, but as long as you know how much they will be taking off of you weekly then this can be controlled for.
Alternatively you can hire an accountant who can help you out with your finances. They are pricey, but can save you a lot of hassle and calculations. I personally prefer to go with an umbrella.
If you’re inside IR35 you have a fixed day rate which the company that hires you dictates. They essentially can call the shots on you, without providing you with any benefits of being part of their company (at least that’s what I have found). For example:
- Annual leave; they tell you how much you have, when you can take them, how many you can take in one go, and leave you to organise within your team to ensure someone is always on call. You do not get paid for the days of leave you take, so be cautious. This also counts for bank holidays, sick days etc.
- Hours worked; you can choose to protect this to a max of 48 hours/week – I did because I like having a life – but essentially this is fixed and working more hours will not affect your pay. They won’t pay you for more hours worked. It’s actually a good practice in being diligent with your work/life balance. Also if you protect your hours, they can’t demand you work on weekends/holidays etc.
- Notice period; I was told I have a 3 month notice period, which is super odd for a contracting role – it’s normally a week, if that, and even then it’s out of courtesy.
- Essentially it is like you are on payroll, being paid via PAYE as all your taxes, student loans, NI contributions and pension contributions, as well umbrella company costs are taken before you get your salary.
- You’re provided with a laptop & work phone.
You don’t have any of the broader company perks, at least I wasn’t provided any – which I feel is a bit of a damper, considering the stance they take on annual leave and notice period. So you can’t apply for internal secondments or training courses, and any jobs you might like to move into in the company you can’t apply as an internal because you’re not technically an employee.
Having said this, this has given me a starter insight into contracting, and I think I am going to try and collect more of these in the future. I have already started speaking to lots of recruiters on this, and I have made a number of connections. But I’m holding off on putting my CV forward to them, until my current contract role comes to a close. They all want to move at a much faster pace than longer-term employment roles, which is quite handy.
Before that, I want to learn more about outside IR35 because it sounds like an ideal role. They often pay quite high rates as your taxes and pension contributions are your own responsibility, so your take home can be very high. Things you need to be aware of are:
- Taxes; you calculate this yourself and is dependent on which country you live in.
- Pensions; you can find a plan and contribute to this yourself as you won’t have the company offering you this.
- Expenses; you pay for this yourself and are not covered by the company – if you ask for the companies to cover this, you start to move into employee territory.
- Student Loans; if you’re still paying this off, you need to be aware of this when calculating your monthly bills.
But I’ll probably post something on that when I’ve experienced it myself. See you at the next post, yeah?
Love & Laissez-Faire x