For some people, the decision to contract is the ideal career move since it affords them the option to take charge of their careers and earn a higher rate of pay. However, leaving a permanent role does include a degree of risk; as such, you shouldn’t assume the grass is greener as a consultant.
This post examines six factors you should consider when deciding whether to become a contractor.
Is Your Personality Suited to the Role?
Before accepting a contract position, you should carefully analyse your motivations for making this move. Are you aspiring to get experience in a different industry, cultivate your abilities, or achieve a better work-life balance?
A person who is suitable for contracting will be passionate about finishing jobs and always ready to take on a challenge. No matter how long your contract is expected to last, if you have the proper mindset for contracting, you will always strive to deliver the best service to the client and become an integral member of the team. Therefore, you must be self-motivated and meticulous.
What are the Repercussions for Your Life on a Financial Level?
The compensation for contractual roles will be heavily influenced by the nature of the project and market conditions at the time. The majority of firms will offer a completion bonus that may be incorporated into the overall compensation package, while others may increase the base salary for individuals interested in contract work.
Depending on the position, applicants may need a substantial salary increase to help cover additional expenses and make the change viable. In some fields, such as technology, contractors should aim to earn at least twice as much as an employee earning a standard wage. You may spend a significant amount of time away from home, and because work is not guaranteed, you may need these additional funds as savings to cover additional travel costs, living expenses, insurance costs, and vacation time.
Don’t forget to confirm when you’ll actually be paid as well. If an agency has a 60-day payment period, you will have to wait two months before receiving your first pay check because they will not pay you until they have been paid. Have you got enough funds in the bank to cover that period?
How will Working as a Freelancer Affect Your Lifestyle?
If you have a family, one of the most important factors you will need to consider when determining whether to take an independent contractor employment is how it will influence your lifestyle. Frequently, candidates disregard this because they are overly focused on the financial aspects of the position and less concerned with the practical issues and the impact it would have on their relationships and family life.
Depending on the job’s location, nature, and duration of the contract, you may be required to make substantial adjustments to your lifestyle. Some contracting employment may demand you to commute further than usual, so if the work involves being away from home on a regular basis, you will need to consider the impact it will have on both your finances and your personal life.
Will you Set Up a Limited Liability Company or Operate as a Subsidiary of a Larger Business?
As a contractor, you will be required to manage all the tasks that were done for you when you were a full-time employee. Using an umbrella business is one way to assist contractors in managing these tasks. It is essential to note, however, that this comes at a cost, as the umbrella corporation may take up to 15% of your earnings in fees. In exchange, they will handle all paperwork and administrative tasks, such as taxes, pension payments, insurance for contractors, and vacation compensation.
The third option for contractors is to set up a limited liability company. You will earn more money if you register as a limited liability business, but you will also be responsible for maintaining your own pension plan and completing your own tax returns, among other responsibilities (which could mean having to employ an accountant to help deal with the financial side of things).
How will Your Benefits be Impacted by Contracting?
Medical insurance, annual leave, and a “completion of contract” bonus are a few of the benefits you must negotiate with a prospective employer. Due to the expanding popularity of contract labour, benefits packages often match or even surpass those offered to permanent employees. Permanent employees will find the transition to a contract post more attractive as a result.
Do you Have the Necessary Soft Skills?
You may be considered for a permanent role upon the expiration of your contractor’s contract. Employers are typically attracted to the soft skills contractors exhibit, as these are the skills that truly distinguish them.
In recent decades, technology and business have progressed to such an extent that tech specialists now lead entire organizations through digital transformations rather than merely observing from the back of the room.
They must now be able to interact effectively with a variety of business stakeholders, as well as understand their needs and translate technical challenges into the workplace. Since technology is no longer a separate entity from the business plan, program managers, business analysts, CIOs, and CTOs are now able to connect successfully with numerous stakeholders across the business. As a result, you should never underestimate the value of soft skills.
Are you Suited to Contracting?
Always use caution when deciding to transition from a permanent position to a contracted one. Contracting is a temporary arrangement, after all. In order to ensure that you are making the most suitable decision for yourself, your family, and your future professional development, you should consider your key motivations for changing careers.
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