Reality of Life as a Contractor

The allure of being a contractor can sometimes be blatant. We’ve all been in the situation when in employment, a gaggle of people in the office stood around scratching their heads, valiantly attempting to solve a problem before accepting that it’s time to call in an expert. And so sparks the arrival of the much-heralded contractor, parachuting in like a slightly condescending superhero, ready to cure all ills without barely breaking a sweat. A wry smile from him and pats on the back from the rest of us follow, as does a chunky cheque for his time before he departs in his gleaming Mercedes.

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Is contracting worth it?

While the potential financial gains that come with contracting are alluring, there are other seemingly attractive aspects too, such as the apparent flexibility and freedom to pick your own hours, work from where you want and refusal to be bound to a single office chair. However, things are not always as simple as they seem; what are the realities of life as a contractor?

Money talks

Specialist jobs call for people with expert skills and it is the addition of that keyword ‘specialist’ that also adds a few extra zeros onto the end of an invoice. In fact, the rate of pay for a contractor is on average 50 and 100 per cent higher than the equivalent rate for an in-house permanent member of staff.

Commanding an impressive hourly rate doesn’t always necessarily equate to an impressive or even comfortable annual salary. This rate is simply an average for the times you’re actually working and doesn’t take into consideration the dry spells, the time spent looking for new contracts, chasing up unpaid invoices, the expense and time in polishing up your skills and so on. Plus, you can expect swings in the rate you can charge particular clients, so it’s important to squirrel away the extra from the higher paying contracts to help you counteract the impact of the leaner periods.

Contractor's Guide to Expenses