Deciding if being a self employed contractor is right for you

I work and live in London and I’ve been contracting and freelancing for about three years now. Speaking from my own experience, getting a contract has been the best decision I’ve ever made.  I mean, I’m so enthused by it I started a website helping people get their own contracts.  Life in the contract world isn’t always sun, holidays and higher salaries… like everything in the world it’s a choice that has plus points and down sides.  The purpose of today’s lesson is to get you to start to think if contracting is the right fit for you.  This will be a two part post detailing with my positive and negative experiences with contracts.  First up..  the negatives:

Hassle of finding work:  Having the uncertainty of not knowing where your next pay cheque is coming from can be overwhelming.  If you have a mortgage or bills to cover any time you’re not working, you’re not making money.  Some people hate job interviews.  I know when I got my first contract, the idea of selling myself was terrifying.  Like everything else in life, the more you interview the easier it gets.  I actually enjoy interviewing now, you get to have a chat with other people and even if I don’t get the job I normally learn something from the experience.

Being out of work:  This is probably the biggest one.  Everyday you’re not in contract you’re not earning.  As most contractors own their own business, it is extremely difficult to get any government payouts like the dole.  As I’m writing this, I have a friend who hasn’t found any contract work after two months.  This hasn’t happened to me yet but when you go this route it’s pretty inevitable.

Time off:  Everyday you don’t work you don’t get paid.  Just this simple fact really makes me prioritize my time off.  If I’m taking time off it will always be to do cool stuff, a holiday, festival, gig etc..  What I’ve found is that I can be out of work without that much notice..  sometimes you may get a promise of an extension, a client goes bust, the money goes and you find you have two weeks off unexpectedly.  As you can’t plan when this will happen, you end up with a few weeks off and nobody to do anything with.  Ever since I was 18 I’ve loved travelling the world, so I’ll jump on the first plane and go somewhere cool but not everyone would be willing to do this.

People Not Paying: I’ve worked for a few smaller companies and, sad to say, some people try to keep their money.  I’ve always got everything I’ve been owed but I have had to threaten with the small claims court.  If you’re new to this the process is fairly simple.  I have a section in my contracting guide that explains all of this.

You Have To Do Stuff:  As you’ll be running your own company, the buck rests with you.  You’ll be responsible for your pension, your tax, it’s unlikely you’ll be trained on the job (I have managed one qualification).

No One Will Look After You:  You won’t get paid sick pay.  If you get a cold and want to stay in bed.. you lose out on a day’s pay.

Managing Your Money: When you contract you invoice the client and they pay you directly.  That means you get all the VAT and the tax.  At first it’s tempting to go out and spend everything in your account BUT don’t.  At some point you will get a very large tax bill and if you don’t have the money to cover it, again the buck stops with you and you’re liable for it.

Accountants:  When you get to a certain level you have to have an accountant.  Mine’s great and they can save you thousands a year..  the downside is they cost money.  Every month you’ll have to pay a certain amount.

That wraps up the downsides of contracting.  Some people might be reading this and thinking ‘I knew it wasn’t for me’ but keep reading.  If you met me you wouldn’t think I was some big hot shot, just someone with a lot of determination and I can say to all of the points above that none of them are really that bad.  I mean take a re-read..  most of it boils down to you taking control of your life.  I actually find a lot of these con’s are risks that help push be to become better at my job.  If you can get a six months’ gig.. then the worst that will happen is you’ll have a bigger bank balance, you won’t have to work for a month or so and you’ll get eventually get a new job.  Stay tuned for the next edition.. to see why I love contracting

 

 

 

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