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Benefits of moving from a permanent staff position to contracting

April 16, 2015  /   No Comments

Victoria McDonnell

Have you been working as a permanent employee for most of your life but are now thinking about becoming self-employed? Victoria McDonnell offers some advice.

For the majority of people, a permanent staff position is the norm.

It gives job security, holiday pay, maternity/paternity pay and possibly other enviable perks such as private healthcare or an employee discount scheme.

However, as times are changing and the UK’s economy begins to grow, an increasing number of people are beginning to turn their hand to contracting or freelancing with around one in seven workers in the UK currently being self-employed and more set to follow.

As the economic climate continues to improve, more and more companies are turning to this highly-skilled and sought-after work force. Contractors, freelancers and self-employed professionals offer far more flexibility and have a much lower long-term cost impact, when compared to permanent members of staff.

Becoming self-employed

Initially it may seem daunting to become self-employed, however there are a couple of options available with varying levels of responsibilities. Firstly you could opt to work through an Umbrella Solution (and become an employee of the umbrella company).

This may be best if you’re new to self-employment as the administration is low, it’s easy to set-up, you can claim expenses and there is little risk involved as the Umbrella Solution deducts all tax and NI contributions for you.

The second option for you is setting up a Limited Company. This is the most tax efficient way of working and will result in the highest level of take home pay. It offers an increased level of credibility and numerous tax planning opportunities which can deliver significant tax savings.

Although running your own limited company involves a higher level of administration you become the director of your own company – giving you the flexibility to work how you want and the freedom to drive your business in the direction you please.

Benefits of working for yourself

Contracting or working as a freelancer offers many advantages for the right kind of person. It allows you to be versatile when it comes to following opportunities that suit your skill set and flexible in terms of when and where you work.

It could also enable you to use a broader range of your skills depending on which assignments you choose and the fact that you are having to manage your own time, workloads and finances also brings new challenges.

Working for yourself also provides you with the opportunity to arrange work to fit your life rather than the other way round. Benefits of working freelance are many and it’s not all about the money, although there is obviously great earnings potential and for many, becoming self employed as a contractor, freelancer, interim or consultant can also result in a substantial rise in take home pay.

Clearly working for yourself carries responsibilities and risks, and does require dedication and hard work to build up the network of contacts needed to meet the desired level of work, but undoubtedly the pros of going it alone for many easily outweigh the cons. Besides 1.72 million freelancers in the UK can’t be wrong.

Victoria McDonnell is marketing manager at Brookson.

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  • Published: 9 years ago on April 16, 2015
  • Last Modified: April 15, 2015 @ 8:27 pm
  • Filed Under: Industry Insider

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