Contracting has become common practice across a number of industry sectors including IT. The benefits of contracting can be significant including greater financial reward and independence. However, there are also down sides including administrative issues and reduced security.
Advantages of Contracting
Due to the short-term nature of the work, most employers are prepared to pay substantially higher rates to contractors than to employees. The employer benefits through savings in holiday pay, sick pay, redundancy etc.
The freedom to change jobs on a regular basis without the formality of notice and without associated blemishes in career history.
The satisfaction and independence of being self-employed.
Not being fixed to set annual holidays. Having freedom to take extended holidays between contracts.
Working in different software environments adds to your skills, thus making you more marketable.
Experienced contractors are marketable in many locations, both at home and overseas, which may give you the opportunity to travel.
Possibility of organised tax planning through running your own business. Also, with tax not being deducted at source from your income, you can earn extra interest income
Disadvantages of Contracting
Additional paperwork and day-to-day attention to your affairs is required as you are running your own business.
Ensuring you have enough money to pay the tax when it falls due.
You receive no remuneration for holiday periods - although your contract rate is increased to reflect this.
You receive no remuneration when absent from work through illness, although this can normally be offset by a good Permanent Health Insurance policy (the premiums paid will be tax deductible).
You are not protected by current legislation offering certain rights to employees.
You basically work continuously on the set of skills you had when you started
OSK Contracting provide quality and professional business advice to indigenous Irish businesses. Our clients include government bodies; multi-national groups; PLCs; SMEs and sole traders but we specialise in progressive indigenous Irish family owned businesses.
Reprinted with kind permission by OSK Contracting www.osk.ie
Phone: 01 439 4200 East Point Plaza East Point Dublin 3