Contracting | Why Make the Switch? [Webinar Transcript]
This webinar, “Contracting | Why Make the Switch?”, is the fourth and final episode of a four-part series focusing on contracting in 2022. In this session, Tony Tynan – Berkley’s Operations Director – is joined by Sean Piggott – Business Development Manager at Icon Accounting.
Webinar Transcript
What is Contracting?
‘Contracting’ has become increasingly popular in Ireland since 2008 and has witnessed double-digit growth, year on year since. A ‘contracting’ job, typically recognises the worker as a self-employed individual providing services on a contract for services basis, rather than on a contract of employment.
A contract for services will typically outline:
- The duration of the contract
- The scope of services agreed
- The hourly/daily rate
Reasons to Consider Switching to Contracting
Higher Rate of Pay
Contractors typically earn between 10-30% higher pay than their full-time employee equivalents. To find out how much you could earn as a contractor, download Berkley’s 2022 Contracting Rate Guides.
Increased Flexibility
Many independent professionals still work the traditional 9-to-5 hours, but many others work an equivalent, managing their day to allow for school runs or other commitments or interests, and this was done, long before Covid-19.
Increased Tax-Efficiency
The ability to claim business expenses has always been a major selling point for contractors. This can vary from the Small Benefit Exemption Scheme to utility bills if working from home, and much more. To learn more about claiming business expenses as a contractor, watch our dedicated webinar “Contracting Expenses: What Can I Claim?”.
Exposure
When working as a permanent employee, it is highly unlikely that you will be deciding which projects you work on and which opportunities you wish to pursue. In contracting, you can pick and choose which opportunities you are most interested in and target them accordingly.
Become Your Own Boss
Working as an Independent Professional allows you to become your own boss. Some contracts will be more rigid than others, but most will offer flexibility in several areas, particularly, where, how and when you work.
What Does a Contractor Typically Look Like?
- Financially-driven
- Highly skilled and qualified
- Self-starter and self-dependent
- Networking abilities
- Flexibility and adaptability
- Experienced
- Highly-motivated
- Confidence in abilities
- Interpersonal skills
- Already a sole trader or entrepreneur
What Do You Need To Be Aware Of Before Becoming A Contractor?
- Contracting isn’t for everyone.
- Independent Professionals get paid for the time physically worked – therefore, your higher daily/hourly rate should take this into account to ensure holidays and sick pay can also be calculated.
- Having a trusted provider manage your compliance makes the transition from permanent employment seamless. It may be your first contract role, but a dedicated Contractor’s accountant will have assisted many first-time independent professionals in a similar scenario to your own.
- Your PRSI class may change depending on your chosen structure – this can impact your social welfare entitlements.
- You will need to network more than a full-time employee if you want to become a career contractor.
- Focus on output – when working as a Contractor, you are expected to deliver and be capable of doing so from the offset. Training may be provided on internal systems, however, your skillset should already be developed to the required level to complete the work outlined.
What Should You Take Advantage Of As A Contractor
Upskill, Cross-skill and Upskill Again!
Professional Development is considered a business expense for an Independent Professional. This means you can take back control of your professional development and do it in a tax-efficient and cost-effective manner.
Executive Pensions, Income Protection & Other Tax Efficiencies!
Income Protection can very quickly nullify and exceed the loss of the Illness Benefit. Not only is it tax-efficient, but it also safeguards up to 75% of your income. To learn more about setting up a pension as a contractor, watch our dedicated webinar “A Contractor’s Guide To Pensions”.
Additional Value Offerings
Service providers will often offer additional value offerings, whether that be wealth management, iPerks, discounts with retailers or otherwise. Take advantage of them – they can be extremely beneficial.
Reliefs & Expenses
There are multiple reliefs available to Independent Professionals. Many contractors are not claiming all of the business expenses they can – always ask the question! To find out more about this, watch our dedicated webinar, “Entrepreneurial & Retirement Relief | What Contractors Need to Know”.
Control the Outcome!
Like most things in life, you take out what you put in. Contracting allows you to learn and deliver, but, also to develop your own personal brand.
Common Myths About Contracting
“Job Security”
Despite the fact that there is an end date for a contract role, 90% of contract roles are extended. If the project that you have been tasked to deliver is complete, it is very likely there will be additional projects that they will want you to complete or contribute to. If Covid-19 taught us anything, it is that the contractors’ are no longer the first to go in times of uncertainty.
“Independent Professionals Can’t Get A Mortgage!”
This simply isn’t true. There are wealth management companies that specialise in the Independent Professional landscape. Speak to an adviser that understands your role and expertise. You do need to be realistic but you can get a mortgage as an Independent Professional. To discover more about the mortgage applications process for contractors, watch our dedicated webinar “A Contractor’s Guide to Mortgages & Buying A Home”.
Flying Solo?
Often, candidates are overwhelmed when they are offered a contract role because they hear, limited company structure, taxation, compliance, invoicing and much more. This can make it seem like you have so much more responsibility but in reality, this can be all managed on your behalf to let you focus on what you do best!
“I’ll have no benefits with Contracting?”
Healthcare, pension contributions, free fruit. We’ve heard it all, but there’s always a way to get the same benefits that your permanent role offers, and you’ll have the additional income to pay for it too!
Sean’s Top 4 Tips
- Do your research on salary/day/hour rate comparisons! You can get started today by downloading Berkley’s Contracting Rate Guides.
- Just reach out!
- If in doubt – SWOT analysis!
- Don’t worry about the longevity, think about the opportunity!