Gerard Kiernan, managing director of Icon Accounting, explores the top questions you should consider before entering the world of contracting.
1. What’s attracting you to contracting?
Contracting is more than a job. A lot of the time, it’s a way of life. We see all kinds of environments through our accounting clients, for example. You might work alone or you could be contracted into offices.
If you need flexibility around other parts of your life, like small kids, school runs, sports and hobbies, it can be a brilliant option. It gives you the independence to work to your own schedule. Also, consider the time frame you’re looking at – is this a stopgap move or a long-term career plan? It can be both!
2. What are the opportunities for work in your sector?
It’s vital that you research this in detail. And not just the actual work – market rates for your skillset and expected pay levels should be on the list too. Ask around your friends and professional connections to get an idea of what’s expected.
From what we’ve seen at Icon, the IT sector is and has been hugely popular with contractors for a while, but we are also seeing rates rising in other areas like finance, marketing and engineering.
3. How will you manage your cash flow?
This will be totally new to many first-time contractors. Freelancers can be waiting 30 days for payment. Consider having a financial buffer of savings to tide you over until you get up and running.
Contracting can be a lucrative career move, especially for those with top-of-the-range skills, but it can take a while to get established.
4. What benefits will you be entitled to?
Contrary to popular belief, contractors actually are entitled to a range of benefits. The Department of Social Welfare has all the important information, while an expert accountant can also talk you through what you need.
The range of social welfare benefits are increasing for the self-employed, particularly with job seekers benefits being granted from November. Also, don’t forget many of the normal employment benefits can be bought through your limited company if you go that route, like sick pay cover, life insurance and pensions, to name a few.
5. How do I decide whether to use an umbrella company, set up my own company or be a sole trader?
I’m always advising people to do their homework. However, if you feel out of your depth on this one, my advice is go to a specialist accountant. They can reassure you and give you the best and most up-to-date advice, as well as looking after your finances.
6. Do you plan to invest in property while contracting?
Again, there are misconceptions surrounding this. Banks are increasingly open to giving mortgages to contractors, but some might request you have a year’s experience under your belt to show your reliability.
Every case is different, so you can continue to plan for your dream home with a walk-in wardrobe and private cinema – just make sure you factor it into your daily rate calculations!
Gerard Kiernan (FCCA) is the founder and managing director of Icon Accounting and one of the founding members of the Professional Contractor Service Organisation.