Being offered a contractor role normally means more money. Sounds great – but do you really know what’s involved before taking the plunge?? Instead of seeing pound signs, make sure you have thought about what a contractor position means – it is very different to a PAYE staff role!
Here are some of the key points that you need to be aware of:
1. Holidays
As a PAYE staff member you are entitled to the normal holiday allowance, but as a contractor, you don’t get this! This is not a negative, contractors can still take holidays – indeed as the boss you can decide when to take time off. Bear in mind, however, that you won’t get paid when you’re on holiday – the cost of this is already factored into your day rate.
2. Private Medical Insurance
This would commonly be provided for ‘staff’ members, but as a contractor your client will not pay for it. Not to worry though, there are options out there for contractors and QAccounting have secured discounted rates from WPA for our clients.
3. Sick Pay
As a staff member, typically you would get up to three months full pay if you are unwell or have an accident. Unfortunately for contractors this is not the case. Again, not to worry, we can introduce you to experienced Financial Planners that will talk you through how to plan for this via Income Protection and Life Insurance etc.
4. Buying a Property
It is not abnormal for mortgage lenders to ask contractors for 3 years of accounts when sourcing a mortgage, which in some cases, is just not possible. Have a look online at Contractor Mortgages for more information. As our preferred partner, they will be able to give you advice and guidance when purchasing a property for the first time or renewing your mortgage.
5. Paperwork
It’s no secret, being the director of a limited company can involve dealing with a lot of paper work!! Luckily, that’s where we come in. You concentrate on the job at hand and let us take care of the book keeping, accounting, HMRC returns, VAT and on and on. It’s what we’re here for.
Our dedicated account managers can help with any queries you may have. New to contracting? Contact us for more information on our services and what we can do for you.
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Although freedom is one of the big draws of the freelance lifestyle, there’s still plenty of financial responsibilities that come with it that can really eat into your time and profits.
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