The contracting sector is evolving at a tremendous rate as more people realize the benefits of versatile working. With the demand of a contingent workforce tremendously increasing, there has never been a better time to become a contractor. But the question on how much experience is needed to become a contractor is something that almost everyone has asked during their initial stages of contracting.
It is apparently considered that an experience of 3 years is suitable in order to become a contractor. Some people say any earlier is risky to become a contractor. But this much information is not enough. In this article, we will consider the most important questions related to contracting and will explain them in a detailed manner.
You must have a targeted approach in order to successfully get a contract. A killer’ contractor CV is probably the most integral step towards finding a good job. Make sure you CV has information relevant to the contract job being applied for. Make your CV short as well as focused and tailored. An estimated 80% contract jobs are given through agencies, so you must market yourself on the job board using specific agencies. Being noticed and standing out is very important if you want a good job.
Follow the contract job applications and chase clients. Experienced contractors believe that if you have landed an interview, you often end up getting the job. That is why during initial negotiations, you should focus on getting the interview and not bargain over rates. For clearing the interview, you should make sure you are prepared, proactive and understand the issue. Be confident, understand the job and try to close the deal. Having reassured the client at interview, follow up with the agency and there! You got a new contract!
Earlier, it used to take weeks to set up a payment mechanism but now it can be done in less than 24 hours by using company facilities and business accounts. The best payment structure depends on your IR35 status. A limited company might not be the best choice for you in case you are inside (caught) by IR35.
If you want to contract for a longer term, then a limiting company will provide you tax advantages and flexibility. On the other hand, you should use a PAYE umbrella company , if you plan to contract for a shorter time. A limited company provides maximum benefits if you have significant benefits that you need to claim. You should not be opting for these companies in case you do not incur and need to claim many contracting expenses.
One among the main factors that makes permanent jobs better than contract jobs is the fact that they provide stability. It is apparently considered that an individual should have at least 3 years of experience before becoming a contractor.
But there is not hard and fast rule. I personally knew a guy who decided to become a contractor with just 4 months of experience. Permanent jobs come along with numerous benefits. Initially, gaining some experience in a permanent job can make you feel more confident and strengthen your move towards being a successful contractor.
If you are a limited company contractor, you are likely to decide how or when you pay yourself. If your contract work is not caught by the IR35, most of the limited company contractors obtain income in the form of dividends. Dividends are beneficial because they are not subject to National Insurance Contributions (NIC) which allows them to save money.
But there are certain things that you need to keep in mind. Dividends can only be paid from company benefits. Also, declaring dividends without sufficient profits is illegal. Corporation tax keeps more dividend information within each threshold. It is important to keep the S447 in mind. According to the tax law section 447, employment related securities tend to target employers using contrived schemes to avoid taxes by paying dividends, rather than paying salary.
There are numerous ways through which you can save money by having a tax efficient setup. Unlike Umbrella Company, a limited company allows effective tax planning through a combination of salary and dividends. You can also claim your business-costs in terms of expenses in order to receive tax relief. In order to save tax, you need to understand IR35. If the contract is caught inside IR35, you can still effectively complete your contract. However, note that there will not be any entitlement as a contractors operating outside the IR35. Understanding how to structure your business is just as important as understanding how much to charge your clients.
It is advisable that you keep up with all government schemes as this might enable you to operate tax-efficiently. You might think that hiring an accountant is something that is not required and can be avoided. But an accountant actually helps in saving your money as well as time and stress. Furthermore, you should avoid any kind of penalties and you should take a share of the profit of your company and keep it as pension.
The upsides to being an IT contractor can be mesmerising, being your own boss is something most people sitting in a cubicle wish for everyday.
Being in charge of my own finances rather than remaining subject to a corporation’s view on their employees as production robots with fixed salaries gave me the independence and liberty to not be part of the never ending concrete jungle.
It can be frightening but moving away from the well known path into IT contracting once done, makes you question why you never did before.
IT contracting is not for everyone though and needs firm resolve and conviction to make it work. Like everything else, it comes with the good, the bad and the ugly. Here are 5 pros and cons of IT contracting to help you make your decision.
Personally, looking back, contracting has been the best decision I made, giving me all the perks a job could never offer and that I was looking for.
The downsides take time to deal with and understand, but once you do it is smooth sailing. Understanding health insurance and putting your money aside are important steps to the learning process.
Negotiating with potential managers is also a learning curve that needs to be tackled with. After you get yourself sorted and settled, the perks out weight the tons by quite a bit.
I personally feel that becoming a successful contractor requires a lot of patience and credibility. It is true that permanent jobs are more secure and stable, but the job of a contractor makes you feel free, wanting to explore. These are some of the key points that I felt like sharing with my voracious readers. As an author, it is a 'must’ for me to deliver the best of knowledge so that my readers can extract maximum information from my articles.
As a reader, how was your experience reading this article? Did you find out boring or was it a 10/10 article? Feel free to share, both your thoughts and the article. Give us your feedback as it helps us to provide specific information and key points that can be of more value to you in future. Comment below about your experience, sharing your impression of this article. You can also share this article with others, so that more people can obtain the benefits of this article.
When it comes to choosing between a permanent IT job and an IT contract, you always prefer permanent because you have job security and you do not have to go for job hunting after the contract expires.
Though people fear that contractual job has certain disadvantages, they miss seeing that it gives you an advantage to work at your own time, flexibility to earn at your own comfort and pays you more than your permanent job.
Risks are present in a permanent job as well, you may get fired if you do not abide by the rules and regulations of the company, do not maintain proper discipline, confidentiality and break the rules. It's just that we have built a perception to see both the jobs at different angles. In this article I will make you aware of “How Risky Are IT Contract Jobs?” and some amazing statistics on how the world is shifting from permanent job to contractual job.
If your thoughts are dwelling between a full-time job and contact job, I would suggest going with the contact job if it gives you a better career opportunity and at least 50% salary hike than your full-time job. According to the study conducted by QUARTZ, 40% of America’s work population will be freelancers by 2020. Contact jobs are preferred more by job seekers as they get to work in their area of interest, it gives them a learning opportunity and there's room for professional growth. Gone are the days when people were under the impression that contract jobs pay less, and are offered at entry-level positions. Though it’s a risk, it’s worth if you are getting a good opportunity to build a professional relationship with your industry. On a bright side, if you perform well when on a contact you might get a full-time employment within the company.
A fixed term contract is valid for a specific period. The start and the end date of the contract are clearly specified and extendable if required and mutually agreed upon by both the parties. It is also very close to a permanent working contract but has a defined end date.
It is a great way to test the skills of an employee before hiring him/her a permanent position in the company. It also benefits the IT company as they get to showcase their employee skills by completing a short-term project in a given time period.
Normal contact does still have an end date, but you will not receive any employee benefits like paid leave, sick pay etc. This is what a traditional contractor is typically known as.
The permanent employee benefits include fixed salary, health insurance, disability insurance and life insurance, retirement plan, vacation and sick day leave policy. You will not be able to enjoy these benefits if you are on a contract. You will have to purchase your own policy (which can be costly) and you will not get paid if you go on a leave. You will not get worker’s compensation benefits if you need one. Though some of the companies have changed their policy and they give insurance benefits to the contractual employees as well. It’s better to clear everything with your employer before you sign the contract.
A contract is bound by legal terms and conditions and if you quit in the middle before the contract expires there can be certain consequences. If the contract clearly states that you will be charged a certain amount if you terminate the contract, you will have to pay the amount to the employer. Some employers have conditions that they have every right to blacklist you from the field you are working in if you leave early. Others will not give you the bonus which you were supposed to get at the end of the contract. In another case, the employer simply has a condition that you will have to serve a one month notice before you leave the company. The terms and conditions vary from company to company, so it is advised that you thoroughly read your contract before opting to quit.
There has always been a confusion in the mind of an employee whether to go for a permanent job or a contractual job. There is no correct answer as it all depends on what kind of package and job you are being offered and whether it is something you are interested to build your career in.
If you are happy with your permanent job, stick to it, but if you are not, contractual jobs have a lot of opportunities for you, learn how to master face to face and telephone interviews for software contract testers and take the plunge. Always remember risk is in both the jobs. It depends how much you are willing to take. It was my responsibility to make you aware of what you can expect from an IT contract job and the risks it has. Now it’s up to you, what you decide. I am sure the cloud of confusion is now cleared.
I would really love to know your thoughts, life experiences or any question you have about the contract job in the comment below.
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Happy Job Hunting!
Just like me, most IT employees are fed up with shifting work hours, work related stress, regular meetings with clients and are looking for alternatives. After working as an IT tester in a reputable IT firm for more than 6 years, I was fed up with my lifestyle and wanted some freedom.
I resigned from my job and decided to become a an IT Contractor and now, I am enjoying my life to the fullest. In extreme cases, I work on contract basis and personally, I didn’t experience any difference in IT contract vs. permanent tester employment. Also, the pay will be higher in case of contract employment but you need to adjust with slightly awkward shift timings. According to several surveys, companies also prefer contract employees and the percentage of contract employees in the US workforce is constantly on rise.
Employers need to pay IT employees even if they are on bench without actually taking up any work. Whereas in case of contract IT testers, they will come to office whenever there is work and get paid on completion of the work. Employer and worker relationship will be very minimal in case of contract based employment and this in itself has several advantages.
IT companies are moving towards cost cutting methods and are doing away with employees who are not meeting their standards. In fact, most IT companies are retaining the core team only and sending pink slips to all other employees. They are thinking of completing the jobs with contract employers and that’s the reason why the demand for contract based IT workers is on constant rise where are permanent employees are going to offices in fear.
In general, permanent employees enjoy some sort of job security and because of this, some employees won’t take their jobs seriously and I am sad to admit that some of my colleagues also belong to this category.
On the other hand, contract IT testers are cognizant of the fact they need to be well qualified to impress their employers and get a chance to work. That’s the reason why contract employees are more focused, job-oriented and try different certifications to prove their credentials.
If you are fed up with regularly going to office just like me, you might want to consider moving from permanent to contract employee. However, those who see permanent jobs as an option of regular income source and don’t have confidence in their skills shouldn’t even think of quitting their permanent job. Even after the recent recession, the IT sector is growing at a constant pace and if you are skilled and qualified, and can learn how to ace a telephone interview, you don’t need to worry about securing a contract job.
You may find it difficult for the first few months but once you get used to it, your lifestyle will change beyond your thinkable limits. You will start enjoying your life and you can spend more time with your family and friends. All your stress related disorders will automatically disappear when you move from permanent to contract employment.
Contract-based IT testers will surely have experience with different kinds of software tools and their exposure will be high compared to permanent employees. I, myself learnt several new testing tools after quitting my permanent job and my overall skillset improved a lot. IT companies work on tight deadlines and it is very important to complete the assigned task within the stipulated time.
Obviously, permanent IT testers are not used to working on tight deadlines as most of the things will be pre-planned and all they have to do is work accordingly. If the employer forces them to work on tight deadlines, they will be under immense pressure and there will be more chances of committing mistakes. So, contract employees score more marks here as well.
In case of permanent employees, employers are constrained by several factors like health insurance, maximum work hours limit, extra pay, leaves, etc. However, as for the contract-based employees, most of these worries can be eliminated and the employer need to supervise only on the task assigned to the contract-based IT testers. Obviously, contract based workers cost a bit more than permanent employees but they are 100% worth giving a try, considering the services offered by them.
Per day income of contract based IT testers will be much higher compared to permanent employees. Also, in some cases, they don’t need to regularly go to the office and will enjoy more holidays per year compared to employers who are permanently stuck in offices in the name of job security.
Certified Tester-Foundation Level (CTFL) is a certification given to qualified testers and if an employer wants a CTFL certified IT tester, he needs to pay heavy salaries on monthly basis. Certified IT testers are easy to find and as the competition among the contract based IT testers is very high, they offer competitive services at lower prices. As contract IT employees are generally hired based on the work load, they know their job perfectly well. Their focus will always be on that job. On the other hand, permanent employees need to manage a lot of tasks in the office and their focus will be low on the job even though they are certified and qualified.
Most of the above-mentioned points are my personal opinions and you can agree or disagree with me. However, generally, the one thing that differs in contract vs. permanent IT tester employees is the job security. But even on this one I was not in total agreement as permanent jobs are also not absolutely permanent and the employer can easily give you the axe if the IT tester performance is below par.
I won’t say I am super-skilled but I consider myself as reasonably good and I am earning a lot more than all my friends who are stuck in permanent jobs. I shared my views so that you can also get inspired to do what your heart desires. If you enjoyed reading this article, please share this with all your friends who are struck in offices but still want freedom and peace in life. Don’t forget to share your opinions in the comment section below.