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Is IT Contracting Better Than a Permanent Job?

Is Contracting really Better?

Is IT Contracting better than a Permanent Job, I personally think so, yes. But please understand, it is not for everyone. For me, it is ideal, and there is a good chance it could be for you.

Understanding IT employment is one challenge IT experts face on a daily basis. While employers want to know where to get the right talent that will give them the most out of their bucks, IT experts have to deal with deciding whether IT contracting is better than getting an IT job on a permanent basis.

However, there isn’t a list of roles that IT experts use to choose on whether a contract is better than a permanent role. More often, companies needs and the overall goal is what determines who they need. Still, the question remains, is IT contracting better than a permanent job? Let us talk this through.

Do Contractors Earn More Than Permanent Employees?

IT contractors make more money than those on a permanent basis. The reason behind this is that you get to set your charging rate. The more you charge, the better you earn; meaning you take home more than permanent IT employees.

IT contractors also get to deduct their expenses as well as pay less in taxes. Well, as a contractor, you won’t enjoy the sick pay, pension, holiday pay, maternity pay, and other benefits.

Although there are other additional costs, you still earn more than permanent employees.

There are other things that make a contractor earn more than an employee. Things like claiming expenses for all work-related equipment like laptops, broadband connections, office equipment, and mobile phones and so on. An IT contractor can also offset their input VAT changed, representing more discount compared to employees.

So it’s clear, you can earn more as an IT contractor than what you will make as an employee.

Do I need to save money as a Contractor?

Accepting a job as an IT contractor earns you more money, but challenging at the same time. The primary goal of every person seeking employment, whether on a permanent or on a contract basis is saving money?

Understanding the pros and cons of an independent IT contractor will answer the question whether you need to save money as a contractor or not.

A contractor is usually not paid for certain things. Most IT contractors do not pay for vacation days and 401k matches.

When you call in sick or don’t work because of holidays, you will not be paid. Although you benefit from lower taxes and other things, you have to pay for your health insurance and other insurances.

The payments you cater for leaves you with one option, save money to pay for your insurance as well as pension, and other policies including your vacations and sick days.

Do I pay Less Tax as a contractor?

Does IT contracting involve the payment of taxes? The answer is yes, although there are other things you need to take into consideration. The way you pay your tax matters most.

A contractor is a self-employed individual. According to IRS (Internal Revenue-Service) official website, self-employed individuals must pay a self-employment tax and income tax.

To figure out what you will be required to pay, the websites states that you need to understand your net profit or loss out of your business even before you can determine the extent to which you are subject to the self-empowerment and income tax.

As expected, this is done by deducting expenses from your income. Read through and know your rights.

Despite the above requirement by the IRS, should a contractor pays less than a permanent employee or should they be taxed the same as permanent employees?

When comparing permanent IT employees to contractors using the tax table, a permanent employee is paid $40, 000 as salary. When this is the case, the gross earnings will be $30,480 per month after NI as well as tax deductions. On the other hand, a contractor takes home $35,893 for the same payment.

Can I go back to a Permanent Job if I fail?

A big part of being an IT contractor is making your own decision. It’s a giant step that needs to be taken seriously.

However, sometimes failure is inevitable. As much as we would like to be self-employed, some mistakes and false starts can lead you back to being an employee.

Although coming back to a world of policy after being in a free and more corporate environment can be difficult, it does happen. Most of us strive to become contractors, but getting that ideal permanent position after you fail as a contractor is an option.

For some people, preparation is the key. People who have been contractors have more experience than other employees. If you are a contractor, you most certainly have worked with a lot of companies, different systems, people, and process.

With the experience, you know which process and systems that have worked and the one that flopped. Use the experience to get work as a permanent employee. Also, consider taking a “Bridge job” as part of your preparation.

How long are IT Contract on average?

The life of an IT contractor is alluring. You get to work flexible hours and accept jobs you like. As an IT contractor, there is an opportunity for IT contracts from NGOs as well as government, companies and even individuals.

The period of a contract depends on the person offering them to you. For example, government IT contracts seem to last longer than individual IT contracts. Knowing the average time an IT contract can last is not easy as there are many fields when it comes to IT industry.

Most companies use standard team and conditions when offering IT contracts to contractors. For instance, we have noticed that company’s offer at least 6 to 12 months it contracts on average. The contracts can be less than 6 months or more depending on the nature of work, your skills and experience and the company offering them.

Is IT Contracting Better - Summary

The answer to the question, "is IT contracting better than a permanent job?’’, in my opinion, yes. But it is not for everyone.

The fact that you manage yourself and your finances is the reason why being an IT contractor is better than a permanent job. 

Sometimes failure is inevitable and going back to full-time employment might be your final solution. The dynamics of being an IT contractor has become increasingly popular.

As the market continues to grow, preparing yourself both as a contractor and permanent employee is the best option. If you think there is more that should be added to the list, comment below, like and share with others.

Before you go, lets go a bit deeper, If you decide to make that plunge, you will need some assistance on finding the best contract, lets go into this with more detail....

How Can I Find Manual Testing Contracting Jobs?

find manual testing contracting jobs

There are many people out there who are searching for manual testing contracting jobs. Many are asking the all-too important question, "How Can I Find Manual Testing Contracting Jobs?’’.

If you find pleasure in finding and fixing bugs in coding and programming, you are most suited for manual testing contracting jobs, for the simple reason that these jobs involve the basic testing of software manually. As a tester, you act as an end user where you have to follow a test plan that gets you to a set of other test cases.

Here is what you need to know before applying for a manual test contracting job:

How Much Experience Do I Need To Get Jobs?

As a manual tester of software, your role in the creating and the success of any software system you are testing is integral. You are involved in software development and deployment. The process includes analyzing software and systems in a bid to prevent or avert any software issues.

For instance, software testing is done from requirement specifications to coding, design and all the way to acceptance. The amount of experience you need depends on where you will be based and the company and software requirements.

You need experience in things like:

  • Stress testing
  • Writing bug reports
  • The monitoring software systems as well as application
  • Running of automated and manual tests
  • Performance testing
  • Testing in various environments, that include but not limited to mobile and web
  • Scalability testing
  • Working towards projects as well as departmental deadlines
  • Quality assurance
  • Writing test scripts and then executing them,
  • Designing tests so as to mitigate risk

Smaller organizations may have a central team of testers working on multiple projects while large organization may need a software tester dedicated to only one project.

Depending on the company, you need to have some experience before finding a job

Do I Need Specific Qualifications?

If you are applying for simple testing jobs, the amount of specific qualifications you need might not be a big issue. Since the manual testing contracting job is more about software testing, subsequent development and quality control, you need to have some specific qualification if you are dealing with complex software structures.

Here are specific qualifications you should have before applying for a manual testing contracting job:

  • In-depth analytical and technical skills
  • Knowledge of the coding languages as well as programming for unit-testing
  • Passion for technology
  • Scripting skills required for automation-testing.
  • Strong verbal and written communication skills
  • Problems-solving skills
  • Ability to work individually and as part of a team
  • Ability to honor tight deadlines

You also need to have a degree in IT or computer science. However, the role of a manual testing contraction expects is open to graduates with a degree in the following disciplines:

  • Physics
  • Mathematics
  • Electrical engineering
  • Chemistry

These are just some of the work you will do as a manual testing contracting expert, meaning specific qualifications are needed to accomplish your task.

Will Employers Wait For My 30-Days Notice Period?

Once you have the qualifications and experience needed, there are other things to put into consideration. Knowing if the employer will wait for your 30 day notice period is vital. This is something you need to check before you assign any contracting job and an employer.

According to Graduate Land, it’s important to check notice period before signing a contract.

With that said, for an employer to wait for 30 days before you can join them might seem like an eternity to them and to you as well. This is especially if you already found your dream job.

Many companies have that notice period before you can resign from your position. The period can be one week to 3 months. The chances are that the same company that has employed you having the same policy is high. Since the employer will always choose the best candidate for their positions, they are willing to wait for the 30 day notice period before you can join them.

Shall I Tell My Boss I Am Thinking Of Leaving?

Regardless of whether you have found a new job or not, the question of whether to tell your boss you are thinking of leaving or not is something you should consider.

Here are some questions to need to ask yourself before making a decision:

  • Is my boss understanding?
  • Is the timing of having this conversation right?
  • Is there any reason for me to tell him or her?
  • What will be their reactions and how will I manage the consequences of telling them?

Remember, no one is obligated to tell their boss that they are thinking about leaving. It’s a personal decision that needs to should be taken seriously. However, if the answers to the above questions are positive, then it’s a good idea to speak to your boss.

Tell them what you are thinking to prevent damaging the relationship you have built for many years. Since this is a touchy subject, telling or not telling could hurt or help your career depending on the circumstances and situation.

How Can I Learn How To Create A Good CV?

A good CV is part of the process of how to find manual testing contracting jobs. In today’s software testing industry, writing a good CV is comparable to literally selling your proficiencies, skills, and talents. Learn how to write a good CV from various sourcing on the internet. Also do not neglect setting up a powerful LinkedIn profile.

For instance sites like Wikihow, offer a step to step guide on how to create a good CV. It also provides you with free samples CV you can use to compare with.

Other sites where you can learn to create good CVs include:

These are just some of the sites where you can learn to create a CV that will earn you that dream manual testing contracting job you have been searching for.


Finding a manual testing contracting job is not difficult as long as you have the specific requirement and experience needed. An ultimate manual tester is employed to find issues and bugs with a project before it’s deployed to users.

Also, remember, if you are still wondering if contracting is better than a permanent job, it largely depends on your appetite for risk, such as dealing with IR35 and tax issues, hunger for a higher pay and personal confidence in your skills.

Is there anything you would like to add? Leave your comment below and lets us know what you think.

How Many Years Experience Before Contracting?

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.

How to find contracts?

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!

Do I Require a limited company to 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.

Is it better to work as a permanent job first?

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.

Do I get paid with company dividends as a 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.

Do I pay less tax while serving as a contractor?

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.

Pros and Cons of IT contracting

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.

The Pros Of IT Contracting

pros and cons of IT contracting
  • Financial Benefits: A very compelling factor in regard to contracting is more money. A lot of contractors are paid more than double the amount a full time employee is paid for the same project.

    Your skills and the industry you are in will play a role in how good a pay you can ask for. The main reason why your pay increases is because you offer your employer flexibility and are taking on short term contracts. Most contractors are paid by the day and can ask for additional pay for extra hours put in.

  • All rounded experience building: Working for a range of different companies and range of different bosses can give you the ability to learn a little something from each one.

    You can develop the skills you already have and obtain new ones by the minute. Each manager will want work done differently and have a different approach to the job. This teaches you how to cater to different types of people. It allows you to advance your career by exposing yourself to multiple different types of processes.

  • Build Your Network: One of the main benefits associated with contracting is you get to build multiple relationships across several companies at the same time. If you can give excellent work to an employer, even on a short term basis, they will keep you in mind and also be a great review to add to your shelf of achievements.

    This helps you uncover a range of opportunities with other companies and clients and also maybe discover permanent positions you could apply for to gain additional job security.

The cons of IT contracting

  • Job security: Job security can be hard when it comes to contracting because of the short-term factor of all your contracts. You need to have found a new contract before the one you are on has ended. This can prove disheartening if you have to deal with a time period where you have no work. During this time period, you start to consider the negatives of the job and have to focus on moving forward rather than getting disheartened.

  • Business Expenses: When you work for a corporation or for someone else, they are paying for the office, the electricity and everything else. When you are IT contracting these expenses become yours to bear and you have to start being your own stingy boss.

  • Benefit Plans: One reason why a lot of employees stay employees is for the package deal you get when signing a contract.

    You do not want to give up your healthcare that comes with your salary. You would have to pay an additional amount for health insurance if you work separately.

    A lot of people I have met along the way have health insurance added to their spouse’s through their position in a company.

  • Pension: Normally an employer would pay if you are ill or give you a pension by deducting a certain amount from your salary regularly. As a contractor you need to take control of all these aspects yourself and put aside enough money for the years that will follow. This needs to be done on a regular basis with no excuses.

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.

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