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Pros and cons of being a contractor

06 November 2023

If you’re working in a trade, you may be wondering whether it’s better to work as an employee or to set up on your own and sell your services as a contractor.

Of course, there are several things to consider when making the decision. This article examines the potential benefits and disadvantages of being a contractor.

What are the advantages of being a contractor?

Working as a contractor can come with enhanced working conditions, such as a wider variety of jobs, increased income, and a better work-life balance.

As a contractor, you can normally expect to earn more per hour

Higher earning potential

As a contractor, you can normally expect to earn more per hour than a typical employee working for a business while doing exactly the same job.

Favourable taxation

You will need to do a little investigation, but you may find being self-employed is more effective, for tax purposes.

You can also set legitimate business expenses off against your tax liability. This may mean you pay less tax than if you are on PAYE.

Greater flexibility

You will get to choose the projects you work on, allowing you to mix up the types of jobs you do rather than repeating the same thing constantly.

In some cases, you may also be able to do the work required in your own time or according to a schedule that suits you. For example, if you want to work for three months and then have three months off over the summer, that’s up to you.

More control over your career

Working as a contractor means you are responsible for your own professional development and the progression of your business. Of course, you must finish contracts on time and in accordance with the contract, but you are also your own boss and answerable to yourself.

Job satisfaction

Being able to pick and choose the work you do, feeling that you are being well paid for doing it, and knowing that your hard work is going towards building your future can bring a great deal of job satisfaction and enhanced wellbeing.

Contractors are responsible for marketing their own services

What are the disadvantages of being a contractor?

While being a contractor offers certain freedoms, there are some downsides to consider.

Less financial security

As a contractor, you are responsible for finding projects to work on. If you’re not working, you’re not earning. You won’t be able to guarantee a reliable fixed monthly salary or weekly wage.

No or fewer employee perks

When you are an employee, you may receive ‘perks’ and bonuses in addition to regular pay. This may take various forms, such as:

  • an employee pension scheme 
  • childcare vouchers 
  • private health insurance 
  • access to a company car

As an independent contractor, you are less likely to be eligible to receive these benefits.

Lack of camaraderie

Although you may work as part of a team on a project, you are not a permanent fixture. At the end of a project, you will likely move on to a different team or project. Some people love this independence, but others miss being part of a stable group.

Additional responsibilities and costs

As a contractor, you are responsible for finding work. That means undertaking marketing activities or networking. You’ll also have to deal with:

  • quoting on projects and sales
  • invoicing 
  • tax returns and accounting 
  • compliance requirements 

It will also be your responsibility to make sure you have adequate insurance in place. You may also need to buy your own tools and equipment, and pay for training and trade association subscriptions.

As a contractor, you may find yourself transferring into and out of different teams

Which option is right for you?

Deciding which is the right approach for you will depend on the sort of person you are, the skills and resources you have, and what appeals most.

Of course, nothing is forever. If you try contracting and decide it’s not for you, you can always return to regular employment.

Finding an insurance company as an independent contractor

Trade Direct Insurance specialise in providing comprehensive insurance for the construction industry. We can tailor our coverage to suit your circumstances, as we offer a range of insurance types: from public liability to insurance for your tools or van.

For decades, we’ve been committed to helping clients find the right insurance, regardless of business size, trade, or employment status.

We believe in providing a personal service, which includes access to a round-the-clock always online claims reporting facility.

Whether you have a query about a quote or need information specific to your trade, we’re always happy to help. Contact Trade Direct Insurance today: send an email or call 0800 0280 380

Trade Direct is authorised and regulated by the Financial Conduct Authority. The company is a leading UK independent broker providing a wide range of policies to tradesmen and construction workers.

This note is not intended to give legal or financial advice, and, accordingly, it should not be relied upon for such or regarded as a comprehensive statement of the law and/or market practice in this area. In preparing this note we have relied on information sourced from third parties and we make no claims as to the completeness or accuracy of the information contained herein. You should not act upon information in this bulletin nor determine not to act, without first seeking specific legal and/or specialist advice. We and our officers, employees or agents shall not be responsible for any loss whatsoever arising from the recipient’s reliance upon any information we provide herein and exclude liability for the content to fullest extent permitted by law.


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