Today is National Freelancer Day in the U.K (apparently) So what’s it like to be a ‘Freelancer’ in 2014 ? Speaking purely from personal experience I have been freelancing for over 5 years so here are my findings:-
Employment – Since leaving ‘permanent’ employment I have never been out of work & have moved fairly seamlessly from one contract to another. I am in Engineering so this may not be so easy in other professions. It also requires a degree of forward planning, I generally start ‘sniffing around’ 2 months from the end of my current contract. You also need to develop an extensive network of contacts & I have found ‘Linked In’ invaluable for this.
Earnings – This is what interests people the most about Contract work. In Engineering earnings are typically 20-30% higher than prermie’ earnings BUT it has to be remembered this doesn’t include holiday or sick pay, pension contributions, bonus etc etc. So if you are regularly sick & enjoy extensive holidays your probably better off as a ‘permie’
Tax – As a contractor you pay less tax. This is because you can set yourself up as a Limited Company & pay yourself minimum wage & the rest in Dividends which are taxable at the Corporation Tax rate which is lower that what you would pay as an individual. You can also deduct legitimate expenses from your taxable income. You can also take advantage of the Flat rate VAT scheme where you collect 20% & pay HMRC 13% of total earnings, keeping the difference. All of this is perfectly Legal & proper but do seek the advice of a qualified Accountant.
Be your own Boss – Sounds great but you always have to remember you also have a Client who is effectively paying your salary & you will have to report to someone.
All in all I have never looked back & intend remaining as a Contractor for the rest of my career. If you are considering this career option I wish you a Happy Freelancer Day & good luck.