A recent study has shown that IT experts are looking for long-term contracts, even though they pay less than more unreliable freelance work. Umbrella company Giant have conducted research that shows that temporary workers in the IT sector much prefer the security of longer contracts despite the fact that a more casual arrangement might pay more in the short term.
According to the survey, two-thirds of IT contractors would take on a less lucrative job even when faced with the opportunity to accept a higher paid temporary role. This suggests that job security is one of the most valued elements of a job, especially in the current economic climate which could be described as ‘uncertain’ at best. Just over one third of those surveyed indicated that they would plump for the higher-paid contract, with the vast majority indicating that long-term stability is preferable to salary.
Anyone who has taken a job with a lower wage can at least work out what they will end up with after tax and other deductions by using a take-home pay calculator. In addition, any advice you may need regarding IR35 law and regulations is available from your accountancy firm, who will be well-versed in all aspects of the law when it comes to these issues.
The survey also showed that IT contractors are experiencing fewer and shorter periods out of work, with 80% of those questioned reporting spending 31 days or less without employment. The year before the same research showed this figure at 78% – while at the same time the retail industry invested more heavily in IT as modern developments guide their thoughts toward mobile commerce. 17% of IT contractors surveyed reported work from the telecoms sector – an increase of 43% compared with 2011.
A word of caution for IT contractors, however – the stability of long-term contracts is great, but be careful not to put all your eggs in one basket. This point of view comes from the experience of those who have found themselves becoming too involved with one firm in particular, leaving themselves open to recent changes in IR35 regulations. Standing alone as a contractor rather than an employee gives much greater freedom.
If you’d like to talk to someone about the pros and cons of taking on long-term contracts with the same company, contact Nixon Williams today and see what impact this could have on your taxes.
Being your own boss, having a great amount of control and freedom will just be a few of the beneficial factors that will lead your nose in the direction of choosing to function through your own limited company. There are other factors that may influence your decision, such as significantly higher daily rates of pay which apply to consultants, contractors and freelancers- which can be expected due to not receiving payment for days off sick or holiday.
Setting up a Limited Company
On setting up your own limited company, appointing a good accountant is advisable. A good accountant should make the whole process easier of running your own limited company, whilst giving you solid advice on the following: tax deadlines, the accuracy of tax submission forms and making sure you are as a company working as tax efficiently as possible.
Here are some great tips to help you find a perfect contractor accountant ideal for you.
Are they specific to you?
Make sure your contractor accountant is suited to your choice of field. There is no point picking an accountancy firm who deals with looking after labourers. As a contractor, you need to speak to contractors who have experience in your field, specialising in contracts so they know they ins and outs of contractor legislation – for example IR35.
Managed Service Company?
A managed service company (MSC) will take over completely the overall running of your limited company, which is achieved by clumping contractors in one group and offering them a ‘managed service’ scheme. IR35 is a piece of legislation that can be bypassed by this sort of scheme.
It is known that HMRC loopholes can be made advantage of with MSCs. However, these loopholes in time have closed – making all use of functioning MSCs illegal. Twenty thousand contractors were affected by this, so it is important to check the credentials of any accountancy firm as to see you don’t get caught by this – resulting in foul play.
Can you meet the accountant in person?
When you deal with accountancy firms you may think that you may just be a number dealing with a corporate image, resulting in the likelihood of speaking to the same person twice…well….not very likely. It’s important to meet your accountant face to face if needs be, tax is complicated enough without talking to a thousand people down the phone. Also, make sure that if you can meet up with your accountant they are not 319 miles away from you; get one that is located near you for obvious reasons!