What is a Contractor?
Contractors essentially do the same job as permies. However, they possess an inner confidence and self-belief in their skill-set, thus employability.
So rather than saddle themselves with a permanent contract and its restrictions, they see an opportunity to earn more under their own steam.
The big question is: are running a business and the subsequent mortgage complications worth this extra effort?
Well, in many cases, contractors can earn up to 50% more than their permanently employed colleagues who do exactly the same job.
However, because they sacrifice the perks of a permanent contract, such as pensions, paid holidays and someone to do their payroll, a contractor does not draw on as many employer resources as a permie.
In exchange for taking on that responsibility themselves, through an umbrella company or their own limited company, contractors can charge much more for their services.
In addition, if things aren’t going great at the end of the 3- or 6-month contract, neither the contractor nor the client is obliged to renew the engagement.
Freelancers, however, work on a per-project basis. Earnings and hours worked per week can fluctuate greatly.
Their number of clients is also usually much greater than those of a contractor. Conversely, their per-project earnings are a lot lower and infrequent.
Author: John Yerou
John Yerou is the owner and founder of Freelancer Financials; a trading style & trade mark of the award winning Mortgage Quest Ltd. One of the most recognised names in providing mortgages for contractors and freelancers across the UK.
In 2004 John began his career in Financial Services as an independent mortgage adviser and broker. John has been instrumental in negotiating bespoke underwriting for contractors with high street lenders.
His presence in the industry as a go-to expert is growing by the day and he is regularly cited and writes in publications both locally and nationally.