Self employment advice: Why contracting is a career for life
Over the past few weeks, I have been taking a journey through the different ages of contracting in conjunction with IPSE, the Association of Independent Professionals and the Self Employed. The four-part series ran on the IPSE website and aims to provide self employment advice and shows how contracting can provide many lifestyle and financial benefits at different stages of life.
Whether you’re fresh out of college or university and looking for that first job, or a seasoned professional with a lifetime of experience under your belt, setting up a Limited Company and contracting is a career that can grow as you do.
Age 18 to 30; Stepping onto the ladder
In the first of our ‘Ages of Contracting’ series, I explore why contracting can be a great choice for people taking their first step onto the career ladder.
The Flex Appeal Report carried out by The Recruitment & Employment Confederation, shows many young people start contracting age 18 – 24 to find work and make money quickly. Other reasons to contract at this age include the flexibility to fit study or hobbies around work or to fund your way through further education.
Those in their mid to late twenties who have perhaps been contracting for a few years might feel ready to consider setting up as a Limited Company.
If you’re entrepreneurially minded and earning over £25,000 per year, choosing the Limited Company formation route can open the door to even more potential benefits. These include:
- being your own boss in control of your working conditions
- greater take home pay
- cut out competition for jobs by starting your own business
- the satisfaction of building your own enterprise from a young age
Contracting through the Flexible Thirties
In the second article of the series, I show how contracting can open the door to new opportunities once you reach your thirties. Whether it’s taking a career break to travel the world or settling down, the flexibility of contracting can provide a greater work / life balance without sacrificing take home pay.
It’s also a great time to become your own boss. Recent research by the Association of Accounting Technicians (AAT) found almost 50% of employees are considering setting up a Limited Company. Again, flexibility and financial independence are strong motivations for going Limited.
Samantha Bell, 41, contracted throughout her mid to late thirties and has since launched her own successful marketing agency, DML Strategic Communications Ltd.
In article two, Samantha shares some of the lessons she’s learned along the way, including:
- keep an eye on the future and where your next contract is coming from
- look out for new problems that need solving for the client you are working for
- be positive and professional at all times
- make sure you know what only you bring to the role
Age 40 to 54; Consolidation and change
By the time you enter your forties, you may well have over two decades of experience and contacts behind you. If you were advised to make the most of your income and savings throughout this time, you should by now be able to reap the rewards of all those lucrative contracts.
In article three, I show how this can be a good time to audit your income vs outgoings to see whether self employment opportunities exist to ease your foot off the pedal or even change direction completely.
David Martin, who contracts in his mid-forties, believes confidence is the key to success:
”My advice for anyone considering a career in contracting is to go for it and have confidence – if you are successful as a permanent employee and enjoy meeting people then with the right attitude you will succeed at contracting.”
Age 55 and over; Flexibility, freedom and planning
In the final part of the series, I discuss the opportunities and challenges facing contractors in their mid-fifties and beyond.
Far from being worried about the future, research suggests those aged 55 to 64 are less stressed and more content than those still in the early stages of their careers.
Travel is a key objective for this age group, so it is no wonder that the flexible nature of contracting appeals. Contracting can also enable working in different environments and with a wide range of people, which helps to keep a career fresh if you’ve been doing it for a few decades.
If you are thinking about slowing down but don’t want to stop working completely, contracting provides a great way to reduce working hours without going straight into retirement.
Other reasons to carry on contracting in later life include:
- making the move into retirement less drastic
- the possibility of supplementing a pension with additional income
- the opportunity to negotiate the number of hours and the type of work
- greater freedom for those wanting to pick and choose the roles they will most enjoy.
It’s never too late to get advice
Whether you’re thinking about travelling the world, settling down or building a nest egg for the future, follow these five steps to make the most of your earnings and savings potential:
1. Speak to a reputable Independent Financial Adviser (IFA) to ensure your money is working hard for you
2. Make the most of tax free savings, such as ISAs
3. Build up your pension pot
4. Review your investments – such as stocks and shares, or additional properties
5. Speak to your contractor accountant to ensure your salary/ dividends split is the most efficient for your needs.
Whatever your reasons for contracting at different times of life, it pays to seek advice on getting the most out of the potential benefits. To find out how we can help, speak to one of our expert contractor accountants today on 01202 375562 or email email@example.com.
This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.