If you’re thinking about making a switch to contract working, then it’s vital that you fully weigh up the risks and the rewards. After all, it’s a big jump to make and you need to know if it’s definitely right for you.
However, while contracting won’t suit everyone, its popularity shows no sign of abating, and it’s undoubtedly become a way of life for over a million people in Australia.
Earn significantly more
The benefits of contractor work are clear with a key attraction being the opportunity to earn significantly more than you would as a full-time employee. It will likely depend on how much your own skillset is in demand, but some contractor benefits are that it affords you the potential to take on multiple roles, further boosting your total earning.
Lower your tax contributions
Furthermore, with the right advice on managing your finances, you can lower your tax contributions, so you’re taking home a bigger wage every month. Exploring Superannuation – putting salary-sacrificed contributions into a ‘super fund’ – may also be an attractive option for contractors. The Government of Australia encourages citizens to accumulate funds to provide them with an income stream when they retire. These funds will grow, typically without any tax implications, until retirement or withdrawal.
Then there are the benefits of flexibility – effectively being self-employed means that you can have flexible working periods. If you want to take a break from working for other reasons, then you have the flexibility to do so.
Nevertheless, there are of course risks. You may not know where the next job will come from, so you could be waiting a long time for the next one to arrive, and short-term contracts may be cancelled with no notice, leaving you counting the cost.
So how to make the best of the contracting life and ensure you’re maximising job opportunities?
Top tips on reducing risk
In fact, that element of risk that goes hand in hand with contracting can be reduced, and here are our top tips on how to do just that:
- Make sure you’re always staying relevant to potential employers and upping your skillset by undertaking fresh training independently. In turn, that means ensuring you have a high impact CV that continues to reflect your expanding knowledge
- Maintain a strong network of contacts. Work hard on staying in touch with existing contacts and cultivating new ones through industry gatherings, LinkedIn, and good, old-fashioned email and telephone. It might just be the reminder that a prospective employer needs to contact you
- Replicate the employee benefits you’d receive as a full-time worker. Insurance can be arranged to cover your income if you’re unable to work due to illness and injury, and you can hone the right pension for you through the right provider
- Proactively seek out support – getting your own personal accountant in place can ease a lot of worry, from preparing accounts and tax returns to advice on setting up a Proprietary Limited Company (PTY), while a professional lawyer should review your contracts
- Be careful with your spending. Balance your outgoings against the likelihood of continued employment and calculate a pot of back-up savings that could help you through a potential sustained period of unemployment
- You may not always be able to pick the perfect job at the perfect time. You may have to factor in an element of taking the rough with the smooth if market conditions aren’t favourable
- Plan ahead to ensure there is no contracting downtime surrounding your holiday periods
- Be prepared to work hard so that you’re remembered and asked back for further jobs
And the best tip of all? Enjoy what you do. Not every job will be great, but enjoying what you do will shine through and make the chances of success, and thus further employment, more likely.
Find out how Momenta can help potential candidates with the process of landing a contractor job.