Working as a Contractor
Advantages of being a Contractor
Before embarking on a contracting career, it is essential to weigh up both the advantages and disadvantages of contracting from both a personal and a business perspective.
- Flexibility: Contracting offers the opportunity to move between various industries and to gain valuable skills and experience without having to give an employer lengthy notice. It also allows a person to carry out the same service for more than one client at a time.
- Experience: Contractors are often more marketable due to their exposure to a wide variety of systems and organisations, which broaden their skills and knowledge base.
- Remuneration: Often employers are prepared to pay higher rates to a contractor than would be paid to permanent employees as the length of the employment is short-term. The employer benefits through savings in sick pay, holiday pay etc.
- Independence: A contractor is his or her own boss, and being self-employed can provide great personal satisfaction and flexibility. A contractor has control over their output from how, when and where it is done to whether they do it themselves or sub-contract.
- Opportunity to work abroad: Contractors who have a few years of varied experience behind them can often market their skills in several countries throughout the world.
Considerations when Contracting
- Exposure: Contractors are more exposed to financial risk than employees. They are ultimately responsible for their work and health and safety and any costs that may be incurred should their work be substandard or faulty.
- Administration: Contractors are responsible for all of their own tax affairs and must ensure that they are fully tax compliant. Contractors must also ensure that they keep proper records of all transactions for Tax and VAT purposes. Contractors are also responsible for their own insurance cover.
- Flexibility: Contractors will often be required to work in continuously changing environments and must be very flexible and adaptable to this.
- Job Security: Contracts are often for short periods of time ranging from two months up to one year.
- Limited Benefits: Contractors do not receive the same benefits as an employee such as pay-related social insurance, sick pay, holiday pay or professional training.
Legal Requirements to Becoming a Contractor:
You must register as self-employed with the Revenue Commissioners. Form TR1 will allow you to register for Income Tax. You may also register for VAT and as an employer for PAYE/PRSI using for TR1 form if the need arises.
If you are setting up as a company it is important to ensure that you comply with the Revenue Commissioners criteria as to what constitutes a bona fide company. These criteria have changed significantly in recent years and we advise you to familiarise yourself with these before you decide to establish a company.
On receipt of the TR1 you will be sent a ‘Notice of Registration’ from the Revenue Commissioners stating that you are registered for income tax and your Tax Registration number.
If you wish to register a business name you must do so by contacting the Companies Registration Office (CRO). On receipt of the completed form RBN1, you will then receive a Certificate of Registration from the CRO.
Contracting for Collins McNicholas:
If you are commencing a contractor assignment for Collins McNicholas, you will need to ensure that you have first filled out and submitted the following documentation:
- A signed copy of your contract.
- Proof of VAT Registration number.
- Tax Clearance Certificate.
- Certificate of Incorporation (for Ltd. Companies).
- Proof of Professional Indemnity, and Public and Products Liability Insurance Cover.
- Personal details including address, contact details and bank account details.