Alongside a greater work/life balance and enhanced tax efficiency, the ability to earn more money is often one of the main motivations for those thinking about becoming a contractor.
Despite this enhanced earning power, there are a number of factors that can affect the amount of money independent professionals can walk away with. To help, we’ve created this handy guide, detailing three important influencers to look out for and how to make sure you get the maximum reward for your services.
Skills & expertise
It should hardly be surprising to learn that your skillset is the most important factor in determining the level of rate you can command. Contractors with an in-depth knowledge of their chosen industry are becoming increasingly sought after due to the ongoing skills crisis.
Amid fierce competition, independent professionals should closely monitor upcoming trends and continuously keep their skills up to date with regular training. Individuals specialising in particularly niche areas will inevitably be able to command a higher rate, as businesses will fight among themselves to secure the talent they need.
The economy and subsequent industry conditions are other factors to be taken into account. Unsurprisingly, a buoyant economic climate and confident businesses should yield a higher rate of pay.
External influencers such as legislation will also determine how much a contractor can earn. For example, individuals experienced in compliance and governance are becoming increasingly sought after within the financial services sector – a result of continued pressure from regulators in the wake of the global financial crisis.
In addition to the gulf in contractor and ‘permie’ rates of pay, there is also a difference depending on which route an individual decides to go down. Those who operate via a Limited company are able to take home more than their umbrella counterparts, due to the enhanced level of tax efficiency on offer.
Limited company directors are able to pay themselves a combination of salary and dividends, thereby reducing the amount of tax they have to pay. For more information about increasing your tax efficiency, please click here.
Have your say
Are you a contractor? What other factors do you believe contribute to the assignment rate you receive? Do you have any advice to ensure you receive the amount of money you deserve? Join in the discussion on Twitter, or leave a comment below.