What Is a Contractor?

Contracting offers individuals and companies a flexible alternative to permanent employment. But what is a contractor and how does contracting differ from other types of employment?

Contractors are professionals who provide skills or services to companies for a set period. They may be contracted for a set number of hours, a certain time frame, or the duration of a project.

Contractors can be self-employed, and work independently as sole traders, or they can run their own limited company. Independent contractors work for themselves and source their own clients. However, an umbrella company or agency can also employ contractors. Those who work for a company may not have to find their own clients, as they can work with clients sourced by the company. The company will also pay the contractor and their taxes.

Whether employed or independent, contractors can work on one or multiple contracts at a time. And with transferrable skills, contractors can often work with a variety of businesses.

The Difference between Contractors and Employees

While employees are obliged to complete tasks set by their employer, contractors can choose to accept or decline work. If they accept a contract, only then will they be obliged to complete the work. Once a contract is complete, if the client offers more work, the contractor is free to take on the additional work or decline the offer. This means they have the freedom to choose their own hours.

Contractors also set the terms of their contracts, such as the fees involved and when and where the work is completed — if the work doesn’t have to be completed on-site.

Why Businesses Use Contractors

Many businesses choose to hire contractors rather than permanent employees for certain roles or projects. Hiring contractors can be more cost-efficient — especially for special projects or processes not carried out on a day-to-day basis.

While contractors can cost more per hour or project, they can still cost businesses less than hiring a permanent employee. With contractors, businesses don’t have to cover payroll costs such as payroll taxes, vacation, retirement or insurance benefits.

Hiring contractors also gives businesses a chance to bring in individuals with specialist knowledge who are pre-qualified for safety-critical tasks. Different projects may require individuals with different skillsets, and contracting offers businesses the freedom to hire the specialists they need when they need them. Choosing the best person for the job can result in higher levels of efficiency and increased profitability.

The Benefits of Working as a Contractor

For many, working as an independent contractor is the ideal job because of the freedom it brings. Many contractors can decide their hours and fit work around their personal and family life, choosing when to take holidays. Contractors can also determine which businesses they work with, and the areas they’re willing to travel to for work (or whether they want to work from home).

Working with a variety of businesses can also be very rewarding and allows contractors to build their skills and experience. With every new project, contractors can build their knowledge, and with more skills under their belt, can move up the pay ladder faster than those in regular employment. Contractors tend to earn a higher rate than employees and have more potential to increase their wage. Completing additional training, or health and safety assessments, and becoming accredited are some of the steps contractors can take to increase their rate and attract more clients.

The Contractor’s Health and Safety Assessment Scheme can help match pre-qualified contractors with clients. If you’re a contractor looking to become accredited and reach new clients, become an accredited CHAS member today. Or, if you’re looking to hire pre-qualified contractors, sign up for a free client membership. 

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