Common challenges facing contractors – Financial, accounting and others… Part 1

1. Administration – if you are using a PAYE Umbrella solution this isn’t going to be such an issue. Providing information to your Umbrella service on your private pension as well as a few other big ticket items is all there is. Your main admin will centre around providing your time-sheet to your umbrella service and your agency on a weekly or monthly basis. But as it provides you with your money this will feel like admin that’s really worthwhile. On the other hand, if you have a limited company solution there will be a lot more admin involved – especially on the expenses front. You will need to ensure you keep copies of all the allowable receipts, compile and provide them to you Umbrella service on a monthly basis. This may take quite some time every month.

2. No paid holidays, no paid sick leave – Normally, in your permanent employment you have a minimum of 4 weeks holiday a year as well as public holidays and are entitled to take a certain amount of paid sick days per year. As a freelancer you don’t have any such entitlements – if you are on sick leave OR if you take time off you miss out on your day rate for each day you are not working. As a result, you need to be conscious of this when negotiating your day rate – plan for at least 6 weeks off per year between sick days, public holidays and holidays.

3. Time between contracts – it’s all very well being a contractor in a boom market when you can have more than 1 offer at a time and there is the potential to move seamlessly from 1 contract to another. There are periods when like 2008-2009 the market tightens and there are more contractors than contracts! In that instance, it is important to up-skill through relevant training and work your network hard to get a new contract. At any rate, contractors need to realise that there will be fallow times and to budget according – put aside 10% of income into a fund for such a scenario if you have a limited company. If you are using a PAYE Umbrella solution you will be paying employers insurance so you will be entitled to social welfare for periods between contracts.

Accounting Pro is Ireland’s premier contractor accounting service.  We are here to help you, the busy contractor and/or company, with all your accounting and payroll needs. We are both an umbrella company and umbrella corporation and we can create your limited company. We are experts in contractor pensions, contractor health insurance and contractor expenses. To learn more about what we do please review  and contact us by email: or phone us 01 6933370. For the UK see Accounting-Pro UK. “Common challenges facing contractors – Financial, accounting and others… ” is an article written by Accounting-Pro Ireland for the benefit of everyone. Feel free to share it but please give attribution on a CC BY-SA license.

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