The charmed life of an Interim Manager? Balancing the risks of contract work with the potential rewards.
Posted on 01-03-16 by Terry Batty
At some point in your career, you’ve probably considered becoming self-employed. Apart from the financial benefits and flexibility this allows you, it also gives you the chance to explore a number of different sectors and companies that would not be possible as a full time employee. That said, being a professional contractor does come with its own risks and potential downsides when compared to the stability of a permanent, employed position.
One of the most appealing factors of being an Interim Manager is the flexibility you have to decide when, where and how often you work. Subject to your ability to market yourself and network, you can determine how long your contracts are, as well as having the freedom to take as much or as little holiday as you like.
There are also a number of financial benefits for Interim Managers:
- Contract rates can be typically double that of an employee, primarily because many contracts are short term positions
- Setting up a limited company (at a cost of only £125 + VAT) can be very tax efficient, with most contractors taking home 75-80% of their ‘day rate’
- You can offset all your business expenses against your income to further reduce your tax liability
However, with the increased benefits that come with being self-employed, there are of course risks that you will have to weigh-up when deciding whether it is right for you. You are responsible for finding your own work and ensuring the money keeps coming in.
You’re also responsible for managing your finances, such as VAT (£82,000 is the current threshold for becoming VAT registered) and submitting the appropriate national insurance contributions. All of these of course can be managed by an Accountant for a relatively low cost, but will increase your stress levels at times! You also will not benefit from a lot of the ‘perks’ that employees receive, such as a pension, life assurance, sick pay and company incentives.
Deciding whether or not to change from permanent employment to contracting is a very personal decision that is often determined by the stage of life you are at, and of course your personal and financial circumstances. If you are currently considering a change in career path, please do get in touch with one of our Consultants who will happily support and advise you on your next move.