A guide to contracting

Why choose contracting? There are a number of reasons why more and more engineers are choosing contracting as a way of working, with around 1 in 7 workers in the UK currently working in contract positions.  At some point they were all facing the same choice you are facing, so you are not alone!

If you are thinking about working for yourself as a contract engineer there are many key decisions to make before going ahead. But first let’s start with the positives of doing so!

  • More freedom and flexibility

    You can decide where you work, where you go & who you want to do business with – giving you complete control of your career. With more exposure to your industry, you are more likely to open more doors and build on your skills through greater job variation.

  • More responsibility means greater potential rewards

    Along with more freedom comes more responsibility, and by being your own boss you need to keep on top of things. As your company, you will be responsible for managing your own finances and the more successful the business, the greater the potential rewards for you.

  • Tax friendly

    Contracting allows more efficient ways to manage your tax affairs, and so is also potentially the most tax efficient way of working. This means you get to keep more of what you earn.

What are your options?

When it comes to deciding how to run your own business you will need to look into either joining an Umbrella Company or setting up a Limited Company. Not sure what each of these options entail? Below is a little more information about what each option will mean for you.

  • Limited Company

    Working as a Limited Company is an increasingly popular option for many self-employed contract engineers. As the director of your own company, you will be responsible for the day-to-day running of the business and for ensuring the company meets its financial and legal obligations. While this option carries the most responsibility, it is also potentially the most tax friendly if you want to optimise your earnings.

  • Umbrella Solution

    If you choose to work through an Umbrella Company as a contract engineer, you become an employee of that company. The umbrella company will therefore pay you directly after making the necessary deductions for tax so you don’t have to. In terms of administration, there is none. Therefore if you want a simple, efficient and reliable way of getting paid without any administrative burden, this may be a more suitable option.

Here to you guide you

The team at Edison have a wealth of experience in the world of contracting and we are always happy to give you more information and advice on the above options.