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Moving From Permanent To Contracting

So you have always worked as a PAYE worker and used to getting paid each week and regular employment benefits.

You now have a daily rate contract and need are going to operate as a limited company contractor.

How does it Differ?

Contract:

Instead of an employment contract, you will have a limited company contract with your client/agency. How this differs is that the contract is with the limited company for the services of you as the consultant rather than with you directly. This gives protection to both parties.

Rate of pay

As an employee you will receive a fixed salary or a salary + bonus, however as a contractor you will get a set daily rate of pay. This would be usually a higher rate than you would get at equivalent level in a normal employment. Contractors generally would have a higher net take home pay.

Payment Management

As a permanent employee you would normally get paid within or at the end of the month that you worked. This is not always the case as a contractor. In a lot of cases you would get paid in arrears. At the end of the month Icon Accounting will issue an invoice to your client and they would normally pay within 2 weeks of the invoice been submitted, however it may be longer depending on the terms agreed on the contract.

Collection of Taxes

When working as an employee you didn’t have to worry about your tax being paid as you just received a payslip showing deductions. As a contractor it is up to you to deduct the correct taxes on your Income and remit to the Revenue in a timely manner. Should you avail of Icon’s services we will ensure that this is completed on time.

Holiday Pay & Sick Pay

When contracting you must bear in mind that your daily rate includes your holiday and sick pay entitlements. You should budget for this when calculating your incoming and outgoings. Icon can help you with this by holding back funds to cover you for times when out of work. As a contractor sick pay can be an issue as you may not be entitled to state benefit. However Icon have a Sick Pay Policy scheme for contractors that pays out from the first day you were out sick. The premiums are discounted and tax relief is provided.

Insurance

As a contractor it is necessary to ensure that you have the correct business insurances for carrying out the contract.

Business Costs

Whilst an employee, all the costs of your training, business equipment etc may have been incurred by your employer. As a contractor, you must incur theses yourself however, the business expenses are allowed as a tax deductible expense. See our expenses section.

Security

Whilst an employee you will have the protection of various employment laws, however as a contractor you would be governed by Corporate Law. Contractors may be first to be laid off in a downturn.

Benefits/Perks

Permanent employees may have certain benefits as part of their employment package. Whilst contracting these benefits will not be giving to you by your client, rather they will all be included in your daily rate.

Our philosophy at Icon is to take the pain out of contracting when you compare with a permanent employment. If you choose one of our fully managed solution your payroll and taxes will be managed in a fully compliant manner taking the worry from your shoulders. We have also introduced benefits to manage the pain points of the contractor. What Icon strives to do is to make contracting as easy as possible for you when making the transition from a permanent role, as we recognise that it may be a big step for you.

With that in mind as a client member of the Icon Group you can avail of tangible benefits to counteract

  • Contractor Sick Pay Scheme
  • Aviva Health Care scheme
  • Free Financial Check with our Wealth Management Partner
  • Executive Pension Planning

  • Advanced Payment Scheme (subject to certain conditions)
  • Discounted Motor and Home cover
  • Online portal management
  • 3 Mobile Discounted mobile phone

Advantages of Contracting over Permanent

  • Higher net take home pay
  • Choice of who you work for and length of contracts
  • Changing contracts, this is easier than changing jobs
  • Experience: Contractors generally get more experience in different roles and cultures due to the nature of contracting