Busting Contractor Myths: Clearing Up Common Misconceptions

Contracting is becoming an increasingly popular career choice, but several myths and misconceptions may continue to cloud its true potential. Whether you're new to the world of contracting or already in the field, understanding the realities of this flexible work structure is crucial. Some professionals may be hesitant to explore contracting due to concerns about job security, benefits, and financial stability, which often deter them from considering this rewarding career path. In this blog, we’ll debunk some of the most common myths about contracting and offer a clearer, more accurate picture of what contracting truly involves.

Myth 1: Contractors Don't Retain Social Welfare Benefits

One common misconception is that contractors, being self-employed, are excluded from making contributions to social welfare benefits. This isn't true. When you opt for a PAYE Umbrella Company structure, you retain your Class A PRSI contributions, just like any other employee. Alternatively, even if you pay Class S PRSI as a self-employed individual, you still contribute to important social benefits, including the state pension, jobseeker benefits, and parental benefits. Notably, since the last quarter of 2019, contractors, and Class S PRSI payers, have also been entitled to access Jobseeker’s Benefit for the first time. This means that despite operating as self-employed, you are not excluded from vital welfare protections.

Myth 2: Contractors Can't Get a Mortgage

Another myth is that contractors struggle to secure mortgages due to the perceived instability of self-employment. While applying for a mortgage can feel overwhelming, this misconception only adds unnecessary confusion. In reality, mortgage lenders treat contractors similarly to other self-employed individuals. Many of the same rules that apply to PAYE workers also apply to contractors, provided you can demonstrate a steady income over a specific period.

Being a contractor can also offer financial benefits, such as higher pay, which can help you save for a deposit more quickly. The key to obtaining a mortgage as a contractor is to be well-prepared, demonstrate your financial stability, and engage with lenders who understand the contractor market.

Myth 3: Contractors Have No Job Security

The assumption that contractors lack job security is understandable but somewhat outdated. While contracting does not guarantee the long-term security that permanent employment offers, the reality of the job market has shifted. Permanent roles are no longer as guaranteed as they once were, as demonstrated during the COVID-19 crisis or the recent tech layoffs.

The good news for contractors is that demand for skilled professionals is increasing. As businesses adapt to more flexible and dynamic working models to fit their project requirements, the demand for contract-based expertise is rising steadily. This means that while your current contract may have an end date, new opportunities are likely to be on the horizon.

Myth 4: Contractors Can't Avail of Employee Benefits

One of the main concerns candidates express when considering contracting is how they will maintain traditional benefits such as health insurance, paid holidays, and sick leave. While it’s true that contractors are not typically provided with these benefits directly by the companies they work for, that doesn’t mean they are unattainable.

The first thing to clarify is that in rate negotiations, we always recommend that benefits are incorporated in rate calculations for candidates. This ensures that they get paid a higher value per time worked, and can organise benefits such as pensions policies and income protection with the additional income held.

With careful financial planning and expert advice, contractors can secure these benefits independently and in a tax-efficient manner. For example, higher contractor pay rates allow you to allocate resources for private health insurance, pensions, and other perks. At Icon Accounting, we partner with Rockwell Financial to provide tailored financial advice to contractors. Their expertise ensures that contractors can set up comprehensive benefits packages that suit their individual needs.

Myth 5: Contractors Are Isolated in the Workplace

Another myth is that contractors often feel isolated, lacking the sense of community that permanent employees enjoy. However, as the work environment continues to evolve, this myth is being debunked. The rise of remote working, flexible hours, and hybrid work environments has levelled the playing field, with many permanent employees now working under similar conditions to contractors.

Moreover, many companies are adapting their workplace culture to better accommodate contractors, ensuring they feel integrated and valued. At Icon Accounting, we recognise the importance of community for independent professionals, which is why we prioritise organising networking events and learning opportunities to help contractors build connections and stay engaged with their peers.

Realities of Contracting: What Contracting Truly Involves

Contracting offers a unique blend of autonomy, flexibility, and financial opportunity, but it also requires self-discipline, financial management, and a proactive approach to securing new projects. Here's a summary of what contracting truly involves:

1. Flexibility and Independence: As a contractor, you have the freedom to choose your projects, set your own hours, and often work from locations of your choosing. This autonomy is one of the main attractions of contracting.
2. Higher Earning Potential: Contractors can often command higher pay rates than their permanent counterparts due to the specialised skills and flexibility they offer. However, this comes with the responsibility of managing your own finances, including taxes, retirement savings, and benefits.
3. Ongoing Learning and Development: Contracting offers the opportunity to work on a variety of projects across different industries. This exposure helps to diversify your skills and can make you more competitive in the market.
4. Need for Self-Reliance: While contractors enjoy autonomy, they also need to be self-reliant, especially when it comes to finding new contracts, managing financial planning, and handling administrative tasks like tax filings.
5. Market Demand: The rise of the gig economy and project-based work means that demand for contractors is steadily increasing. Businesses are increasingly seeking flexible workforce solutions, making contracting a viable long-term career option.

Contracting is a dynamic and rewarding career path, but myths and misconceptions can often cloud its true potential. By understanding the realities behind these common myths, you can make an informed decision about whether contracting is the right choice for you.

At Icon Accounting, we’re committed to helping contractors thrive by providing the resources and support needed to succeed in this career. If you’re considering a move into contracting, or if you’re already established and looking for advice, don’t hesitate to reach out to us. We’re here to help you navigate this exciting career path with confidence.

For more information, contact us at info@iconaccounting.ie or call 01-8077106.