The idea of becoming a contractor can be quite appealing. You get to be your own boss, set your own hours, and work on projects that you find interesting. However, there are some downsides to being a contractor that you should be aware of before making the leap. One of the biggest drawbacks of being a contractor is the lack of labor protection rights.
There is no vacation pay, no sick pay, and no paid maternity or paternity leave. This can leave you in a financial bind if you get sick or need to take time off for any other reason. Another issue with being a contractor is the risk of hiring a bad one. Unfortunately, more than 50% of homeowners report having a negative experience with their remodel or complaining about a bad contractor.
Poor workmanship is often cited as the main reason for dissatisfaction. When hiring a contractor, it's important to make sure that they have the right team in place to do the job properly. If the subcontractors listed do not reflect the quality of the contractor you hired, it's time to stop and hold a meeting with the contractor to get back on track. Redoing a bad job is more expensive than doing it right the first time. If you find yourself in a deteriorating relationship with your contractor, it's important to re-initiate communication and make sure everything is in writing.
An important red flag is when a contractor fails to obtain a permit with the local municipality for an important and specific project. It's also important to pay attention to how the contractor interacts with their team and other people. If they are not able to mix and interact socially, it could be a sign that they are difficult to deal with. The number of independent contractors has been increasing steadily over the past few years, but this comes with its own set of risks. If a contractor submits a bid or quote and tells you they can start right away, it could be a sign that it's not the most popular program in town. Being too busy can also cause contractors to overstretch their finances and get into cash flow problems. This can lead to them cutting corners or taking shortcuts on projects. To avoid these issues, it's best to establish communication early on and make sure everything is in writing.
It's also wise to hire a retired contractor or home inspector to come and check on the work as you get closer to completion. Finally, keep in mind that if you're not happy with your contractor's work, you can simply terminate the contract without notice. If you find that your contractor is avoiding questions by being dishonest or giving unrelated answers, it's time to look for someone else. Outsourcing your company's taxes is one way to manage them as an independent contractor. And if you're considering making the switch from PAYE job security to becoming a limited company contractor, make sure you understand all of the risks involved before making your decision. By understanding all of these potential issues, you can make an informed decision about whether or not being a contractor is right for you.