Those of you who've worked as a contractor and as a full-time employee, which did you prefer?

I've been thinking about going down the contractor route, but I have reservations (which I won't get into here because I don't want to bias anyone else's comments).

Comments

[Asha Kanta Sharma]

Full-time employees worry about Monday. Contractors worry about renewal.

[TaiKedz]

I did the contractor route once (UK).

I came out concluding that whilst I love the variety of the technical work that comes my way there, I absolutely hate the admin that comes with going solo, and the financial implications.

Admittedly, I did not make my life any easier by not purchasing for an accounting solution (that track expenses, calculates tax, manages invoicing, etc) and instead trying to do it via the accountant included through a company that had managed my Ltd business setup and providing documents to them ad-hoc ...

Lead generation is also difficult, especially if you're not of a sales mindset. I used to trawl Indeed.com to look for opportunities, and to avoid cold-calling and sales-pitching to companies.

If I were to return to contracting, I would probably make a stronger point of reaching out to former colleagues to see if they were in need of contractors at their old/new companies for my skillset, as well as use a small business accounting solution. A local one to me is freeAgent , my friend who runs a small shop uses SAGE which links up directly to their bank account and processes information automatically... there are options for eliminating the overhead and, if I really wanted to, I would likely try to find someone to do all the admin for me a couple of hours per week - it gets the paperwork sorted, and someone gets some extra cash.

The hard part financially is that because you are not on any fixed salary, and self-employed, banks do not consider you viable for any meaningful loans - so don't do it if you're intending to take out a mortgage! That's a definite dead-end.

And whilst you're working a contract, you're earning, but if you're between contracts, you'd better have saved up a little buffer. If you've got unpredictable costs, or are saving up to send a kid to higher education (or just a fancy school) , you need to take that into account.

You can also find yourself out of contract unexpectedly - there aren't the same provisions (American model notwithstanding) for employees as there are for contractors.

On the other side, being employed means you do have better job security (I have the UK in mind), right to company benefits (private medical insurance, stock options, pension top-up/matching, if any suit your fancy or needs) and you don't need to do nearly as much paperwork - in the UK, tax returns are automatic through the PAYE system. You get limited holiday days though (as a contractor, you can in theory say "oh, I am not available on this day/that day" and that's it), and your extra hours aren't always remunerable. You might be stuck with dealing with legacy items forever and getting out of a bad work environment may not be so straightforward (being a contractor means that the very principle is that either party can terminate the contract at will with short notice).

Sometimes you might need to relocate temporarily/medium-term for a job. Depending on what you like/want, this may be a pro or a con.

Would I go back to contracting? I've considered it, but not in any rush.

[Andrew Janke]

I've spent time doing both. They each have their pros and cons, and which is right for you depends on your situation and preferences. Personally, I prefer being an employee (whether that's full-time or part-time).

That being said, I think a lot of people have a good idea of what being a full-time employee is like, but either don't know about or underestimate the downsides of being a contractor or self-employed consultant.

• The dollars you bring in as a contractor sound big but are worth significantly less than those in a FT salary, due to taxes, non-billable additional work time, gig-seeking and self-promotion time, and expenses. My own rule of thumb is that a dollar of income as a contractor is worth about 60% of a dollar as an employee.
• Taxes: you'll probably both pay a lot more taxes, and have to do a lot more tax paperwork.
• Benefits: Health insurance, paid time off, life insurance, some tax filing and 401k etc management (and even matching!), office space and equipment, and various other things are provided by an employer. In the US, health insurance is by far the most important.
• FT hours are pretty much guaranteed and stable; work as a contractor is definitely not. Also your FT paycheck will probably show up regularly; getting payments as a contractor can be iffier. Long term job security as an employee is generally much better.
• You have legal and financial liability for things as a contractor that you don't as a FT employee. Do your research and get business insurance! (You did incorporate as an LLC or the like, right?)
• When you're self-employed, it's all up to your own self-discipline and organization. No management to nudge you or help out with the organizational logistics.

I'm using "FT" as an abbreviation for "full-time employee" here, but it mostly applies just as much to part-time employees, except for some of the benefits.

[garyk2015]

The big choice you typically make is weighing up the benefits of permanent employment; holiday pay, sick pay, training, career progression vs earning less than a contractor.

Depends where you are in your career, if you are early on then I think being perm means you can take advantage of career progression. I would say thats the biggest thing you forgo.

Also you need to factor in now the whole IR35 legislation. You are effectively taxed as a permanent employee but with none of the benefits. This has made a huge difference to the contract workplace, contracts do exist that are deemed outside but they are not as common as inside roles. You will have to work through an umbrella company and I know a couple of these got hacked recently and contractors didnt get paid for weeks/months even.

[Doug Schwartz]

Employees are treated better and have more say. Contracting lets you bail afterwards without having to burn any bridges.

I contracted as a programmer-writer for over 20 years (mostly doing C# at Microsoft) before I spent 6 years at AWS (Ruby, Go, .NET, Rust SDK docs), which I loved.

Like almost any gig/job, it's the people, especially the manager, who makes the real difference. I've gone from a great gig/job to an awful one simply by a manager change. The converse is also true.

[Richard Guay]

The freedom of picking projects as a freelancer is great. But, if you have no savings you should stick with an employee role. The basic rule of thumb is to have a year of salary saved before starting freelance work (or, start doing freelance work while having a job if your job allows that). If you don’t get job easily, you have money to keep you going.

Working for a good employer with good benefits makes life easier and promotes leaving the job with the job. Freelance work has a tendency to control your life because you don’t easily leave the job at the end of the work day.

[Randall]

I've done both. I guess if I had to pick, I enjoyed being a contractor more. Here's why:

• I got hired to solve technical problems and that was pretty much all that was expected of me. I didn't have to participate in most of the corporate rituals that full-time employees did. I liked that I could just laser-focus on code. I enjoyed the "mercenary" feeling. (some people may find that this feels alienating and consider it a downside, but I liked it)
• I could (and did) travel the world and work at weird hours that may not have been acceptable for full-time employees.
• I was given a lot of technical freedom and didn't have much oversight.

What I didn't like:

• While my hourly pay was good, there was no equity or benefits involved, and I had to pay more taxes, so overall I made a lot less than I do at my current (full-time) position. But it's possible I was under-charging for my time and it's my fault.
• No real "career advancement" and your job title is "contractor" which is un-cool. I thought that was a downside at the time, but now I'm not so sure. I'm a "lead engineer" now and it has been hard for me compared to the contractor life.
• Job security? I guess? Honestly this never really bothered me that much because I had savings and figured I could always find other work quickly. I was a contractor at the start of the pandemic and didn't get laid off. Still, I knew my position wasn't secure compared to full-time employees.