Contract vs Permanent - Which is Best?

Work is weird.

Should you work as an employee or take the leap as an independent contractor? Getting a higher-paying permanent role is the surefire way to financial freedom. Or do contractors get paid more?

Let's break it down.

The advantages of a permanent role

1. Job Security and Stability: One of the main drawcards of working as an employee is the job security and stability it can offer. Companies often provide long-term contracts and a steady paycheck, making it easier to plan for the future. This is favourable in the eyes of banks, your spouse, and your family.
2. Health and Retirement Benefits: Employed professionals typically enjoy access to employer-sponsored health insurance and retirement plans, which can be a significant financial advantage over the long run.
3. Training and Development: Many companies invest in the personal and professional growth of their employees, offering opportunities for training, skill development, and career advancement.
4. Social Interaction and Networking: Working as an employee can offer more opportunities for social interaction with coworkers and networking within your industry.

The advantages of contract roles

1. Flexibility and Autonomy: As an independent contractor, you have greater control over your schedule, workload, and projects. This flexibility can improve work-life balance and the freedom to work at your own pace.
2. Higher Earning Potential: Contractors often charge higher hourly rates than their employed counterparts, which can lead to increased earning potential.
3. Tax Benefits: As a contractor, you can take advantage of tax deductions unavailable to employees, such as home office expenses, travel, and equipment costs.
4. Diverse Opportunities and Skill Development: Working as a contractor can expose you to a wide range of projects and industries, allowing you to develop a diverse skill set and stay current with market trends.

So, how do you weigh up the decision?

When deciding between working as an employee or a contractor, consider the following factors:

1. Career Goals: If you value job security, benefits, and the potential for career advancement within a company, employment may be the right choice. However, contracting might be a better fit if you prioritise autonomy, flexibility, and diverse experiences.
2. Financial Considerations: Weigh the financial benefits of both paths, including income, benefits, and tax implications, to determine which option makes the most sense for your unique situation.
3. Risk Tolerance: Are you comfortable with the potential risks associated with contracting, such as fluctuating income and finding new clients? If not, the stability of employment might be more appealing.
4. Personal Preferences: Consider your personality, work style, and the type of work environment that suits you best. Do you thrive in a structured, collaborative setting, or do you prefer the freedom of working independently?

Choosing between working as an employee or a contractor is a deeply personal decision that depends on your career goals, financial needs, and personal preferences. However, by carefully evaluating the benefits and drawbacks of each path, you can confidently navigate your professional journey and find the path that leads to your ideal work-life balance.

For me, once I turned to contract roles, I never looked back. Freedom to grow from a one-man band into a proper company was something I'd always wanted in life, and it all started with contracting.

It's not for everyone, but I would encourage anyone in the Power BI world to at least try contracting once.

You never know where it might lead you.