Freelance or Permanent work?

[Kenneth Oti]

Hi i'm from the UK
I'm just wondering what is your most preferred way of working? Contract work or being employed at a company?
I've met a few freelancers (self employed) and they prefer the freedom and being able to negotiate their terms and pretty much a lot of the big name hire externally. The pros I get about working for a company is that there is more security and knowing that every month a pay check is coming in.


I lean more on the freelance side, but I'm starting to see that it's more of a personal preference as opposed to a career decision as there is more risk involved. Is anyone else here freelancing or have done it before?

[Stephan van Hulst]

I prefer fixed employment. I'm sure I could earn more as a freelancer, but that would mean I would be spending a lot of time on other things than what I enjoy doing. Besides, I'm good enough at what I do that I'm afforded a lot of freedom at the company I work for, or the companies they farm me out to.

The steady paycheck definitely plays a big factor for me as well.

[edit]

Welcome to CodeRanch!

[Kenneth Oti]

Stephan van Hulst wrote:I prefer fixed employment. I'm sure I could earn more as a freelancer, but that would mean I would be spending a lot of time on other things than what I enjoy doing. Besides, I'm good enough at what I do that I'm afforded a lot of freedom at the company I work for, or the companies they farm me out to.

The steady paycheck definitely plays a big factor for me as well.

[edit]

Welcome to CodeRanch!

Thanks for the welcome.

yeah i totally understand the fixed income. I guess the perks of the company is also beneficial you can't really get that self employed. I like though the flexibility of being able to work for different companies which makes me look in demand but the diversity is what gets competing companies getting in touch.

[Tim Cooke]

I have always worked as an employee, so can't give a fully balanced account.

You often do get a bunch of perks with employment such as private health insurance, paid holiday, paid sick leave, dental, training, bonuses, shares, etc etc that you do not get as a self employed contractor. It's worth mentioning as well that there's a distinction between being a freelancer and being a contractor. As a freelancer you are self employed and are paid for specific services, such as building a website, and you price the cost of that service as you see fit. As a contractor you are paid a daily rate for your time to work with a company on whatever they wish you to do. Both are self employed, but being a contractor feels a lot more like being employed than a freelancer.

In theory, you get paid a lot more by the day as a contractor which affords you ability to set up and pay for those perks for yourself.

In the UK there are specific rules around working as a contractor, called IR35, that are designed to prevent tax avoidance. In practice it means you need to be quite careful that you don't benefit from company perks afforded to employees, otherwise the argument is that you are indistinguishable from an employee and should be employed. So don't eat the free lunch, don't go to the holiday parties, etc etc.

Like I said, I'm currently employed and am happy to be since at the present time I have an emotional investment for the company to succeed and I want to be a part of that. But I've decided a while back that once this particular company journey ends I'm going to go contracting, just for the flexibility to be able to take large chunks of time off inbetween contracts instead of scraping together a week or two here and there.

[Frank Carver]

The great majority of my career has been as a contract software developer in the UK (since about 1995 or so) I  have loved it.

Plusses:
Rates of pay are usually better
The employer / client can't claim the intellectual property of your own out-of-hours work (even though a lot of companies try to!)
You avoid most of the office politics, nobody thinks you want their job
You get to buy a lot of stuff as a tax-free business expense
You get to manage your own personal development (as a business expense)
You can work for multiple clients at the same time
You can use your business for other things, and still get the tax benefits (I also do video editing, training, writing, and publishing, for example)
Nobody looks at your CV / resumé and asks "why did you leave X?"
Nobody asks "Where do you want to be in 5 years"
You get to call yourself an entrepreneur ;)

Minuses:
It's tempting to work too hard and never take vacations.
You have to be strict about putting money away for contingencies and retirement
You have to negotiate your own rates and look for work more often
You have to track what's in demand and keep your skills sharp all the time
There can be periods without work, but that's why you should diversify
You may have to commute further as it's not usually worth moving home for a short job
The contract market in the UK is weird at the moment, as the government is pushing against it

On the whole, though, if you are good at what you do, contract work can be very fulfilling and varied, and has enabled me to take a few years off to do a PhD, so I can't complain!

[Kenneth Oti]

Tim Cooke wrote:
As a freelancer you are self employed and are paid for specific services, such as building a website, and you price the cost of that service as you see fit. As a contractor you are paid a daily rate for your time to work with a company on whatever they wish you to do. Both are self employed, but being a contractor feels a lot more like being employed than a freelancer.
.

That's so key thanks for explaining that, i thought of them as the same until now

[Kenneth Oti]

@Frank Craver you sold it well

[Paul Clapham]

For me it was being an employee that I preferred. To put it plainly, programming was one of my skills but talking to other people to persuade them to give me work was not one of my skills.

[Les Morgan]

I've done both rather extensively in my career.  When you say freelance I interpret that as consulting.  I do love consulting, but then it is not truly freelance--where I am the boss and I make my own contract, and do all my own paperwork and am on the hook for collecting the cash and also finding the clients.  I do not do that.  IMO: running solo like that really sucks because you have to do the footwork while your on the job for the client your working for now.  you need to get into that whole billable hours thing--imagine a Mr Yuck sticker here.

I have worked for a few consulting firms and also snagged my own contract a few times.  So I have done all 3 flavors of work.  I much prefer being an associate of a consulting company or having a permanent full time employer.  In saying this I would also have you realize that I have, since graduating from college been fast tracked in everything I've ever done.  I was required to hit the ground running, and accelerate from there.  I never had the luxury of being "the new guy" or "the guy fresh out of college".  While I have been both the "the guy fresh out of college" and "the new guy" I found my self in planning and operations meetings speaking equally with all the others nearly my first day on the job.  As such, I have always been on the "cool projects" and have had my career basically riding on the line with each of them from the start.

so here are my preferences, and way, in order of preference:

1 - full time, permanent employment: full benefits, known days off, usually some compensation package for overtime, fast track for miracles, and, at least in my case, the corporate memory seems to be long lived and appreciative.  I give them everything i have to offer, and in return--they take care of me quite well.

2 - associate of a consulting firm: consulting agency finds clients and does contract negotiations on my behalf, benefits as defined in the contract, down time training, extended paycheck for down time (up to 2 months) while seeking a client and acceptable contract for next opportunity, negotiable pay from contract to contract, incentive perks from consulting firm, substantial bonuses for recruiting friends and associates to come into the fold of the company.

3 - solo (self employed): all contract money is mine.  down side: my rep and my company rep is all i have to go on, there is not a multi-million dollar organization adding their name to mine saying this guy is golden,  all responsibility is all mine too--i run 30% over contract and i have to either eat that, negotiate extension of the contract or justify overrun, everything comes out of my end one way or another.

The first 2 are much preferred.  I have done all 3, but out of over 30 years since college: about 30 years of it have been spend in option 1 and 2, with nearly 2/3 time in 1 and 1/3 in 2 with a couple years in option 3.  if you can do option 3, I salute you, my father did for 30+ years as an auto mechanic, I can pitch multi-million dollar systems and land the contracts, but I do not have the skill to as easily pitch myself in the same way.  My father did, and many others do... it is not for me.

Les

[Les Morgan]

Paul,

i hear you there!  a friend of mine and i heard of a consulting opportunity that would have made us rich if we could have cracked the shell and got into it.  he and i and another friend formed a company--together we have well over 40 year of project development experience and reference for same.  what we didn't have was references for our newly formed company.  no matter how we spun it, then would be client would not accept us as an acceptable risk to let bid--though each of us in that newly formed company had worked for the client in times gone by and were a known and respected quantity.

the thing that i found the most humorous, about the entire dealings with the experience and after was: the people that were awarded the contract--failed miserably, and to get to a "minimally acceptable deliverable" they used code that i had developed for the company when i had worked there years before.  my code is still an integral part of that system too.

Les

BTW: i remind the client about that quite often, as i wrote the package that was cut out of the requirement to allow a  minimally acceptable deliverable by the company the contract was awarded to--i also remind them that my code powers a lot of that which was delivered by that company too. (yes, i can be a pain in the "keyboard" at times)

Paul Clapham wrote:For me it was being an employee that I preferred. To put it plainly, programming was one of my skills but talking to other people to persuade them to give me work was not one of my skills.

[Frank Carver]

Les Morgan wrote:a consulting opportunity that would have made us rich if we could have cracked the shell and got into it.  he and i and another friend formed a company--together we have well over 40 year of project development experience

I have been in this situation many times, too. The trick seems to be finding intermediaries who have the clout, or are on the right supplier lists, to get you in with the big dinosaur (for a cut, of course.)

One time the chain went as follows:

Me - working for my own company - through my friend's company - though an intermediary who happened to be on the preferred supplier list for a completely different service - through an internal "consulting" division at he big corporate -  for the actual people who needed the work done.

All those intermediaries took their slice. I ended up with a decent rate, so who knows what extortion the eventual client was paying!

[Peter Rooke]

Since the recent tax changes (IR-35) there are no real benefits to working as a "freelance", or as we would say, a self-employed contractor in the UK.
In effect, you end up paying a lot of tax since the tax office treats you like a regular employee, but you don't get any employee benefits.

I am of course very biased (and angry   ) since I've contracted for about fifteen years, often doing the work and hours that regular (we call them permie) employees don't or won't do.  Actually, it's causing a lot of problems, as systems are now failing due to staff leaving projects and companies are now struggling to find replacements.  The issue is that the UK government produced a report which highlighted the expected issues.  It was then debated in the House of Lords who then made various recommendations;    

It is right that everyone should pay their fair share of tax. But the evidence that we heard over the course of our inquiry suggests that the IR35 rules— the government’s framework to tackle tax avoidance by those in ‘disguised employment’—have never worked satisfactorily, throughout the whole of their 20-year history. We therefore conclude that this framework is flawed......

It is likely that the off-payroll changes will cause widespread disruption. Many of our witnesses described how the proposals had already encouraged blanket status determinations and the early termination of contracts. We also heard that many contractors had been left in an undesirable ‘halfway house’: they do not enjoy the rights that come with employment, yet they are considered employees for tax purposes. In short, they are “zero-rights employees”. Separating employment status for tax purposes from employment status under employment law also fails to acknowledge that contractors bear all the risk for providing the workforce flexibility from which both parties benefit.

House of Lords; Off-payroll working: treating people fairly      

These recommendations were ignored by the House of Commons, and today we have a very strange situation;

“We have entered this bizarre situation when it makes sense not to work in your own country, and that’s a consequence of badly designed legislation,”

Financial Times IR35 reforms

[Tim Holloway]

Yick.

At least you don't have to depend on "employee benefits" for basic healthcare there.

So far.

[Peter Rooke]

Yeah, I did some contract work for the National Health Service.  
Transition project for their patient records system but always felt that the information was being evaluated for potential profit.  
I'm actually leaving the UK contractor market, it's just not worth the hassle.