Things I wish I knew about contracting (before I signed the contract)

Remote working is a very real thing; lots of people do it these days. I’ve been privileged that my physical location hasn’t prevented me being hired to work on some really cool products with a couple of awesome companies. I’m currently working with a company with offices in the US and UK. Despite being far (faaaarrr) away they decided to hire me. I went through the negotiations as I would have any case of full-time employment, and we quickly settled on a package.

Then came the little issue how how precisely they would hire me, since they didn’t have an office where I’m at (and I didn’t have residency where they’re at). Ultimately it was concluded that I had to be hired as an external contractor. At the time I figured this would just be a minor technicality; for all intents and purposes, I was going to treat it like full time employment, and so would they.

Some folks warned me that this was naive because contractors are easy to let go of. This is not a concern of mine because if I’m in a situation where I’m not delivering and am not indispensable, I would want to move on anyway. There’s other stuff I could be doing instead.

Then there’s the question of emergencies. If I were an employee, being hit by a bus and put in a coma means I would probably still get a few sallaries coming in (different jurisdictions have different legal requirements). It’s true that being a contractor I wouldn’t have this privilege, but this boils down to a matter of insurance, which can be purchased, so perhaps it should simply have been factored in as a (slight) salary bump if we’re being completely pedantic about it.

There are two things that caught me by surprise that – had I known about before hand – I might have been less thrilled about being a contractor, or at the very least would have liked some compensation for.

  1. Paperwork. It started off with having to register a business… not a huge deal, that was just a bit of one-off running around. Then it’s having to invoice monthly… also tolerable (though I almost forget every month, even when the calendar reminder chimes – I tend to dismiss it as an annoyance). Having to deal with taxes, on the other hand, is quite a chore. It takes up more time and energy than I thought it would, even with the help of an accountant. It’s a pain having to document everything, in particular when it comes to international transactions. It’s easy to take for granted how much time is saved by being taxed at source.
  2. A bigger issue is credit-worthiness. This is probably a special-case: my new contracting gig coincided with a move to a new country (where I have a very thin credit-file). I applied for a personal loan (mainly because I wanted to develop a credit history) after being “conditionally approved” (lesson learned: that just means the marketing department wants you, but noone in the credit check department had any say in it). My application was eventually declined. To their credit, the bank was transparent about why: if I were being taxed at source, they’d need to see two months of income, but because I’m a contractor they’ll need to wait to see 12 months of tax data.

The second point is easy to overlook, but when it catches you by surprise it’s the sort of thing that could throw a wrench in life plans. If I have to wait that long before being deemed worthy of a simple personal loan, it might take quite a bit of time to build up a credit worthiness within striking distance of a home loan. Luckily I wasn’t counting on buying a house any time soon.

Remote working is loaded with pros and cons, but on the whole it’s very liberating not having one’s work limited to what’s available in a physical location. Although contracting isn’t a requirement for remote working, it is a common mode, and for the most part it’s fine – I just have a kew kinks to work out that I wish I knew about beforehand.

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