Thinking about becoming a contractor? Find out what to expect, from earning potential and finding work to managing tax, finances, and getting started in New Zealand.
Dear Amelia,
I keep seeing contract roles that pay more than permanent jobs, and I’m tempted.
But I don’t really understand how it all works. Do I need to set myself up as a business? What happens with tax? Do I need an accountant? And how do people actually find enough contract work to make it worthwhile?
I like the idea of earning more and having more freedom, but I’m wondering what I’d actually be signing myself up for.
Contractor Curious
Dear Contractor Curious,
Contracting can be brilliant. You can earn well, build experience quickly, work across different businesses and get a lot more variety than you might in a permanent role.
It can also be uncertain, inconsistent, and occasionally stressful. The bit people tend to focus on is the higher hourly rate. The bit they sometimes forget is that every contract eventually ends, and then you need to find another one.
So let’s start with why people do it.
For some people, it’s the money. Contract rates are often higher than the equivalent permanent salary because you’re taking on more of the risk yourself.
For others, it’s the variety. You might spend six months helping one company through a digital transformation, move into another business to cover parental leave, then spend nine months working on a completely different project. You get exposed to more businesses, more systems and more ways of solving problems, which can build your experience very quickly.
And some people just prefer the lifestyle. They like having an end date, being able to take a proper break between assignments, or knowing they’re not signing up to spend the next five years climbing one corporate ladder.
First, what do we actually mean by contracting?
At Campfire, we tend to think about non-permanent work in three broad categories.
Freelance is doing bits and pieces of work for different people or businesses. You might design something for one client, run paid media for another and pick up another project next month. You can have several clients at the same time.
Temp is usually working pretty much full-time inside one business, on an hourly rate, for a relatively short period. It could be six weeks, three months, cover while someone is away, or extra support while a business recruits permanently.
Contracting is similar in that you’re often working full-time inside one business and being paid an hourly or daily rate, but the assignment tends to be longer. Six months, nine months, 12 months or sometimes longer.
There are grey areas, obviously. One company’s temp is another company’s contractor. The label matters less than understanding how you’re working, how you’re being paid and how long the arrangement is likely to last.
The bit people don’t always talk about
You have to find the work.
This is probably the single biggest thing that puts some people off contracting. If you want to do it long term, you need to get comfortable with the fact that part of your job is hustling and finding your next job.
That means staying in touch with recruiters, talking to former bosses, messaging old colleagues, keeping your LinkedIn profile current and letting people know when you’re becoming available. It can mean coffees, follow-ups, introductions and the occasional slightly uncomfortable experience of actually telling people that you’re good at what you do.
Some people genuinely enjoy this. They like the networking, they like moving around, and they don’t mind not knowing exactly what they’ll be doing in six months.
Other people hate it.
I’ve met excellent candidates who would be fantastic contractors technically, but the uncertainty would drive them mad. They don’t want to spend the final month of every assignment wondering where the next piece of work is coming from.
That’s not a weakness. It just means permanent work may suit them better.
And don’t get too excited about the hourly rate
If somebody offers you $80 an hour, don’t immediately multiply that by 40 hours, then by 52 weeks, and decide you’ve cracked the system.
Your hourly rate isn’t the same thing as a salary.
Depending on how you’re engaged, you may not have paid annual leave, paid public holidays or paid sick leave in the same way a permanent employee does. You may also have gaps between contracts.
That higher rate has to compensate for some of that.
This is why good contractors tend to be sensible with money. They know there will be months where they invoice a lot, and there may also be a month where very little happens.
A financial buffer makes contracting much less stressful.
So how do you actually get paid?
There are broadly two common ways.
The first is working through a recruitment agency.
This can be a really easy introduction to contracting because the agency does a lot of the heavy lifting. They find the client, place you into the role, manage the contract and generally take care of the administration around timesheets, invoicing and payment.
Depending on the arrangement, you may be paid through the agency’s payroll, with the relevant deductions handled before the money reaches you.
For a first-time contractor, that can be a nice way to test the waters without suddenly becoming a salesperson, accounts department and tax administrator all at once.
The other option is working as a self-employed contractor.
Now you’re effectively running a very small business. You find the client, agree your rate, invoice them, manage your expenses and make sure your tax obligations are dealt with properly.
That sounds more intimidating than it needs to be.
Some contractors use an accountant. Some manage it themselves with accounting software. Others use services such as Hnry, which is specifically designed for self-employed people and can take care of much of the tax and accounting administration for you.
For people who like the idea of contracting but immediately think, “I absolutely do not want to become an accountant”, that sort of service can make the whole thing feel much more manageable.
How do I actually get started?
First, work out what you’re selling.
“Marketing” is too vague. “I’m a performance marketer”, “I’m a digital project manager”, “I’m a senior designer”, “I’m an e-commerce specialist” or “I’m an integrated producer” is much easier for someone to understand and buy.
Contractors are often brought in because a business has a particular problem it needs solved. The clearer you are about what you can do, the easier you are to place.
Then work out what sort of work you actually want. Do you want the odd freelance project? A three-month temp role? A nine-month contract? Do you want to work directly with clients, or would you rather have a recruiter helping you find the work?
And then start building your network before you desperately need it.
That last bit matters.
Good contractors don’t usually wait until Friday afternoon on the final week of their contract before mentioning that they’ll be available on Monday.
This is where I’m going to plug Campfire
We do a lot of freelance, temp and contract work across marketing, digital, media, e-commerce and creative, and we’re actively growing that side of Campfire.
So we want to know who’s open to it.
That includes people who want the occasional freelance project, people available for short-term temp assignments, and experienced contractors looking for longer six, nine or 12-month contracts.
If that’s you, tell us what you do, what kind of work you want, what your rate is and when you’re likely to become available.
The reason is simple. When a client rings us and says, “We need someone really good who can start next week”, the people we think about first are usually the people we already know.
That doesn’t mean you should hand your entire career over to a recruiter and sit quietly waiting for the phone to ring. The strongest contractors usually have several routes into work at once: recruiters, former employers, old colleagues, LinkedIn and their own networks.
But you don’t have to do all of the hustling by yourself.
So, should you try it?
If you like variety, don’t mind a bit of uncertainty, and are comfortable putting yourself out there, contracting can be a fantastic way to work. You can earn well, learn quickly, and build a career that looks very different from the traditional permanent route.
But the hourly rate isn’t the whole story. You need to manage your money sensibly, accept that there may be gaps, and get comfortable with the fact that eventually you’ll need to go out and find the next piece of work.
If that sounds exciting rather than horrifying, you may be very well suited to it.
And if you work in marketing, digital, media, e-commerce or creative, make sure Campfire knows who you are.
Because in contracting, being good matters. Being known helps too.
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