If you’re an employee, you’re shielded from financial risk, but as a consultant or contractor outside IR35, this is not the case. Your contract may be terminated early, you may be on a fixed-price engagement which is overruns or your client might drag their heals when settling invoices. You may have to make financial investments, such as gaining certifications, paying for insurances or professional advice, or spending money on marketing to win new clients. These are financial activities that are not without risk. This stems from being in business on your own account: these are the financial risks that business owners face on a regular basis.
On the other side of the coin, the ability to take risks can also lead to rewards. For example, gaining certification may allow you to increase your daily rate, or investing in the right software tools may allow you to finish fixed-price engagements sooner and increase your profitability.
Put simply, as a consultant or contractor you should be exposed to a greater risk than employees and you will not enjoy the same financial protections as employees.
IR35 financial risk tips
Check out our tips for overcoming financial risk within IR35 with our short video guide.
