Son starting out in IT contracting..advice required please.

[Wacky Racer]

Ok,

One of my lads (aged 26) has been working for a large firm (IT) in the North of England as a permie for a couple of years, he is not really stretched in his job and has always fancied working around London.

He has now secured a contracting job (3 months) with a smallish firm (£150per day) they are going to train him up, hopefully another another 3 months will follow, then possibly leading to some permanent work with the same outfit.

It is obviously a very big move for him, so he is going to move into his best friend's pad down there until he finds his own place after a few months.

So,

What are the pitfalls, the do's and dont's?

He knows he will have to fund his own holidays, pay his own tax etc, so what are the first things he should be doing whilst down there.

He does have quite a bit of money behind him as a "buffer" fortunately, so he will not be going down with ten bob in his pocket.

He does not drive, (learning, but holds a m/bike licence...no bike) but knows London very well, the firm is based in central London , and seem to be very helpful.


Thanks in anticipation.

WR.

Edited by Wacky Racer on Wednesday 5th October 13:39

[C8PPO]

Depends what he's doing but my first advice would be to get the 3 months cracked off quickly and then find a contract paying £300/day instead, which shouldn't be too hard.

[dan5oclocksmith]

First thing he needs to do is sort out an accountant - and for that, you need Eric Mc.

[Wacky Racer]

dan5oclocksmith said:

First thing he needs to do is sort out an accountant - and for that, you need Eric Mc.

Yes, I know Eric's reputation is first class, but he could use mine who I have been with over thirty years.

Also regarding the pay, he knows he could probably earn a bit more elsewhere, but is more interested in being trained up in this particular programming language to gain experience.

Don't ask me, I'm a computer numpty..

[hornetrider]

£150 isn't a lot for London but it sounds like a decent opportunity to suck it up for a bit whilst being trained.

So... he needs to set up a company (google is your friend, costs bugger all) and decide whether he needs to register for VAT. But... you can talk to your accountant about all of that. Aside from that I guess flat hunting is on the cards.

[Big_Kahuna]

To the OP.

Message from your son:

"I'm 26.

I'm on top of things.

Stop interfering dad, it's my life, not yours."

[Landlord]

C8PPO said:

then find a contract paying £300/day instead, which shouldn't be too hard.

I guess it depends on the industry but as far as I can tell, the contract market is on it's arse at the moment in terms of supply (of contractors) and demand (by employers)

[M@verick]

Landlord said:

guess it depends on the industry but as far as I can tell, the contract market is on it's arse at the moment in terms of supply (of contractors) and demand (by employers)

I beg to differ

R.

[Wacky Racer]

Big_Kahuna said:

To the OP.

Message from your son:

"I'm 26.

I'm on top of things.

Stop interfering dad, it's my life, not yours."

I accept what you are saying, I'm only trying to help him along a bit, can't see a problem.

He's not on PH and there are lots of IT bods on here...found out some useful stuff already.

[Tonsko]

2 ways to do the accounts: 'Umbrella company' - whereby the company sort your tax affairs out, and you just get a monthly salary as normal, or you register as a Ltd company and go it alone. 2nd option recommended, due to past colleagues being shafted by st umbrella companies. Will need a permanent home to register the Ltd. company from, so I guess that would be yours, as I don't think Companies House will allow the registered address to be a rented property.

With regards to using your accountant, is he well versed in IT contractors? If not, he might not be the best guy to use as he wouldn't make your son as tax efficient as someone who deals exclusively with IT contractors, or knows the particular area well. Probably no need to be VAT registered as yet, but can be useful. If you do, do the VAT returns yourself, they're fairly straightforward.

Beyond that, make sure contract is 'IR35' checked, and good luck to him!

[Wacky Racer]

Tonsko said:

2 ways to do the accounts: 'Umbrella company' - whereby the company sort your tax affairs out, and you just get a monthly salary as normal, or you register as a Ltd company and go it alone. 2nd option recommended, due to past colleagues being shafted by st umbrella companies. Will need a permanent home to register the Ltd. company from, so I guess that would be yours, as I don't think Companies House will allow the registered address to be a rented property.

With regards to using your accountant, is he well versed in IT contractors? If not, he might not be the best guy to use as he wouldn't make your son as tax efficient as someone who deals exclusively with IT contractors, or knows the particular area well. Probably no need to be VAT registered as yet, but can be useful. If you do, do the VAT returns yourself, they're fairly straightforward.

Beyond that, make sure contract is 'IR35' checked, and good luck to him!

Thanks very much for that.

That's the kind of advice I was looking for.....

[justayellowbadge]

Wacky, if he does go the umbrella route I can recommend these guys:

http://www.contractorsolutions.co.uk/

Very efficient, very helpful and very straight.

[M@verick]

Wacky Racer said:

He has now secured a contracting job (3 months) with a smallish firm (£150per day) they are going to train him up, hopefully another another 3 months will follow, then possibly leading to some permanent work with the same outfit.

It doesnt sound like he is contracting so much as consulting. If this firm is going to train him and bill him out to clients he should be on their payroll, in which case he would be paid holiday and sick etc.

If he is sub contracting he could still use his own limited liability company, or if this is for a short term as you say "leading to some permanent work" he could think about using one of the many umbrella company offerings - this way he wouldnt have to deal with all the book keeping and nonsense himself.

If he intends to contract longer term its worth setting up his own company and joining the PCG (professional contractors guild - Google it) there is a wealth of information on there about financial, legal, and general contracting matters.

On a more general note, I would tell him to focus as much on client facing skills and networking as he does on being technically skilled. One of the first things I was told was "I can train you up as a techie, anyone can learn that but I cannot teach you how to consult". There are many propeller head techies that could sit in a corner and code you a new world, but many do not have the ability to translate that into management speak or plain English when talking to clientside staff. If you a techie can also talk strategy and business process or just converse intelligently in laymans terms that is a real plus.
In terms of networking if he develops a professional circle of contacts that he takes out for the occasional beer, and checks in with from time to time / offers to help for free etc, he is likely to start to generate repeat business as well as making sure he remains uppermost in clients minds when they next need someone to come in and fix something.

HTH,

R.

[Tonsko]

No probs . Oh yeh Always alwaysalways stash AT LEAST 20% of company's income into a separate business account before paying yourself. This should serve as a corp tax, PAYE tax, incidental tax account. He doesn't want to find himself in the unenviable position of paying off last year's corp tax with this year's money. I've known a few guys over the years that did this, and while not strictly necessary, it will reduce overall stress levels

As for bank, a lot of folk I know use Cater Allen. I don't, as when I first started, I was a bit skint, and my £1 cheque bounced, so they refused my business.

[GestapoWatch]

Followed the same path even down to the £150 a day bit at first to gain experience and am eternally grateful for the guy who took a chance on me.

Now in the 'normality' of Contracting and, save for a few last minute knock-backs, wouldn't change it for the world.

Smile and invoice and you can't go wrong.

[Vladikar]

C8PPO said:

Depends what he's doing but my first advice would be to get the 3 months cracked off quickly and then find a contract paying £300/day instead, which shouldn't be too hard.

I work with contract veterans of 15 years+ contracting who work at £350-£400 so I think that may be a tad ambitious.

As an I.T Recruitment Consultant (Oracle Database market mainly) my advice would be:
- Work your arse off when onsite, most contracts almost always get extended if you are the one staying late and getting the job done
- Network yourself and be friendly, never burn any bridges, contractors know contractors and word gets round in London believe me. Create a LinkedIn account and get recommended too!
- Remain professional and show you actually CARE about the company
- Show you are worth paying for

The most successful contractors I work with do very little in the way of networking themselves since their CV does most of the talking (extension after extension when out on client site generated from dedication and hardwork).

[Tonto]

Depends on how the initial period works. If your lad only ends up working 3 months (or 6 months) contracting and then does permy, then setting up your own company sounds a bit of a faf on.
Many many years ago, I did pretty much exactly what you are describing here. I was working up north in a job and managed to get a really good redundo package. I found that I couldn't get any similar jobs in the area as I was on quite a lot of money (working for an Oil company), so I ended heading for the smoke. I looked for a while for permy and contract, just so I could get some money coming in. Ended up with a 6 month contract, after which the company wanted me to move to perm, but the salary was poor, so I changed to another better paid permanent job. The point of the story is that when I was contracting, I was working for the recruitment agency and therefore didn't need to set my own company up.

[Tonsko]

^^Tonto makes a good point. If he's doing it with a view to becoming perm - a working review period if you like - then you may as well use the agency's umbrella services.

[NobleGuy]

Yep, if the idea is to go permie then Ltd. Co is a waste of time and money.

[Wacky Racer]

Well I sent him a link to this thread and he told me to say thanks for all the helpful replies, he really appreciated them.