What do I need to do to become a contractor???
Discussion
There must be someone out there that can give me advice on how to become a contractor in the IT industry.
My current employers have p1ssed me off for the last time!!
I know about the signing up with an IT Agency (Abraxas comes to mind) and I wouldn't be leaving my current job until I have the contract signed, sealed and delivered.
What I want to know are the pros and cons of doing it.
If I'm effectively self employed what would I need to cover to make contracting worth my while.
Also with contracting, what insurances do I need to set up, do I need an accountant or can I do that myself and is there anything else I have missed that I would need to do?
Any help would be gratefully apreciated.
Cheers.
My current employers have p1ssed me off for the last time!!
I know about the signing up with an IT Agency (Abraxas comes to mind) and I wouldn't be leaving my current job until I have the contract signed, sealed and delivered.
What I want to know are the pros and cons of doing it.
If I'm effectively self employed what would I need to cover to make contracting worth my while.
Also with contracting, what insurances do I need to set up, do I need an accountant or can I do that myself and is there anything else I have missed that I would need to do?
Any help would be gratefully apreciated.
Cheers.
Firstly you need to become familiar with the IR35 legislation and how to get around it.
After that step is complete.
Find an accountant and form a limited company. These are available off the shelf for about £100. He will go through all the good stuff like dividends and things that are tax deductable.
You'll need some liability insurance but its nothing major.
Other than that fill your boots and good luck!
After that step is complete.
Find an accountant and form a limited company. These are available off the shelf for about £100. He will go through all the good stuff like dividends and things that are tax deductable.
You'll need some liability insurance but its nothing major.
Other than that fill your boots and good luck!
i was going to ask that question...
i am looking at similar info, not IT!, assume I go to inlandrevenue site and search ......
I am looking at working part time for a number of different employers and some may be PAYE, some may be as self employed. Just starting to search for info. Do I need to become a limited company?
i am looking at similar info, not IT!, assume I go to inlandrevenue site and search ......
I am looking at working part time for a number of different employers and some may be PAYE, some may be as self employed. Just starting to search for info. Do I need to become a limited company?
Not an easy one at all.Theres a crowd called the Professional Contractors Guild or some such that have all the IR35 information you could need.
I think its www.pcg.org.uk
JonRB will be along at some point I am sure and he has a veritable wealth of information on said subject also.
I think its www.pcg.org.uk
JonRB will be along at some point I am sure and he has a veritable wealth of information on said subject also.
First of all I can recommend a really good IT Accountant, email me offline.
Secondly, regarding IR35 it's a very complicated subject, and dont assume that you can "get around" it ... it depends on a lot of things, and luck. Basically, to try and prove that you are IR35 exempt depends on whats in your contract with the agency ... things like rights to substitution, being allowed to work from home, the type of work you are doing (a project with a measurable start/end/payment, or are you just going to work and doing what your boss tells you day in day out), how you are paid (hourly, by project), how long you work for a customer and so on. It's probably safest for now to assume that you WILL be covered by IR35 ... if your accountant can get you exception, then great, but assume the worst for the moment.
You will need : an accountant, to be a Ltd company, VAT registered (the accountant will sort out the last two). Most agencies will only deal with you if you're LTD/VAT.
Its not worth doing the accounts yourself ... a good accountant will save several times what they cost you per year in "tricks of the trade" which you wont know.
SiOsbon, the problem with "not leaving my current job" is that people wont wait ... presumably you are on a 4 week notice period with your current job ? No one will wait 4 weeks for a contractor, they normally want to interview on a monday, start on a wednesday (or what have you ... what I'm trying to say is that if you get a contract, they'll want you to start pretty quickly after that, certainly not 4 weeks later ... 1 week might be pushing it with some companys)
Is it worth it ? Well, I've been doing it for 7+ years now ...
Advantages : money (of course !), money, money, money, extra time off, much less stress, dont care about office politics, lots of change (if you like change)
Disadvantages : no stability, the time off you get can't be planned (its whenever the contract ends), no holiday and sick pay (having just spent 2 weeks off with broken back, and went back to work too early really, I know about this ! If I was a permie I'd probably have 5 to 6 weeks off), you tend to get given all the sh*t jobs that the permies dont want, you are responsible for keeping yourself up to date with current languages etc.
I can't see myself going back to being a permie in the near future. For a start, I'd find it hard to take a 50% wage cut. But sometimes recently I do sometimes hanker after an "easier" life .... maybe I'm just getting old and lazy !
Secondly, regarding IR35 it's a very complicated subject, and dont assume that you can "get around" it ... it depends on a lot of things, and luck. Basically, to try and prove that you are IR35 exempt depends on whats in your contract with the agency ... things like rights to substitution, being allowed to work from home, the type of work you are doing (a project with a measurable start/end/payment, or are you just going to work and doing what your boss tells you day in day out), how you are paid (hourly, by project), how long you work for a customer and so on. It's probably safest for now to assume that you WILL be covered by IR35 ... if your accountant can get you exception, then great, but assume the worst for the moment.
You will need : an accountant, to be a Ltd company, VAT registered (the accountant will sort out the last two). Most agencies will only deal with you if you're LTD/VAT.
Its not worth doing the accounts yourself ... a good accountant will save several times what they cost you per year in "tricks of the trade" which you wont know.
SiOsbon, the problem with "not leaving my current job" is that people wont wait ... presumably you are on a 4 week notice period with your current job ? No one will wait 4 weeks for a contractor, they normally want to interview on a monday, start on a wednesday (or what have you ... what I'm trying to say is that if you get a contract, they'll want you to start pretty quickly after that, certainly not 4 weeks later ... 1 week might be pushing it with some companys)
Is it worth it ? Well, I've been doing it for 7+ years now ...
Advantages : money (of course !), money, money, money, extra time off, much less stress, dont care about office politics, lots of change (if you like change)
Disadvantages : no stability, the time off you get can't be planned (its whenever the contract ends), no holiday and sick pay (having just spent 2 weeks off with broken back, and went back to work too early really, I know about this ! If I was a permie I'd probably have 5 to 6 weeks off), you tend to get given all the sh*t jobs that the permies dont want, you are responsible for keeping yourself up to date with current languages etc.
I can't see myself going back to being a permie in the near future. For a start, I'd find it hard to take a 50% wage cut. But sometimes recently I do sometimes hanker after an "easier" life .... maybe I'm just getting old and lazy !
OK - firstly do you REALLY want to be a contractor ...
What is your specialisation, how are your skills and are you prepared to improve them yourself without being sent on courses.
Are you comfortable knowing that you can lose your job tommorrow and find yourself out of work and generally be at the mercy of market forces ?
Are you prepared for a lot more personal admin aggro ?
Are you happy to regularly go into unfamiliar situations and hit the ground running ?
Are you happy to deal with the fact that sometimes people will expect you to be better than everyone else, and they may be a certain resentment against you , because of the perception that you are on three times as much money ?
If you're fine with all this, then get an accountant ...
I use ascot drummond, who are entirely online, so it's handy - but there are lots of good ones, and some not so good - good luck.
They will help you set up your company and tell you how all the tax stuff works (vat etc), but remember - you are responsible for a certain amount of it (not too easy if you're away from home for long periods etc.
Then go to the PCG, they can help you with IR35 and indemnity insurance etc.
Basically IR35 is about what your contract says etc and it is up to you to get on the web and find out what you need to do to get round it (PCG is the best place for this).
Then you need a job, don't sign up with agencies as they are mostly to55ers - however there are some good ones too, and you rely on them to get work.. the best thing to do is to go to jobserve and apply for specific jobs, after a while you will get to know the agencies that tend to have the most knowledge etc in your area of work ( I only know this stuff for IP networking...).
Good luck.....
What is your specialisation, how are your skills and are you prepared to improve them yourself without being sent on courses.
Are you comfortable knowing that you can lose your job tommorrow and find yourself out of work and generally be at the mercy of market forces ?
Are you prepared for a lot more personal admin aggro ?
Are you happy to regularly go into unfamiliar situations and hit the ground running ?
Are you happy to deal with the fact that sometimes people will expect you to be better than everyone else, and they may be a certain resentment against you , because of the perception that you are on three times as much money ?
If you're fine with all this, then get an accountant ...
I use ascot drummond, who are entirely online, so it's handy - but there are lots of good ones, and some not so good - good luck.
They will help you set up your company and tell you how all the tax stuff works (vat etc), but remember - you are responsible for a certain amount of it (not too easy if you're away from home for long periods etc.
Then go to the PCG, they can help you with IR35 and indemnity insurance etc.
Basically IR35 is about what your contract says etc and it is up to you to get on the web and find out what you need to do to get round it (PCG is the best place for this).
Then you need a job, don't sign up with agencies as they are mostly to55ers - however there are some good ones too, and you rely on them to get work.. the best thing to do is to go to jobserve and apply for specific jobs, after a while you will get to know the agencies that tend to have the most knowledge etc in your area of work ( I only know this stuff for IP networking...).
Good luck.....
Oh yeah, contractors don't get ill... ever and holidays are a nightmare...
since jobs have been harder to come by lately you don't want to go on holiday while you're working, but when you end your contract you don't want to go away in case it takes a long time to get another contract - also you always miss a good job when you're away.
You need to leave your job first then start looking, sometimes it can take a while and get pretty demoralising....
since jobs have been harder to come by lately you don't want to go on holiday while you're working, but when you end your contract you don't want to go away in case it takes a long time to get another contract - also you always miss a good job when you're away.
You need to leave your job first then start looking, sometimes it can take a while and get pretty demoralising....
Join us! Actually... no.. don't, you might take my next job! 
I've only been contracting for about 20 months now and I much prefer it to being a permanent employee. But as said previously, its not for everyone. You have to be flexible and able to cope with the randomness of contracting. But of course with the right contract, there are a lot of benefits. My favourites are my 4 day week, being my own boss & being able to afford my Chimaera!
Good luck...
I've only been contracting for about 20 months now and I much prefer it to being a permanent employee. But as said previously, its not for everyone. You have to be flexible and able to cope with the randomness of contracting. But of course with the right contract, there are a lot of benefits. My favourites are my 4 day week, being my own boss & being able to afford my Chimaera!
Good luck...
IR35, I believe is still in existance but because of it's seriously badly thought out mechanisims it wasn't generating the revenue the government wanted - so they introduced something else I believe.
The PCG is the place to look.
Contracting...mmmm, if you have got a permy job at the momment I would be tempted to hang on a little. Anyone who has been a contractor over the last few years will tell you the market hasn't been too good.
It is picking up - thankfully, I'm out on my ear in september, so I'm looking at the momment.
I've been contracting for 8 years now and not been out of work once. However, I've just been lucky. Plenty of incredibly intelligent and educated people I know have been - it's very much the luck of the draw.
As for agencies - accept that they are the scum of the earth, will try and shaft you at every turn, and don;t EVER expect them to tell you the truth and you will be off to a good start. I've been shafted so many times - it's just par for the course. As for registering with one agency - register with hundreds - I was registered with about 250 at one stage.
Here is an example of how agencies try and scam you - it's happened to EVERY contractor I know. You tell the agency you are intrested and the rate you are after(lets say £35/hr in this example). They tell the client this, pass you CV and you get an interview. Later on the agency rings you up and tells you how wonderful you are and how much the client likes you BUT they have budget and the maximum they can go to is £31.00. You moan, they "allegedly" ring client, 10 mins later, they offer you £31.75 as the client really liked you.
What has really happened is you have just let the agency get an extra £3.25 hour + their usual 15% aswell. Most agents work on commission, don't expect them to think of your pocket. The client will still be paying £35 +15% to the agency evey month.
I had this once where an agent was making £10 +15% on my hourly rate!!! I only found out when I was discussing my rate with my manager, who thought I was on a lot more than I was.
Don;t be afraid to tell the agency bo
ocks. The first agency I went through after I turned down a contract I was offered told me "You'll never work in this industry again. I'm going to blacklist you". I worried about it and then 2 days later I got a 9 month placement through their other office....
Apologies if I come across as negative towards agencies - but I am. They add nothing to the equation once the introduction has been made between client and contractor. I'd rather pay them a bulk amount for the introduction and then thats it. Or they can have their 15% for the duration of the initial contract period - any extensions should be free of commision. I'd accept that there may be charges in transfering my money, so maybe 1 or 2% commision. Nothing more. The fact they take their same rate 3 years later is criminal.
Good luck if you do go down this road as it can be very rewarding, at the same time even though I've been very lucky, it's incredibly stressful when the end of your contract looms. Which can be every few months - everytime you renew you are looking for the next renewal.
Cheers,
JC
The PCG is the place to look.
Contracting...mmmm, if you have got a permy job at the momment I would be tempted to hang on a little. Anyone who has been a contractor over the last few years will tell you the market hasn't been too good.
It is picking up - thankfully, I'm out on my ear in september, so I'm looking at the momment.
I've been contracting for 8 years now and not been out of work once. However, I've just been lucky. Plenty of incredibly intelligent and educated people I know have been - it's very much the luck of the draw.
As for agencies - accept that they are the scum of the earth, will try and shaft you at every turn, and don;t EVER expect them to tell you the truth and you will be off to a good start. I've been shafted so many times - it's just par for the course. As for registering with one agency - register with hundreds - I was registered with about 250 at one stage.
Here is an example of how agencies try and scam you - it's happened to EVERY contractor I know. You tell the agency you are intrested and the rate you are after(lets say £35/hr in this example). They tell the client this, pass you CV and you get an interview. Later on the agency rings you up and tells you how wonderful you are and how much the client likes you BUT they have budget and the maximum they can go to is £31.00. You moan, they "allegedly" ring client, 10 mins later, they offer you £31.75 as the client really liked you.
What has really happened is you have just let the agency get an extra £3.25 hour + their usual 15% aswell. Most agents work on commission, don't expect them to think of your pocket. The client will still be paying £35 +15% to the agency evey month.
I had this once where an agent was making £10 +15% on my hourly rate!!! I only found out when I was discussing my rate with my manager, who thought I was on a lot more than I was.
Don;t be afraid to tell the agency bo
ocks. The first agency I went through after I turned down a contract I was offered told me "You'll never work in this industry again. I'm going to blacklist you". I worried about it and then 2 days later I got a 9 month placement through their other office.... Apologies if I come across as negative towards agencies - but I am. They add nothing to the equation once the introduction has been made between client and contractor. I'd rather pay them a bulk amount for the introduction and then thats it. Or they can have their 15% for the duration of the initial contract period - any extensions should be free of commision. I'd accept that there may be charges in transfering my money, so maybe 1 or 2% commision. Nothing more. The fact they take their same rate 3 years later is criminal.
Good luck if you do go down this road as it can be very rewarding, at the same time even though I've been very lucky, it's incredibly stressful when the end of your contract looms. Which can be every few months - everytime you renew you are looking for the next renewal.
Cheers,
JC
The above post is correct - what I would say is do not be afraid to ask a pimp (agent) what their commission is, and get them to put it in writing. If you need to you can always find out what the client is paying.
Don't be afraid to hold your ground.
On the other hand, if I'm getting what I want I don't begrudge the pimp getting his cut, there are actually some good ones out there, and often they'll find you more work... always a good thing !
Don't be afraid to hold your ground.
On the other hand, if I'm getting what I want I don't begrudge the pimp getting his cut, there are actually some good ones out there, and often they'll find you more work... always a good thing !
[quote=guydw]Oh yeah, contractors don't get ill... quote]
Yeah its funny that - how the thought of not getting payed,somehow means you never actually get ill enough to go sick.
But the up side is that feeling of reassurance you get from all those folded up pound notes in your back pocket.
Yeah its funny that - how the thought of not getting payed,somehow means you never actually get ill enough to go sick.
But the up side is that feeling of reassurance you get from all those folded up pound notes in your back pocket.
IR35 is still in existence and will apply in the relevant circumstances. The difference bewteen now and when the legislation first came in is that contracts are now generally better worded so that IR35 sensitive areas are omitted from the contract or given a very low profile in the wording.
Don't forget that each contract undertaken by your company needs to be reviewed with IR35 in mind. Therefore, if you work on four separate contracts during the year, you could find three contracts escape IR35 and one doesn't. You could even find yourself involved in two contracts running at the same time, one which is under IR35 and one which is not.
If you are operating through yopur own limited company you are legally NOT self employed. Self employed individuals are those who are trading in their own right as individuals. IR35 DOES NOT apply to self employed individuals.
Don't forget that each contract undertaken by your company needs to be reviewed with IR35 in mind. Therefore, if you work on four separate contracts during the year, you could find three contracts escape IR35 and one doesn't. You could even find yourself involved in two contracts running at the same time, one which is under IR35 and one which is not.
If you are operating through yopur own limited company you are legally NOT self employed. Self employed individuals are those who are trading in their own right as individuals. IR35 DOES NOT apply to self employed individuals.
Correct Eric - IR35 applies if you trade through a co and are paid as a co but are in essence an employee eg have a contract with one co only etc etc
Basically it means extra Ni and PAYE is due
Take care - IR35 is still an IR hot topic and they really are clamping down on these kind of issues
Basically it means extra Ni and PAYE is due
Take care - IR35 is still an IR hot topic and they really are clamping down on these kind of issues
SiOsbon,
You could consider using an Umbrella Company for your first couple contracts. As I understand it they take much of the hassle out of contracting by dealing with all the tax and payment issues, and charge you an administration fee. Any contract for the supply of your services is between them and the agency/client.
I doubt it will be as advantageous tax-wise as setting up your own company, but may be worth considering while you find your feet as a contractor.
Some companies you could have a look at are:
www.safesolutions.co.uk
www.parasolit.co.uk
www.norlaconsulting.co.uk
You could consider using an Umbrella Company for your first couple contracts. As I understand it they take much of the hassle out of contracting by dealing with all the tax and payment issues, and charge you an administration fee. Any contract for the supply of your services is between them and the agency/client.
I doubt it will be as advantageous tax-wise as setting up your own company, but may be worth considering while you find your feet as a contractor.
Some companies you could have a look at are:
www.safesolutions.co.uk
www.parasolit.co.uk
www.norlaconsulting.co.uk
Next query, I have more than 4 years experience in various technologies, mainly Web based (JAVA amongst them) and some in diverse technologies such as Test Director, QuickTest Pro and Integrity Manager.
Even though I have most of my experience in the web, I have certificates in the Mercury technologies (Test Director and QuickTest Pro).
Should I,
a) just go for it and try and get a contract
or
b) hold off for a couple of months and get the other certificates.
How do prospective employees view this lack of certificates, but having actual experience instead?
Would they be a waste of my time and money to obtain them?
Have spoke to a few IT contractors and they have mixed opinions on the usefulness of certificate and v few recommend the JAVA one, since it not the being able to recite JAVA that makes you a good programmer, but the experience gained from doing it.
Cheers for the help given so far, it is much appreciated.
Si
Even though I have most of my experience in the web, I have certificates in the Mercury technologies (Test Director and QuickTest Pro).
Should I,
a) just go for it and try and get a contract
or
b) hold off for a couple of months and get the other certificates.
How do prospective employees view this lack of certificates, but having actual experience instead?
Would they be a waste of my time and money to obtain them?
Have spoke to a few IT contractors and they have mixed opinions on the usefulness of certificate and v few recommend the JAVA one, since it not the being able to recite JAVA that makes you a good programmer, but the experience gained from doing it.
Cheers for the help given so far, it is much appreciated.
Si
Check websites like jobserve.com and other similar ones to see how much work is out there for you.
If you want some advice on Offshore mbrella companies drop me a mail and I'll put you in touch with some good people.
IR35 is a tricky one, but if you're offshore you don't need to worry.
Ed
If you want some advice on Offshore mbrella companies drop me a mail and I'll put you in touch with some good people.
IR35 is a tricky one, but if you're offshore you don't need to worry.
Ed
SiOsbon said:
Even though I have most of my experience in the web, I have certificates in the Mercury technologies (Test Director and QuickTest Pro).
Are your certificates CPS, CPC or just from training courses?
If you have CPC consultancy firms are crying out for your skills. You won't need to go contracting.
Look at www.jobserve.co.uk. I used it all the time when I was contracting.
Hugh
sagalout said:bad assumption! Don't beleive a thing the IR says about IR35, they believe they are above the law and their arrogance over the years with respect to IR35 defies belief. PCG is the place to look from the contractors perspective.
assume I go to inlandrevenue site and search ......
Section 660a is the legislation they are pushing as IR35 isn't generating revenue for them. And the bastid son of IR35 and 660a was mentioned in the last budget if I recall - PCG will have any details.
Bottom line - the Government will consider you fair game and easy pickings, and will try to tax the living daylights out of you. Make sure your contract rates will cover you for:
- 10% more tax than otherwise to pay employers NI if you do get caught
- cost of holidays (no work, no pay)
- resting periods (you may be lucky and jump from one contract to another, and then again you may take 12 months to find one)
- pension arrangements
- travelling costs (you could end up anywhere, and the IR probably won't allow these as expenses)
As mentioned, also be prepared for lots of permie resentment, hassle with VAT and tax, stress at contract renewal, getting shafted by agencies (my current one takes 41% commission for example - they think I don't know) etc etc. It ain't all rosy!
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