Contract work - Worth the effort?

[GazB 10]

Hi all,

 

Are there any IT contractors knocking about?

 

I'm in a permanent job at the moment, but getting more and more tempted to go contracting. I've just been offered a job that will pay me £350 a day, for 3 months. Is it worth the effort and the hassle of being "self-employed"?

 

I'm 20, still live at home and have no commitments.

 

GazB

[hmr44 10]

Thats really good money to say you're only 20! I'd definatley do it, if only for a while and then go back to working permanant.

 

From the money side of things you would be much better off, as you have no commitments. The only bad thing, I think, is how secure it will be.

 

My mums ex working in IT and only did contracting work, he was loaded but the job wasnt secure at all, and he spent most of his time looking for new jobs!

[charlie75 10]

If you are young and have no commitments then now is a good time, do you work with any contractors at the moment. They ,may be able to give you tips on things like setting up a Ltd company, tax, deductible expenses, VAT etc.

 

Is your area of IT contracting sustainable, what happens after 3 months.

 

I know its obvious but contractors don't get sick pay, holiday pay, employer pension contributions.

[NEKRO138 10]

Depends how good your permanent job is. The fact you have no ties is good though. Got to remember, there's lots of people in your field of work, contracts may be difficult to come by.

 

Good luck, whatever the decision.

[NEKRO138 10]

Depends how good your permanent job is. The fact you have no ties is good though. Got to remember, there's lots of people in your field of work, contracts may be difficult to come by.

 

Good luck, whatever the decision.

 

In fact mate, screw this, just ask your mum. Mum's know best!

[JoeP 11]

Hi,

 

I've contracted or freelanced for most of my working life.

 

That's good money - you will need to set up a limited company or go through an umbrella company of some sort. Which you do depends upon whether you intend to carry on contracting.

 

The main issue is keeping new work coming through. The longest I've been out of work 'against my will' was about a month in Janury 2000. You will spend a lot of time phoning agencies, chasing work up, etc. You also need to ensure that you have money to keep you going when you're not working - if you have no major outgoings, you're in a good situation.

 

Is the skillset you have 'sellable' after this one role?

 

For example, although there are a lot of .NET contracts around at the moment, there's a lot of competition and that can force rates down. I still take a lot of VB6 work because there are less contractors in the business and it's easier to get the work.

 

On the back of one contract, it's hard to judge whether you will be better off contracting. Contracting requires a lot of discipline and you are expected to deliver from the off. You will pay for your own training, pensions, health insurance, etc. It's not an easy career, but it does give incredible flexibility.

[GazB 10]

What I didn't mention is that the job offered is in Chelmsford! But I've been offered jobs all over the UK contracting for over £250 a day so I think getting the work would be Ok if I was prepared to travel..

 

Joe - Do you pay an accountant to sort out all your taxes etc? I know I;d have to set up my own "company" which costs about £60 on the net and I can be the director

[WildStar HR 10]

It's absolutely worth it.

I contracted for 4 1/2 years and saved enough money to enable me to start up my own business. There are a few points you have to be aware of though:

 

1. Get a good accountant who specialises in managing IT contractors. If you end up getting stung for too much tax then it's not worth the hassle and you might as well be permie. Email me if you want me to provide a name. Read up about IR35 and make sure that you can fulfil the criteria to fall outside of the ruling.

2. Make sure that you put money aside for those times when you're looking for work - don't always assume you'll get renewed. I used to save 60% of what I invoiced for to account for tax/holidays/time spent looking for work.

3. Be prepared to travel. I had to get up at 6am every morning and drive over to Manchester when I had contracts for IBM/AstraZeneca.

4. Be aware that you can't take the p*ss as much at work as if you were a permanent employee – you have to be very disciplined. You're getting paid a lot of money, so if you want to get renewed show the company that they're getting their monies worth and don't waste their time.

5. I know you might think you're too young to think about it but it's worth setting up a stakeholder pension as well when you're contracting but your accountant can advise on that.

6. Don't let accountants/agencies try to charge you hundreds of pounds for setting up a limited company on your behalf. Companies House: http://www.companieshouse.gov.uk will have all the information you need to do it yourself - cost you about £50.

 

Good luck!

[hmr44 10]

What I didn't mention is that the job offered is in Chelmsford! But I've been offered jobs all over the UK contracting for over £250 a day so I think getting the work would be Ok if I was prepared to travel..

 

Joe - Do you pay an accountant to sort out all your taxes etc? I know I;d have to set up my own "company" which costs about £60 on the net and I can be the director

 

Thats what my mum's ex did. Is it legal, I always thought it sounded a bit dodgy because I didnt really understand it!

 

Good Luck Gaz xxx

[JoeP 11]

GazB - I actually go through an umbrella company who deal with all my invoicing and such, and I get paid by PAYE. I send a timesheet and they deal with all teh money, I can claim certain expenses, etc.

 

The DOWNSIDE of this is that it's not as tax efficient as if I was running my own company - however, since the advent of IR35 the tax efficiency of the Limited Company over the umbrella has reduced quite a lot.

 

The UPSIDE is that I don't pay an accountant, don't have to faff around with VAT, Corporation Tax, Company Returns, etc.

 

You will need soemone else to help you 'run' the company - last time I did this you needed at least one Company Dircetor AND a separate Company Secretary - often your accountant may be able to help here. There is also a GBP30 fee each year payable to Companies House.

 

As for travelling - I've been lucky and never had to work away from home - I've not needed to. I've always worked along the Sheffield - Leeds - Nottingham corridor. When you work away from home you can claim expenses but it can be rather depressing.

 

As for my taxes, I don't use an accountant - I just fill in my employee tax return for my Contracting (because I'm paid PAYE by my Umbrella Company) and I fill in an extra 'Self Employed' section because I also do some freelance work. I keep reasonably good records - filling out my tax return then takes an afternoon.

 

If I was working through a Limited Company with VAT, etc. to deal with I think I would go to an accountant. I did my own books some years ago before going through an umbrella company, and I spent a lot of time faffing around that would have been better spent working or relaxing!

[WildStar HR 10]

Thats what my mum's ex did. Is it legal, I always thought it sounded a bit dodgy because I didnt really understand it!

 

Good Luck Gaz xxx

 

Yup, it's legal. You set up a company in which you're company director and also the only employee. You'll also have to appoint a company secretary. The aim is to pay tax as a company, rather than as an individual. It's 'tax avoidance' rather than 'tax evasion' - which would be illegal!

 

Also, if you're invoicing for more than the VAT threshold per year, then you'll also have to register for VAT and pay that once a quarter (you'll charge VAT on top of your rate). I think the current threshold is about £61,000, so you'd be over that if you're raking in £350 per day. http://www.hmrc.gov.uk/ will give you all you need to know about VAT.

[GazB 10]

Can you put anyone down as the company secretary? Would my mum be allowed?

 

Joe - Which umbrella company do you use?

 

Wildstar - Thanks for the info, greatly appreciated