Contracting - What do I need to know?
Discussion
I apologise in advance for the stupid thread, but I'm hoping those more experienced can point me in the right direction, and also maybe offer some advice.
I'm currently permanently employed, but have an interview for a contracting job on Friday. Having been a permanent employee all my life, I've no idea about contracting. This came out of the blue with a company contacting me, but the day rate seems good.
Where do I start? What are the things I need to know/consider before accepting/rejecting the role?
It's looking at the day rate roughly doubling my income; however... I'm currently in a permanent job, expecting redundancy in March of 4 months' pay. This contract would end up being a 4 month(ish) contract - to the end of January.
I suppose it's two things I'm really looking for advice on... Where do I start with actual contracting, and is it worth considering with the redundancy I'm expecting?
I'm currently permanently employed, but have an interview for a contracting job on Friday. Having been a permanent employee all my life, I've no idea about contracting. This came out of the blue with a company contacting me, but the day rate seems good.
Where do I start? What are the things I need to know/consider before accepting/rejecting the role?
It's looking at the day rate roughly doubling my income; however... I'm currently in a permanent job, expecting redundancy in March of 4 months' pay. This contract would end up being a 4 month(ish) contract - to the end of January.
I suppose it's two things I'm really looking for advice on... Where do I start with actual contracting, and is it worth considering with the redundancy I'm expecting?
IMHO you need to weigh up your future prospects as a contractor. Do you know if there's a possible extension or another contract if this one doesn't work out or finishes in 6 months time? Check your market and how buoyant it is. Then you need to think about the pros/cons of the redundancy package vs how much you can earn as a contractor.
In terms of getting set up, speak to a decent accountant. If you already work with some contractors then ask around. There's loads of info on the internet about setting up a Ltd company vs going with an umbrella. Which one is best will depend on your goals/circumstances.
With regard to working my personal experience is that it doesn't matter how hard you think you work now, be prepared to be a lot more productive and vigilant. I worked hard as a permie but contracting is different. Slip up, mess about or speak out of turn and you can soon find yourself out on your ear (and speaking to another agent). Never forget that you will be operating a business and as such need to conduct yourself accordingly. Get it wrong and you will find it harder to find repeat business. I've made a lot of good working relationships but despite this, never let my guard down. The best compliment you can get is to end a contract and to leave with an open invitation to return.
Overall I don't think I'd go back to permanent employment as I find contracting quite liberating. There are downsides but for good/bad I wouldn't change it for anything.
All the best!
ETA, What do you need to know about the role? What's the highest rate they will pay
Seriously though, if you're a good match for the role then go for the max as you will never make it up later.
In terms of getting set up, speak to a decent accountant. If you already work with some contractors then ask around. There's loads of info on the internet about setting up a Ltd company vs going with an umbrella. Which one is best will depend on your goals/circumstances.
With regard to working my personal experience is that it doesn't matter how hard you think you work now, be prepared to be a lot more productive and vigilant. I worked hard as a permie but contracting is different. Slip up, mess about or speak out of turn and you can soon find yourself out on your ear (and speaking to another agent). Never forget that you will be operating a business and as such need to conduct yourself accordingly. Get it wrong and you will find it harder to find repeat business. I've made a lot of good working relationships but despite this, never let my guard down. The best compliment you can get is to end a contract and to leave with an open invitation to return.
Overall I don't think I'd go back to permanent employment as I find contracting quite liberating. There are downsides but for good/bad I wouldn't change it for anything.
All the best!
ETA, What do you need to know about the role? What's the highest rate they will pay
Seriously though, if you're a good match for the role then go for the max as you will never make it up later.Edited by Fatman2 on Wednesday 5th September 20:47
Fatman2 said:
IMHO you need to weigh up your future prospects as a contractor. Do you know if there's a possible extension or another contract if this one doesn't work out or finishes in 6 months time? Check your market and how buoyant it is. Then you need to think about the pros/cons of the redundancy package vs how much you can earn as a contractor.
That is the potentially risky bit, for two reasons... I work in the NHS, and there isn't really a clear view of how it'll go in the future. On one hand, with everything changing from April 2013, it could be that a lot of contract work is available. It could also easily go the other way; especially as recently there was a call for a huge reduction in contractors, with new checks coming in next year. It's fair to say my expertise lies solely in the NHS, so if that went down the pan, so would any chance of another job. I could of course just do this one contract and try to find work elsewhere after it ends.Fatman2 said:
In terms of getting set up, speak to a decent accountant. If you already work with some contractors then ask around. There's loads of info on the internet about setting up a Ltd company vs going with an umbrella. Which one is best will depend on your goals/circumstances.
I suppose it would be quicker to go with an umbrella, so I'd likely have to do that. I'll look into it.Fatman2 said:
ETA, What do you need to know about the role? What's the highest rate they will pay Seriously though, if you're a good match for the role then go for the max as you will never make it up later.
Well, a rate has already been agreed, so I'm not sure if I'd be in a position to re-negotiate at that stage... Would I? I can say pretty confidently that I'd be a perfect match for the job, and my expertise in the area they're recruiting to is well developed. Seriously though, if you're a good match for the role then go for the max as you will never make it up later.Edited by Fatman2 on Wednesday 5th September 20:47
Sounds tricky. I would be a little edgy about something that could go either way but in my industry (aerospace) companies often talk about reducing the subcontractor count. However, what they forget is that contractors fulfil a legitimate role in dealing with fluctuations in workload so it rarely happens like that. Again, if possible speak to some contractors that have been with the NHS to get the lowdown on the history.
If you're being made redundant then providing you're not going to receive a huge redundancy payout then the other view is 'why not' as you don't really have much to lose but everything to gain.
Going umbrella could be good in the short term but don't think it's not possible to incorporate a company and set up a bank account in a short space of time. I incorporated mine in a morning and returned the bank paperwork next day. Registering for flat rate VAT takes a little longer but most agencies will back date VAT payments once you have the certificate through.
Oh, and don't worry about the rate if it's been negotiated already. It's probably one to bear in mind in future but given what you've said, should be on the highest they're offering anyway.
If you're being made redundant then providing you're not going to receive a huge redundancy payout then the other view is 'why not' as you don't really have much to lose but everything to gain.
Going umbrella could be good in the short term but don't think it's not possible to incorporate a company and set up a bank account in a short space of time. I incorporated mine in a morning and returned the bank paperwork next day. Registering for flat rate VAT takes a little longer but most agencies will back date VAT payments once you have the certificate through.
Oh, and don't worry about the rate if it's been negotiated already. It's probably one to bear in mind in future but given what you've said, should be on the highest they're offering anyway.
To be honest it sounds straight forward to me as someone who has done the permie-contractor-permie route. Steady money today is better than the promise of bigger money tomorrow...
Stay in your staff role until you get redundancy. That way you will know for real if there is a robust contractor market for your skill set, i.e. if there's a real market then you'll pick up a contractor job then (March) no problem, you will launch into contracting with a war chest (redundancy payment), between then and now you can get all the mechanisms you need in place - i.e. ltd company or equivalent, insurance, accountant etc, etc. Build your contacts, do some longer term networking rather than panic (gis a job) type networking, try to extract some pre-redundancy training etc.
If it were an uncertain redundancy timescale and you hated your job I'd say get out now but with the picture you paint It's go the route above.
Stay in your staff role until you get redundancy. That way you will know for real if there is a robust contractor market for your skill set, i.e. if there's a real market then you'll pick up a contractor job then (March) no problem, you will launch into contracting with a war chest (redundancy payment), between then and now you can get all the mechanisms you need in place - i.e. ltd company or equivalent, insurance, accountant etc, etc. Build your contacts, do some longer term networking rather than panic (gis a job) type networking, try to extract some pre-redundancy training etc.
If it were an uncertain redundancy timescale and you hated your job I'd say get out now but with the picture you paint It's go the route above.
I went contract from a permie job and I love it. Yes its not guaranteed income for years on end but then again you aren't stuck in the same job for years on end.
Contract I am in started back in Nov and was for 3 months. I am still here but could end in October though I will probably get extended.
Nothing is nailed on till you get the paperwork through.
Being out of work for a while is a blessing not a disaster if you save for it.
Working away from home can be a pain, I spend more time with my housemates than I do my wife but if the money wasn't good I wouldn't be doing it. Weekends are great
You cannot pay yourself 100% of your day rate. Look at maybe 50% of it.
You don't need to go VAT registered straight away but you will eventually. Pay your VAT into a seperate account and pay it every 1/4.
You can setup a company within minutes and a bank account in about a week.
Make sure your outside of IR35. Check your contract for subsitiion clauses and working from home.
Get a good accountant.
You will also need pulic liablity insurance. Its cheap so don't worry about it.
All in all, go for it. You will enjoyu it and if you don't it no biggie just leave and get another one.
Just noticed the redundancy thing. I was in the same postion, redundancy threatned and the pay out would have been big but it just hung in the air as a constant threat. I eventually just got bored of waiting and went contracting. Guys I used to work with are still unsure about their jobs but won't do anyting till they know for sure. They could be waiting for ages and opportunity doesn't hang around.
Contract I am in started back in Nov and was for 3 months. I am still here but could end in October though I will probably get extended.
Nothing is nailed on till you get the paperwork through.
Being out of work for a while is a blessing not a disaster if you save for it.
Working away from home can be a pain, I spend more time with my housemates than I do my wife but if the money wasn't good I wouldn't be doing it. Weekends are great
You cannot pay yourself 100% of your day rate. Look at maybe 50% of it.
You don't need to go VAT registered straight away but you will eventually. Pay your VAT into a seperate account and pay it every 1/4.
You can setup a company within minutes and a bank account in about a week.
Make sure your outside of IR35. Check your contract for subsitiion clauses and working from home.
Get a good accountant.
You will also need pulic liablity insurance. Its cheap so don't worry about it.
All in all, go for it. You will enjoyu it and if you don't it no biggie just leave and get another one.
Just noticed the redundancy thing. I was in the same postion, redundancy threatned and the pay out would have been big but it just hung in the air as a constant threat. I eventually just got bored of waiting and went contracting. Guys I used to work with are still unsure about their jobs but won't do anyting till they know for sure. They could be waiting for ages and opportunity doesn't hang around.
Edited by Sexual Chocolate on Thursday 6th September 16:48
Edited by Sexual Chocolate on Thursday 6th September 17:10
Interview today then, good luck! Depending on how you feel after it, talk to an accountant straight away, then you will have all your facts and figures lined up to make a decision. A good accountant will speak to you (f2f, tel or Skype) initially for free and give you all the headers you need to think about in that first meeting. Get someone who is used to dealing with contractors and accountants, they will be able to advise on company formation (could be free if you become a client), salary/ dividend, business bank account, HMRC and the dreaded IR35.
Finally, if you are not certain if you will want to continue contracting after this forst opportunity you prob will be better going the umbrella route, but your accountant will advise on the costs/ tax efficiencies of each.
Good luck
Finally, if you are not certain if you will want to continue contracting after this forst opportunity you prob will be better going the umbrella route, but your accountant will advise on the costs/ tax efficiencies of each.
Good luck
Thanks everyone. I originally turned it down, but have got 'roped' back into it. They're currently mulling over a revised offer. Not a lot more money, but a longer notice period (which helps me, though I know it also helps them).
I'll come back if I accept, since I know I'll need some rapid advice of where to go next!
P.S. I thought the interview went really badly, but they liked me.
I'll come back if I accept, since I know I'll need some rapid advice of where to go next!
P.S. I thought the interview went really badly, but they liked me.
IMO, the notice period means very little.
If there is no work, they tell you not to come in, and you can't bill for the day. This should be a fundamental part of your contract (and obviously you can say the same to them, I am not coming in today ..)
You will be a business providing a resource, not an employee contracted to work 9-5 or whatever. You may have a 'notice period' but if things get feisty then this really doesn't mean much.
IMO, if your contract guarantees pay without work then you are putting yourself at risk of being caught under IR35..
It is worth getting someone like qdos or bauer & cottrel to check over your agency contract to cover these issues.
If there is no work, they tell you not to come in, and you can't bill for the day. This should be a fundamental part of your contract (and obviously you can say the same to them, I am not coming in today ..)
You will be a business providing a resource, not an employee contracted to work 9-5 or whatever. You may have a 'notice period' but if things get feisty then this really doesn't mean much.
IMO, if your contract guarantees pay without work then you are putting yourself at risk of being caught under IR35..
It is worth getting someone like qdos or bauer & cottrel to check over your agency contract to cover these issues.
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