From permy -> contracting

[old.user4556]

All,

I've got to a point in my life where i'm skilled enough to want to become a self-employed contract programmer. I'm only 26 with no ties (other than a mortgage), and the glitzy lights of London and hefty "£500 a day" contracts beckon. My older colleagues with families say "if i was you at your age, i'd be contracting ages ago".

I'm just a little unsure about going about it? Who's done it, and what are the pitfalls of contracting and general self-employment? People talk of umbrella companies - what are these, and why use one? Do i need an accountant? What is IR35? Do I just apply for the job as normal, or do I go through an agency? I'm just unsure how to get it off the ground.

Currently I work in IT for a large bank (remaining nameless), and the package is very very good (between share options, bonuses, pension, private health care and staff benefits) - so all this would be lost, I understand that.

Musings/thoughts/advice?

 

[Chilly]

I've done a small amount. What I will say is that it might be good money, but its good money for a reason. You have do a lot of the donkey work (tax, mostly) that your employer would do (or pay someone to do it for a cut, as is normally the case).

Also, since you will be dealing with more employers than most people you will get more shit ones. I've been lucky that the few contracts I've done since leaving Uni have all been quite undemanding (I only charge £150 a day anyway) and I can spread the work out and have time to dos about in the sun. You will definitely end up with the odd bad apple that will be slow, keep changing their mind, farting about paying you and the rest of it.

Working properly on contract means a shitload of travel - be prepared to live a quarter of your life on the m25

 

[Raven]

I deal with the accounts for contractors for one of the larger agencies in the country for IT personnel. If you are lucky you can get your £500 a day paid as a LTD company plus your expenses, which depending on your contract could be anything (i have seen people on 2k+ a week expenses if they have to stay in hotels, traveling up and down the country and what not)

You are pretty much guaranteed to get work every day but tbh on £500 a day you can pick and choose when you work, obviously some will require your 9-whatever 5 days a week but some are pretty relaxed.

 

[DaGaffer]

Personally I didn't enjoy contracting much. The money is fine, but if you regard work as a social, as well as economic part of your life, you lose a great deal. Before IR35 it was a little bit different, but it's rare to be contracting in one place for ages these days, although there are contract teams of course.

 

[Malecheon]

What's your motivation for wanting to contract ? Do you just want a change of lifestyle, new challenges and a new place to live, or is it purely financial ?

I've not contracted extensively, but at the company I work at now, we have a lot of people that have contracted, so I'm basing this off their experiences as well. If you're doing it just for the money, then it's worth it, as you can make far more in a short space of time than you're likely to as a permanent employee at any company. Also the range of experience you get can be invaluable later in your career.

If like DaGaffer said though, you view work as more than just 'turn up, get paid, go home' and want to enjoy the social aspect and also feel a part of something, then contracting may not be for you.

 

[Guest]

£500 a day, cool but tbpfh the market is saturated with pimps (recruitment consultants) you will know what i mean about pimps if you start contracting, these guys will promise the earth and deliver jack shit.

If they say the rates £40 an hour then after your first wee kyou gert your contract delivered to your house and it styates £35, what can you do.

pimps, gotta love em

also i once didnt get paid for a whole 14 weeks by one set of money grabbing pimps


theres a forum at Contractor UK - for UK IT Contractors, IT Contracting and Computer Freelancers where all your quations will get answered by people who have been contractors for years.

 

[mace]

I've been a contractor for almost 10 years now. I'd advise you to go contracting now and stop contracting by the time you're 36 and get back in to the permie market.

Advantages of contracting:-

1. Money
2. Variety

Disadvantages of contracting:-

1. There is little respect for contractors. e.g. your knowledge/advice is often ignored.
2. You are often treated as an outsider even if you've contracted with the client for years.
3. Lack of training
4. Unable to advance above team lead/architect level.
5. Lack of employment rights e.g. if you get in to an argument with a permie (any permie) then you can quickly be shown the door.
6. You are generally expected to work harder than permies.
7. Stress from various immoral government attempts to increase their tax take from contractors whilst not improving the employment rights.
8. It's difficult to get back in to the permie market as there's a perception that you'll not be loyal to the company.
9. You'll get used to the money and the money doesn't typically increase by much over the years in the same way that it would as a permie.

In other words contracting will make you rich, but it makes few people happy.

You're best off starting a limited company rather than joining an umbrella company. An umbrella company is a company specifically set up to allow multiple contractors to contract through it as opposed to a limited company which usually allows only 1 contractor to contract through it. The advantages of an umbrella company used to be that a lot of the admin was done for you and the admin costs e.g. accountancy costs could be reduced. However, the government has effectively put managed services companies (i.e. umbrella companies) out of work.

IR35 is an Inland Revenue regulation that if your contract resembles that of a permanent employee i.e you are under the effective control of the client then your limited company should pay the same amount of national insurance as if you were a permanent employee. The Inland Revenue has taken a number of contractors to the Tax tribunal over this but hasn't won many cases up to now due to the difficulty of establishing the level of control in each individual case.

Most contracts are found via Jobserve (which typically involves the end client contacting an agency who then advertises for candidates, forwards on CVs and handles the drawing up of contracts and payment of contractor), but there are a lot of contractors who find direct contracts as well.

 

[Clown]

Excellent first post. Hello whoever you are.

 

[Scouse]

Good post. Been contracting for 8 years myself and I'd say this about the "disadvantages" tho:

Disadvantages of contracting:-

1. There is little respect for contractors. e.g. your knowledge/advice is often ignored. << But what do you care as you're a contractor - you're there for the wedge, not to be praised.
2. You are often treated as an outsider even if you've contracted with the client for years.<< Yep, people can be jealous! But hopefully you're there to earn cash first and foremost. I currently have a great working environment tho...
3. Lack of training << pay for it yourself! I go to India for mine - great holiday!
4. Unable to advance above team lead/architect level. <<but get paid twice what they're on anyway
5. Lack of employment rights e.g. if you get in to an argument with a permie (any permie) then you can quickly be shown the door.if you want "employment rights" don't go contracting ffs! it's all about MONEY!
6. You are generally expected to work harder than permies. << IMHO that's generally not too hard
7. Stress from various immoral government attempts to increase their tax take from contractors whilst not improving the employment rights. << yep, government's are fuckers but who wants "employment" rights anyway, capiche?
8. It's difficult to get back in to the permie market as there's a perception that you'll not be loyal to the company. <<dunno, If I play my cards right I'll be quitting before I'm 40 anyway. I've just paid off my first house (I'm 33) and am off travelling round the world for a couple of years when I've saved a wedge - swings and roundabouts...
9. You'll get used to the money and the money doesn't typically increase by much over the years in the same way that it would as a permie. <<but it doesn't matter as you earn 2 years salary for every 1 as a permie anyway - and unless you're retarded you'll whack a LARGE lump of it into your "early retirement" fund

In other words contracting will make you rich << disagree strongly - it'll never make you "rich" - just "financially comfortable", but it makes few people happy.true! - but I'd rather be unhappy on double the money

I love it tbfh. I've had about 6 long-term contracts and most of them have been at large companies who use a lot of contractors - so the permies don't hate me.

The one time I've been at a company where the permies were shit to me I quit - safe in the knowledge that, because of a bit of self-discipline, I had two years worth of salary stashed away in the company account - so I never have to work in a job I hate.

Tip: NEVER, EVER discuss your rate with anyone. Figure out what you're happy working for and stick with that. Discussing your rates with other people is a recipe for disaster.

Other Tip: Agents are FUCKERS. All of them. No exceptions. They'll scream down the phone at you that you'll "never work in the industry again" and then ring back that afternoon with two job offers. They will also try to skank you on the rate. If the client says he's prepared to pay £500/day to you and the agent rings up saying the client will only pay £400/day then you can bet your bottom dollar the agent is trying to take an extra £100/day off you.

I'm not on such rich rates but the same principle applies

Anyway - my advice is: Go for it m8. If you hate it you can always get another job


Oh yeah. And ContractorUK is a pretty good website. The forums are full of racist mercenary wankers but they still give good advice...

 

[throdgrain]

Hmm. Ive been doing nearly a grand a week last 6 months, but I had to work 35 hours a week sometimes

Sounds like good money ...

 

[old.user4556]

I love you Scouse, we're on the same "grab that cash with both hands and make a stash" page

 

[mank!]

out of interest who are people contracting with? i've just started and found it alright, just don't understand the pay/tax side of it whatsoever.

i think the place i work has a lot of contractors so we're treated decently enough