New to contracting - a couple of questions before I start...

[murd]

Hi all,

For the past 7 years since graduating university (computing science) I have been working for a tiny software company just outside London. My main role is as a java & c# developer with a fair amount of DB admin stuff thrown in (mostly postgresql and MSSQL). I've also done some project-management and system admin stuff (*nix) as well.

Sadly I don't see this company expanding anywhere in the next few years and have decided the time is now right to get out. As I'm (relatively) young, single and financially secure I'm keen to try contracting to see how I find it. I've had a read through a number of articles on this website but still have a couple of questions:

1) I do not currently have a ltd. company set up, is this something I would need to do before applying for work or can it wait until I've secured an offer?

2) When I look at job listing such as those on contractuk.com's job-search I assume these are all going through an agency? If I was to apply for one of these do I then what is the general procedure after that, would I deal with an agent for the most part as well as having an interview with the company?

3) I've seen sites such as contractoralliance.co.uk which have offers such for 3rd party companies who will look over contracts, I assume in an effort to avoid IR35. Are these offers worthwhile?

4) Is it worth me simply selecting an contracting agency and letting them deal with a lot of the searching/advice and if so, any recommendations for such a firm for someone in my position?

5) Any other advice?


If it's any help I can post a copy of my cv (with personal information redacted).

Thanks in advance

[northernladuk]

You could try doing a bit of research first. Check out all the links to the right paying particular attention to the new contracting guides. Google is also your friend.

1) I would say you need a company setting up as that who the contract will be with. If it is with you named you are looking at IR35 problems.

2) Yes

3) Yes. Qdos and Baur & Cotterel (I will hav eto learn how to spell it one day) do it as well.

4) No, you do the hard work. The agents are nothing more than pimps out of every penny they can. You and only you are incharge here. They will ring you for a role if you have your CV with them from time to time or find you on sites but do not rely on them at all.

5) Where do we begin? Keep an eye on the forums, search back and get applying. Experience is what is needed here.

I would say you need to prepare for a shock. If you have only worked in one small company you are going to find it tough going having to adapt to large corporates etc. Not only is it a new environment for you you have to concentrate on not looking like a permie so double whammy. You may look like a one trick pony to an agent because of your lack of placings so expect a bit of a wait for your first contract unless you are niche or some other mitigating point in your favour.

[murd]

Thanks for your advice, especially your final paragraph, it's much appreciated.

I have spent a good time reading through the various guides but I couldn't find any advice on whether to get a ltd company set up before applying for roles or to wait for an offer.

Thanks again.

[northernladuk]

Thanks for your advice, especially your final paragraph, it's much appreciated.

I have spent a good time reading through the various guides but I couldn't find any advice on whether to get a ltd company set up before applying for roles or to wait for an offer.

Thanks again.

It can be done very quickly, only a few days if you get an off the shelf one but you will have a lot on your plate once the ball starts rolling so might be worth getting it sorted in advance if you are totally sure you are going to go contracting. Finding and accountant and reading up on VAT and the Flat Rate Scheme will also make the first week a little less stressful.

[Zippy]

Or just go with an umbrella co until you decide contracting is for you.

[murd]

Or just go with an umbrella co until you decide contracting is for you.

Thanks Zippy, I've been having a read about the umbrella vs ltd and it seems to me that although a bit of extra hassle, generally speaking ltd is always going to be worth it? There are two SJD accountancy offices within 20 mile of me so if I do decide to have a crack at the contracting route I think I will go and speak to them - they seem to have an good reputation. I've managed to find a few threads on here about them, however it's not as easy as it could have been as just searching "SJD" is "too short" for the forums search facility!

Wasn't thinking earlier, of course I can do a "sjd site:forums.contractoruk.com" google search and get better results.

[Zippy]

True. You'll always make more money with a ltd, even in the unlikely event you are inside IR35. The accountants fees seem to compare favourably with umbrellas too. I suggested it as a way of playing yourself in to the contracting market without the worry of paying HMRC/keeping books etc (although the accountants who post on here seem to offer a comprehensive advice service)
Best of luck with your new venture!

[northernladuk]

Thanks Zippy, I've been having a read about the umbrella vs ltd and it seems to me that although a bit of extra hassle, generally speaking ltd is always going to be worth it? There are two SJD accountancy offices within 20 mile of me so if I do decide to have a crack at the contracting route I think I will go and speak to them - they seem to have an good reputation. I've managed to find a few threads on here about them, however it's not as easy as it could have been as just searching "SJD" is "too short" for the forums search facility!

Wasn't thinking earlier, of course I can do a "sjd site:forums.contractoruk.com" google search and get better results.

It doesn't matter where SJD's offices are really. I have been with them a number of years and never been near the place. They always answer mails promptly and can speak to them if need be so face to face isn't needed.

[Wanderer]

1) I do not currently have a ltd. company set up

2) When I look at job listing such as those on contractuk.com's job-search I assume these are all going through an agency? If I was to apply for one of these do I then what is the general procedure after that, would I deal with an agent for the most part as well as having an interview with the company?

3) I've seen sites such as contractoralliance.co.uk which have offers such for 3rd party companies who will look over contracts, I assume in an effort to avoid IR35. Are these offers worthwhile?

4) Is it worth me simply selecting an contracting agency and letting them deal with a lot of the searching/advice and if so, any recommendations for such a firm for someone in my position?

5) Any other advice?

1. As Zippy says, an umbrella is an easy way to get a soft start to contracting and once your initial (say 3 month) contract is up, you can switch to an LTD at renewal/new contract time. If you are making good money like > £250-500/day from day 1 or you are feeling bold then you might want to go and join the PCG who can get you setup with a package including accountant, insurance, Limited company and advice to get you kick started. Just avoid anything that involves a "scheme", foreign countries or currencies, loans, trusts or whatever. They are widely considered to be risky by people here.

2. Agents will normally do the introduction to the client and will generally want to negotiate a rate with you. They will then add on a markup and pass that on to the client. Agents get up to some stupid tricks that you should be aware of. The main ones are fishing for references, bullying people into opting out and taking extortionate percentages of what the client is paying (typically they should take anything from 5% to 20%). Agents will try and hide their margin from you and they love ripping off noobies like you, so discuss the rate with the client if possible (some clients are happy to discuss it, others will insist that you negotiate with the agency).

3. Professional IR35 reviews are absolutely vital. Don't presume you are IR35 caught - if you can avoid IR35 then you can avoid a LOT of tax. There are IR35 calculators out there - plug in some numbers and see how much you could save if you can avoid IR35 and make sure your contract rate is set correctly for inside/outside IR35 contracts.

4. Talk to each agency as if you are a pure virgin, don't tell them which other agencies you are dealing with or which jobs you've applied for or they will just ring up and try and get their own people in there in front of you.

5. The rewards are great but it's not for everyone. Come and get some it if you think you are good enough, but remember that it's a mean world out there and we're a bit of a grumpy bunch here so you will need a thick skin. It looks like you've got past Northernladuk who is our resident bouncer so you're off to a reasonable start. Good luck!

[Witty]

I would say you need to prepare for a shock. If you have only worked in one small company you are going to find it tough going having to adapt to large corporates etc. Not only is it a new environment for you you have to concentrate on not looking like a permie so double whammy.

My first post on these forums.

I was just browsing the post and saw this. Spot on. I've just finished my first 3 month contract and the 'shock' was massive. I was in a smaller company beforehand as well and to go into a big company was very tough. They had technical procedures that I thought were absolutely shocking and I made the BIG mistake of questioning them. This caused a little bit of strain with the bosses. It's not my place as a contractor to make suggestions. You get treated totally differently as a contractor - i.e. I couldn't use the copier or fax just in case I used it for business use - limited access to the office - I could go on.

My tip: when you get up in the morning put on your contractors head and not your employee head.