Just landed my first agency contract job...

[Darkcat]

'Evenin all!

First post - be gentle!!!

Ok a bit about my background, ive been self employed for the last err.. 14+ years, doing a half/half mixture of IT (pc repair. network management, IT management) and web design/developemnt and graphic design. Mostly as a freelance, some as perm (although i get bored fast!)

SO, since shutting down my highstreet IT retail shop in september '11, i had to find a job fast, and took the first one i could, as an underpaid web dev / graphic designer.
suffice to say i was looking for another job from only 2 months into that one.

6 month later (now) after several interviews, i have landed my first agency contracting role.

Ive had to go .Ltd (finally) in order for this to work...

anyhoo - so a few questions!

Firstly, how in god's name do i pay myself??? (I know its a paperwork thing) ive been self employed for ages and the SA is easy, but now being a director, god knows what im supposed to do, theres lots of conflicting information out there with dividends etc etc....!!

next - ive got a 3 month contract, at a decent day rate, however during the initial conversations and the interview there was no discussion of how many days a week! - i assumed 5.
anyway, i now find out (having just been called from the agency to confirm the company wants me) that they only do a half day on fridays! this basically leaves me £400 down per month on what i expected to get.
should i argue this? should i charge more than half a day?

lastly-but-one
Ive been sent the dreaded "opt out" form.
Yes / no??!!!!!!
and will NOT opting out, damage my chances with this(or other) agencies in the future?

and finally! (for now)
So, im working away at my contract (hypothetically) and start considering my next move.
How / when should i start searching for my next contract? I was contacted by this current agency after the found my CV on TotalJobs, in fact 3 separate people from them about different jobs over the same month!


Thanks in advance!!
Peter

[oscarose]

'Evenin all!

First post - be gentle!!!

Ok a bit about my background, ive been self employed for the last err.. 14+ years, doing a half/half mixture of IT (pc repair. network management, IT management) and web design/developemnt and graphic design. Mostly as a freelance, some as perm (although i get bored fast!)

SO, since shutting down my highstreet IT retail shop in september '11, i had to find a job fast, and took the first one i could, as an underpaid web dev / graphic designer.
suffice to say i was looking for another job from only 2 months into that one.

6 month later (now) after several interviews, i have landed my first agency contracting role.

Ive had to go .Ltd (finally) in order for this to work...

anyhoo - so a few questions!

Firstly, how in god's name do i pay myself??? (I know its a paperwork thing) ive been self employed for ages and the SA is easy, but now being a director, god knows what im supposed to do, theres lots of conflicting information out there with dividends etc etc....!!

next - ive got a 3 month contract, at a decent day rate, however during the initial conversations and the interview there was no discussion of how many days a week! - i assumed 5.
anyway, i now find out (having just been called from the agency to confirm the company wants me) that they only do a half day on fridays! this basically leaves me £400 down per month on what i expected to get.
should i argue this? should i charge more than half a day?

lastly-but-one
Ive been sent the dreaded "opt out" form.
Yes / no??!!!!!!
and will NOT opting out, damage my chances with this(or other) agencies in the future?

and finally! (for now)
So, im working away at my contract (hypothetically) and start considering my next move.
How / when should i start searching for my next contract? I was contacted by this current agency after the found my CV on TotalJobs, in fact 3 separate people from them about different jobs over the same month!


Thanks in advance!!
Peter

Well done and good luck!

[quackhandle]

You will probably find that most people will take a small salary > 8K with expenses and pay yourself the rest in dividends but I would have thought this would have been the same when running a retail shop, although I have no experience of this. Being a contractor you can pay yourself what ever you bloody like but whether HMRC will like you doing that is another matter. You need to read the all guides on here - they are invaluable - and get yourself an accountant - did you not have one when running a shop?

Opting In/Out seems to be a matter of conjecture on here, some people do, some don't. PCG even recommended that I opt out with one contract, so it's down to you and your personal situation/choice really. Get up to speed on IR35 and SonOfIR35 as well, although again, some contractors take all precautions against this some don't. I''ve found that with contracting knowledge is definitely power.

I have found that whether your in a contract or on the bench you should always be looking for your next gig.

Good luck

qh

[Darkcat]

Thanks! ill see what everyone else has got to say...

and get yourself an accountant - did you not have one when running a shop?

no, i was running as a sole trader, the paperwork was simple, why waste £500 a year on an accountant! they seem to be able to charge a extraordinary amount to add things up.......

also - i hate accountants.

[Contreras]

First post - be gentle!!!

Fat chance! You're only getting away lightly so far because it's past some peoples bedtimes, just you wait...

Firstly, how in god's name do i pay myself???

The company needs to be PAYE registered in order to pay salary, which can be done online at the HMRC site. A minimum of £7500-ish per annum will get your NI stamp whilst incurring no tax (probably). Top up with dividends for which the company doesn't need to be PAYE but does need to issue a dividend certificate (to yourself), templates on the net. Bear in mind that dividends are paid out of company profits *after* corporation tax has been paid. Precise level of salary vs. divvies depends on your situation.

they only do a half day on fridays! this basically leaves me £400 down per month on what i expected to get.
should i argue this? should i charge more than half a day?

Have you signed a contract yet?

Fwiw, I think if you wanted to charge more than half-day that would be reasonable but let's say the stance could be tell agent that a day-rate is a day-rate regardless of hours worked and then negotiate down from that position. As a first timer the agent may well be screwing you anyway so chalk it up as experience.

One option you could negotiate to only provide services 4 days a week at the original agreed day rate, leaving you with a day off to focus on securing other revenue streams... (you mentioned web/graphic design, etc.). Agent probably won't like this as they lose out on commission so it's a bargaining position even if not your preferred option.

Ive been sent the dreaded "opt out" form.
Yes / no??!!!!!!

Do you have any idea how often this is discussed here and elswhere?

There's plenty of info on this site and elsewhere, including PCGs free guide to contracting. Read up on IR35, Allowable expenses, VAT registration and the Flat Rate Scheme. Consider becoming a PCG member.

Speak to an accountant (or two!) to point you in the right direction or you will be in a mess very quickly.

and will NOT opting out, damage my chances with this(or other) agencies in the future?

[chef]

1) Get an accountant, NOW, first thing you do... don't read any more of this post just go do it...

2) Accountant should advise you on how to pay yourself, PAYE, Dividends etc. that's why you pay the accountant to advise you on such things. They should also help or atleast advise in setting up a company bank account as cmpany money is not your money so no paying yourself direct into your bank account. Agency pays your co., your co. pays you, that's how it works.
3) read the guides on here and get familiar with IR35, in short terms it's the difference between getting a temp in to do some work "here do this, be in at 9am, follow these steps a,b,c to do the work" to getting a plumber in to fix the plumbing "err. fix my plumbing", it's alll about direction and control, no direction or control and you're seen as your own company, lots of direction and control, your seen as a permie in disguise of being a company and trying to pull a fast one over mr taxman.
4) No opting out will not damage your chances with anyone else including current agency no matter what the agent tells you, they are fickle and will forget everything in the past if it means you will earn them money in the present.
5) Your contract should state day rate, it should also state based on an expected x days per week over a period of x days or between dates x and y and should also state (in an ideal world but rarely happens) what rate you would get outside of the normal weekly working days/hours rate. If it says 4.5 days per week then that's what it is, I would guess it will say 5 days or 40hrs. So if client co. take half day friday and you've already done your 40 hrs then you bill for 5 days. If the contract says 5 days and not 4.5 then you bill for 5 days.
6) not sure what you do but losing 400 over a month for not working 4xhalf days suggests you're on a daily rate of £200. Generally speaking for IT that is not a decent rate as running a limited incurs more costs and more tax than self employed but as I say I have no idea what it is you're contracted to do.

HTH

Chef

[northernladuk]

It never ceases to amaze me how people will jump in to contracting, get a contract..... but fail to even grasp the basics like how to get their money out???? Newbie questions I can get but 'How do I pay myself???' Seriously???

OP you need to read the newbie guides to the right hand side. Everything you ask and a ton of stuff you haven't even though to ask are in there. Good idea to actually research something before you start it so need to catch up quick or it will cost you dearly.

[Wanderer]

Firstly, how in god's name do i pay myself???

Any way you like!

It's vital that you get an accountant, VAT Flat Rate Scheme registered, PAYE setup and get some advice on expenses. You WILL need an accountant to do the year end for the company and it will cost pretty much the same amount to pay in a lump sum at the year end as it will to engage one now so DO IT.

As a hint though, take an annual salary of £7,488 or £624 per month. If you have already taken some other income this financial year then you will have to reduce this. If you bugger it up then you will pay a lot more tax than you have to - hence the need for an accountant to stop you making a mess of it.

The salary and expenses are set against company income to leave a profit on which your company pays 20% CT. The company then pays this money out as a dividend and there is no further tax to pay unless you hit the higher rate tax bracket. If you are going to hit the higher rate bracket then people often retain the money in the company without paying it out, that way it can be paid out next year if you are having a lean year and will be under the 40% rate or used to invest in a business venture.

Done right, you can save a lot of tax. Done wrong, you get into a tulipload of trouble with fines and paying tax you could easily avoid. Did I mention you want an accountant to help you out here?

there was no discussion of how many days a week! - i assumed 5. they only do a half day on fridays! this basically leaves me £400 down per month on what i expected to get.

Hell yeah, put your business hat on and negotiate with them.

Ive been sent the dreaded "opt out" form. Yes / no??!!!!!!
and will NOT opting out, damage my chances with this(or other) agencies in the future?

No, don't opt out. Read the sicky in Business/Contracts.

How / when should i start searching for my next contract? I was contacted by this current agency after the found my CV on TotalJobs, in fact 3 separate people from them about different jobs over the same month!

4 weeks from the end, speak to the client and see if there are any prospects of an extension. Regardless of what they say, start looking too because you may get a better offer.

Good luck

[Darkcat]

Thanks for the advice guys! (well, most of you)

I have done a lot more research and had a long discussion with my accountant, all is good on that end.

I have decided NOT to "Opt out"

I have just received the contract from them, and what i was told on the phone, and what i am reading seem to be completely different thing!!!
(i have not signed anything yet)

a few more little questions for you -

1. I asked the agent what would happen should I complete early, which isn't unlikely, given what they want. She said - as it was a 3 month contract that I would be paid up to the end of the contract.
However the contract states, that "The agreement shall commence from the date hereof and shall continue until the completion of the Service Provider Services to the reasonable satisfaction of the Client at which time this agreement shall expire automatically unless previously terminated by the Employment Business or the Service Provider.."

basically saying when I finish, I'm out the door....

2. I have not got a written schedule of requirements from them - although i do understand basically what they need, it may be a lot bigger or smaller of a job once i get my teeth in - should i demand this before signing anything? my heart says for gods sake yes!

I'm sure I'm being mildly screwed... !!

[Wanderer]

I have just received the contract from them, and what i was told on the phone, and what i am reading seem to be completely different thing!!! (i have not signed anything yet)

That's never happened before!

1. I asked the agent what would happen should I complete early

I think we have established from your comments above that they will say anything that comes into their heads to "sell" you the contract. None of it means a tulip unless it's written in the contract.

2. I have not got a written schedule of requirements from them

Is the contract to deliver a fixed piece of work or is it to work for them for up to 3 months, 5 days a week?

If the contract doesn't state a deliverable then you just go in there, do the work and invoice for the days you work. It's not your problem if the scope of the project creeps or it turns out to take twice as long as you expected - in fact it's good for business because you get some more work out of them. Do keep an eye on the end result and try to push back any scope creep to the next phase of the project but that's just good working practice anyway.

I'm sure I'm being mildly screwed... !!

Probably.

Read your contract, there will be 30 pages of bulltulip which you will have to read. Here is a check list of a few very important things you need to pick out of it:

1. What's the pay rate and contract duration?
2. Is the contract outside IR35, look for RoS and MOO (accountant or professional review required)
3. What are the payment terms, can you invoice them weekly?
4. Is it an hourly rate or daily rate and how many hours are you expected to work?
5. Is there any contractual restraint preventing you from working with the client in future? Almost certainly yes so how long is it, what are the terms?
6. Does the contract mention the "opt out" of the "agency regulations"?
7. Did they sign the contract or are they waiting for you to sign it first? Watch it because one of their stupid tricks is to "forget" to countersign it and send you a copy.

Not opting out means the agency are bound by law on certain contract terms, specifically they can't refuse to pay you because the client didn't pay and also they have restrictions on any restraint of trade in 5. above. If they have clauses in the contract which don't comply with the law then they are unenforceable (though they will try to bluff you that they are).

Good luck, you are on the right track.