Sub contracting marp up fee Sub contracting marp up fee
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    Default Sub contracting marp up fee

    I am an IT contractor with a UK limited company and planning to sub contract some work to other consultants.
    Would I still make a profit with a mark up fee of 20%?
    So, if I pay the sub-contractor say £500/day and I charge the client £600/day (20% mark up), would I still make a profit considering corporation tax, dividend tax etc?

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    I'd spend more time understanding how to run your company and learning the absolute basics about it's finance and general commerce. Will I make a profit?? Really?

    I'm glad you posted this crap in general.
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    Quote Originally Posted by mav2005 View Post
    I am an IT contractor with a UK limited company and planning to sub contract some work to other consultants.
    Would I still make a profit with a mark up fee of 20%?
    So, if I pay the sub-contractor say £500/day and I charge the client £600/day (20% mark up), would I still make a profit considering corporation tax, dividend tax etc?
    You're out of your depth mate, leave it to someone who knows what they are doing.

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    Quote Originally Posted by mav2005 View Post
    I am an IT contractor with a UK limited company and planning to sub contract some work to other consultants.
    Would I still make a profit with a mark up fee of 20%?
    So, if I pay the sub-contractor say £500/day and I charge the client £600/day (20% mark up), would I still make a profit considering corporation tax, dividend tax etc?
    Yep, you'll make a profit of around £2million a year. Well done you.

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    Even a small child knows what profit/loss means and you call yourself a IT contractor?
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    Quote Originally Posted by mav2005 View Post
    I am an IT contractor with a UK limited company and planning to sub contract some work to other consultants.
    Would I still make a profit with a mark up fee of 20%?
    So, if I pay the sub-contractor say £500/day and I charge the client £600/day (20% mark up), would I still make a profit considering corporation tax, dividend tax etc?
    You'll make £100/day before tax. Don't forget expenses and cost of doing business factor in as well.
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    Quote Originally Posted by mav2005 View Post
    I am an IT contractor with a UK limited company and planning to sub contract some work to other consultants.
    Would I still make a profit with a mark up fee of 20%?
    So, if I pay the sub-contractor say £500/day and I charge the client £600/day (20% mark up), would I still make a profit considering corporation tax, dividend tax etc?
    Broadly yes - see other posts about lack of business expertise.

    In particular, have you considered payment terms and cashflow. Your contractors will demand regular payment. Do you have the reserves to pay them when the client is late with invoice payment.
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    Quote Originally Posted by northernladuk View Post
    I'd spend more time understanding how to run your company and learning the absolute basics about it's finance and general commerce. Will I make a profit?? Really?
    Quote Originally Posted by stek View Post
    You're out of your depth mate, leave it to someone who knows what they are doing.
    Quote Originally Posted by fullyautomatix View Post
    Even a small child knows what profit/loss means and you call yourself a IT contractor?
    Please give him a break. Based on his login name, I'm assuming he's only 12 or 13 years old....

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    1 Million Rupees!
    I was an IPSE Consultative Council Member, until the BoD abolished it. I am not an IPSE Member, since they have no longer have any relevance to me, as an IT Contractor. Read my lips...I recommend QDOS for ALL your Insurance requirements (Contact me for a referral code).

  10. #10

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    Quote Originally Posted by mav2005 View Post
    I am an IT contractor with a UK limited company and planning to sub contract some work to other consultants.
    Would I still make a profit with a mark up fee of 20%?
    So, if I pay the sub-contractor say £500/day and I charge the client £600/day (20% mark up), would I still make a profit considering corporation tax, dividend tax etc?
    If you buy a service at X and sell it at X+Y then, yes, you'll make a profit. The profit will be subject to tax, however, you will still end up with more money than you started.

    But .... if you are considering sub-contracting then that is the least of your problems.

    If you are really going to sub-contract then you had better ensure that for every hour that your consultants bills you, you can pass that onto the end client. A single day extra that the consultant charges you that you cannot pass to your client will wipe out 1 week of profit.

    If your consultant decides to take-off after one month, you'd better know how you can replace him. End client won't care. You will still need to deliver what you have signed up to.

    And if your consultant produces sub-standard work, you'd better make sure you have a robust agreement in place to handle disputes. You don't want to end up providing 3 months of unbillable time to fix someone else's mistakes.

    ..... all in all for what would likely to be about £70 per day in your pocket it's a lot of risk. Which is why consultancies charge £800+ a day but pay their staff a couple hundred.

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