> You should have savings to cover at least 4 months of
> your usual expenses. You will spend some money
> establishing a company. It may take several weeks to
> find your first contract.
> A service like www.formationsfactory.co.uk will make the
> incorporation process easy.
Setting up a bank account is pretty easy too, and I'm not sure why you'd use a third party for it. 15 minutes of filling out HSBC forms did it for me.
> Finding your first client might be hard.
If you're just getting in to it, start with a recruiter. They'll eat in to your contract rate, for sure, but they'll also have a far better visibility of the market than you, they'll get better feedback from clients than you, and they'll help chase your invoices and so on. I worked as a contractor for a long time and never had a bad experience with a recruiter, where the OP seems to have had a dreadful time...
> rates
> IR35
When I arrived in London (as a foreigner fresh off the boat) I had about 4 weeks worth of money. I couch surfed and worked the recruiters endlessly and landed a job in 10 days. It wasn't the greatest job but it was a start - a 3 month contract building a new system. It's amazing how motivated you can be when you see your bank accounts date with destiny. After the contract was signed I used the remainder of my cash and got a 'bedsit' - a tiny room - and asked for my first weeks pay to be paid on Friday afternoon. Within a month I had a place to rent, a social scene and was busy working on getting the next job.
So if you don't have any dependents I think you can take the high risk plunge and go for it. Certainly the best decision I ever made in my entire life - and by that I mean life changing in a way that I cannot even imagine how my life would have been had I stayed on my prior path.
The only thing I'd expand on is that there is a big difference between permy recruiters and contract recruiters. The best contract recruiters know that they will have roles to fill in 6 months time, so they're going to want to keep you on their 'roster'. The best contractors know that contract recruiter help you make more money.
Recruiters are annoying but some companies will only hire contractors through recruiters so it's worth spending a little time dealing with them (but don't hesitate to stop talking to any that isn't professional, there are plenty others).
For the rate it depends on the language and the industry as well, java in finance is always going to be higher than python in a startup but if it's below 300/350 you can walk away.
I stopped being a contractor last year, i'll have to check those dividend tax changes
Really? In experienced level dev jobs? Most of the people I know are on two months notice. Three months, which is what I'm tied to, doesn't seem uncommon for senior devs/DBAs/similar.
You can only be forced to give a notice period up to your payroll pay frequency. So for example, if you get paid monthly then you cannot be sued for failing to give > 1 month's notice!
... But of course, most people will still honour their company's "3 month notice" (or whatever) period out of good faith, as it's generally a good idea not to burn bridges.
That must be very dependent on your company sector and market. Also, notice is generally reciprocal, so a bigger one is generally considered a benefit - as practically, the company has to pay you when they terminate you, but you can almost always negotiate a much shorter notice when you resign.
Where I worked, when the decision was made that someone was no longer going to be there, they didn't spend much time in the office.
You actually can - you have to select from a pre-given list of share classes, though, but I did a priority-and-ordinary shares setup thing online via companieshouse - unless that's not what you meant?
One other thing to bear in mind - if you apply for a job in Banking the credit history, criminal records, references etc check will take 2-3 weeks anyway.
That seems pretty low to me. Here in the Netherlands contract developers get about the same, between £400-£600/pd (actually between 70~90 euro/hour) but cost of living is way lower than in central London.
Ah, boom times. Don't you just love 'em, and miss 'em when they're gone?
edit : original post had a calculation mistake in it.
> change how dividend tax works
https://www.crunch.co.uk/blog/contractor-advice/2015/07/09/w...
IMHO, just get an accountant.
Here is a good guide from a gov.uk site [1]
You should be aware that there is no obligation for limited companies to have a business bank account. However, it is usually a good idea to have one.
Furthermore, you don't need to be a UK resident to open a business bank account but most banks will not deal with you due to higher costs and fraud concerns.
P.S. your company does not require a UK-based bank account. You can open a business bank account in your country in the name of your LTD company in the UK. You will need to have your company documents (Certificate of Incorporation and Memorandum & Articles of Association) apostilled.
Also the advice about marketing yourself is crap. Recruiters are the #1 way of landing contracts. They're finders and you're paying a finders fee for that service. They have the big guys with oodles of cash to get hold of.
If you can't get a gig through a recruiter then you either don't have skills that are in demand or don't come across as someone who they'd want to sell.
If you don't go through the recruiters, you end up being left with the cheap arse companies that won't pay up anyway. If you're sneaky about it, you and the recruiter can get the client to pay the finder's fee.
Once you're in the system, build up a network of contacts and then move through that rather than using the recruiters. I'm doing that at the moment and ended up taking a perm position that was better paid than the contract rates were (without all the hassle of IR35, rolling a Ltd etc)
I've never used a recruiter, the companies I work for paid pretty good and I had one unpaid bill in a couple of decades.
Building your own network and getting rid of recruiters as your main source of income is very important to new contract programmers.
For one they take a cut and for another they will sell those parties where they can take the largest cut first.
I'm not saying they don't have a function but recruiters goals and the recruited goals are not 100% aligned and you should be very much aware of that when using one.
One way to side-step recruiters is to build up (large) number of contacts with people in the industry who may get to know someone that needs your particular skillset.
The more peculiar your skills the harder it will be for recruiters to place you and so more of the acquisition part will have to be done by yourself.
Think of using recruiters as 'outsourcing acquisition', it has all the upsides and the downsides associated with all other forms of outsourcing.
Another danger with outsourcing your acquisition to recruiters is that you are handing the keys to one of the most important parts of your business to another party, who can then either cut you off at will, replace you and retain their contact with the company you were placed in and so on.
The sales department (which you've essentially outsourced) is a very important (if not the most important) element in any company, even a small one.
You may be able to make your life a little easier by not doing that work, especially if you're an introvert but in the longer term you're setting yourself up in a very dangerous position.
So, use recruiters if you have to but be wary and make sure you have alternative channels to being hired under your own control. Never let a single recruiter get you all of your jobs or even a majority of your jobs.
It is such a massive grey mass of companies, if you just google it or try to search LinkedIn.
I'm wondering if opening an LTD is even really needed in this case, what about people that already have a company or similar(sole trader) for this purpose in their own country? Have someone had any experience with this approach? Or has any idea about how it could be perceived?
We're one half UK resident, one half not, and the UK bank put up the fraud check, which required about 30 pages of paperwork including three different proofs of ID copied and authenticated by a notary public (cost me $30). They were and are ultra slow and do not accept any form of internet communication - only snail mail, phone and in-person counter service.
Say, in Russia one'd generally would want to go sole trader route and not an Ltd one. Less initial paperwork, a bit more relaxed tax/accounting rules (with same rates), and significantly simpler to put earned money into your wallet.
If you are self employed there is no liability protection that separates you from the business this means that for the business to go bankrupt you have to also go bankrupt, and worse creditors can go after your own and familial assets to clear debt that was incurred by your business.
Now in some rare cases when there was gross and often criminal misconduct the liability protection can be lifted on a business which means it's stakeholders can be found liable for damage but that's quite rare.
But my biggest question is where do you find a client ?
Is there a website (like a jobs website) for contract work, besides elance and the like ? Yeah, I can google it, but it's usually just a waste of time.
Is there any serious place where an experienced developer can meet serious clients ? I mean clients willing to pay for quality work so I can make a living similar to a corporate job ?
It was great to build my portfolio up; I'd recommend it if possible. It's much easier to land gigs with a freelance portfolio.
I was perm for like 5-6 years, I think building your skills in perm roles is how it should be, but I'd probably have a lot more money if I'd just became a contractor.
- Contracting pays a lot more than a perm role.
- You do not deal with politics, which is a major plus for me.
- You do not hear about you not getting your promised y% bonus because company did not do x% business.
- You are not worried about 'changing the world', the way you would in a startup.
- working 4-6 years your asses off at a startup may be equivalent to working as a contractor for that time. That is a big may be, your skills, confidence, market everything plays a big role.
- Always get a good accountant, go for ltd company, enroll your wife and PAY YOUR TAXES!
- I started when i had about a month's savings, and it worked out well.
- Day rates depend on your skill set. 350 is the minimum i guess for any role, max is your imagination! 800? 1000? but getting 500-550 should be the target at least.
- Getting a contract is tricky: use linkedin, recruiters, friends and whatever else. All are necessary. I would not worry too much about a recruiter getting a cut as long as i get what i had asked for.
- Get a contract before quitting your perm role. Mostly companies looking for a contractor wait for 2 weeks, if you are good and your skills are in demand they would wait for 3-4 weeks.
- Always plan your vacation at times when everyone else is on holiday. December/January and April are good times.
- HMRC website is good enough to register a company, 15 pounds and 20-30 mins.
- Getting 450 a day is always better than siting idle waiting for that 550-600 a day contract.
- There is lot of competition, be prepared for that.
- Prepared for some level of stress (specially when you are out of work), it is still worth it.
- Do not worry too much about your utilization in a contract, it is the client's worry. You are paid for your skills and not your time. Do put reasonable time, but that is not the criteria you were hired with.
- 'Doing/Completing my time' is a BS. I have had several contracts and none of the clients ever had problems with my timings. And i am particularly bad at working normal hours. Sometimes i get at work at 10 and leave at 5. At times i work whole nights.
- Recruiters are lairs, don't give too much info. Ask for a job spec and day rate before giving any info. I would help you, after you get me a contract!
- Send your CV to all who asks for it. Keeps you in the market.
- You will not necessarily get a higher day rate if you went directly with a client. Your day rate depends on your skills and negotiating skills only. If you do not ask for a good day rate, chances are, you wont get it.
- Sometimes, leave it on Luck. We can be the smartest asses on the planet, but at times need luck.
Hope this helps.
- don't trust agents - don't trust agents One more thing: - don't trust agents
If you find a half-honest one work with them as much as you can. They'll still try and screw you over but they might decide to be straight once in a while.
I don't blame them in a way - the competition is fierce and matching client and contractor for happy outcomes is hard. But too many of them are willing to try and renegotiate your rate down after an offer is made - 'they like you, but not at your original rate' - 99/100 this is a ruse to keep some pounds in their pocket. Learn to be firm with agents.
Find out who makes the decisions on hiring and who has budget within a company and get to know them personally. They're the ones signing your pay.
I contracted for nearly 10 years in a variety of places. It's a great life but you do have to keep an eye on your career as your skill set might start to get old, and it's hard to move onto the next thing because you don't get the chance to practice it. But I have friends who have been doing it for 20 years now, and they have made a great life out of it.
They are sales people though, and obviously there are bad ones. However they are providing a service to you, (and their client), often contractors that go direct are on a worse rate, get paid a lot less frequently (3 months after each month, vs weekly in some cases) and have to deal with tedious internal HR processes.
Some times after you get used to the industry you have enough contacts to go direct, but initially an agent can really help you out.
-Getting 450 a day is always better than siting idle waiting for that 550-600 a day contract.
I'm fine with making a tradeoff like that for very short term work, but I don't want to commit myself to long- or medium-term work at any sort of significant discount.
If I'm confident I can get that 550 eventually, it easily pays for those days I spend on the beach.
Lets say:
Desired rate: 150 Available rate: 100 Sit idle for desired rate: 30 days (20 working days in a month)
let's say a contract is 2 months long.
with 100 day rate yo get: 100 x 40 = 4000 with 150 day rate you get: 150 x 20 = 3000 (well if you get 200 a day, you still make the same amount of money as you would working on 100 for 2 months instead of 1)
Unless you get a significantly long contract on your desired rate. And also, that long contract gets till the end. Most likely it will, but life is bitch. You never know what would happen, it is about risk assessment.
As the author notes, the legal business entity and business infrastructure should be set up in advance. This enables one to acquire clients and do business before putting in a two-week notice at your full time job. I no longer operate my company, but had I abided by the 4 month of living expenses rule I would have never gotten off the ground. Within 4 months I was earning slightly more than double my previous salary. Don't shackle yourself to rigid startup rules. If you have clients and believe in what you're offering, go do it.
So this advice is based on that, but obviously if you're good and marketable, you'll probably be OK. I myself really became a contractor after a relationship breakup when I was in about over £3000 O/D, a mortgage to pay and about £4300 credit limit.
Discussed this with agent, they agreed to pay me the day they were paid and I drove 400 miles for a contract which wasn't actually signed by the client yet. Luckily, they were happy to see me on the Monday, and I got paid at about £4200 into that limit.
This was 2 years ago. Now I probably earn 5+ times my highest perm salary, so in my case the gamble was super worth it, but if you're not somewhat charismatic and decent at your job with a marketable skill, it could go the other way.
To shed some more light on my strategy:
* I planned to exit the company months in advance.
* Signed two clients
* I was a director of a small development team. I architected much of the company's critical infrastructure (most importantly, credit card/payment processing) and knew that I could leverage my knowledge to negotiate an advisory contract.
* Put in my notice
* Signed ex employer as my third client with weekly payment and a two month minimum. They obviously could have broken the minimum agreement, but kept me on until I severed the contract several months later. Weekly payment was key.
A little strategy can go a long way, but obviously it could have turned out much differently for me. And as noted, this is purely anecdotal. While four months buffer is generally wise, it is not de facto necessary.
Calculating how much capital you need to have in reserve before you go contract can be done using a couple of basic probability/finance measures. Look at reasonable worst cases (client bankruptcy, tax investigation, unexpected dismissal) and make sure that you have the current assets to survive them!
But you're doing this as an employee right? (Right!?) I hope everyone on this forum is going to be ok if they are made redundant tomorrow.
The whole point of this is that you need to be able to survive a setback. You should not be living at a 10% chance of missing rent each month! You can count on that probability eventually happening over a long enough period.
That's what banks want to see, for example, if you apply for a mortgage as a contractor.
Use HMRC PAYE Tools to report each salary payment you make, and pay any National Insurance if applicable (which it won't be if you keep you salary below £671 a month).
Use the same tool to report any expense payments each May (form P11D).
Use Companies House WebFiling to submit your annual return (a short submission confirming some details about your company's directors and shareholdings etc.) each company year end.
Use HRMC's Online services to submit your corporation tax and accounts nine months after each year end. I pay £45 each year for collection of Excel templates from http://www.diyaccounting.co.uk/ to record my accounts which produces a mockup of the HMRC web form with the fields filled in.
Pay yourself a dividend one or twice a year and find a Word template to print out a record of the payment and the board meeting you had to decide on it.
Finally, use HMRC Online Self Assessment to submit your personal tax return each January, which you may already be doing anyway.
Looking at all this now it seems like a lot, but it's not as bad it sounds. I suppose you've got to have something of an interest in learning how a business is run to justify it. On the other hand you can save your company a tidy sum, plus as a company director you're legally responsible for the accuracy of the various submissions anyway, whether an accountant does it all for you or not, so you may as well have a sound understanding of it all I say. Also, I don't know whether this is the really the case or not but I've a theory that the more you run your operation like a proper business the less likely you're going to come a cropper of an IR45 disguised employment judgement, which could be severely financially damaging.
Running your own operation like this will put you in a better position for trying out any side projects I believe, and of course it will all stand you in good stead when you finally hit on the world changing idea you've been waiting for and your one man band blossoms into a large corporation (although do then get some accountants - but at least you'll have some idea what they're up to).
I'd also highly highly recommend freeagent which is so good it makes you wonder what your accountant does. It has been right where my accountant has often been wrong!! Here's a referral link:
It makes the accountants life a lot easier too (they get a slightly restricted login).
Didn't make the transition then. Always wondered ..
- Are any remote? I mean who wants to live in London? ;)
- How do you find them in the first place?
http://jacquesmattheij.com/be-consultant/
The idea was to one day bind this all together and make it a book.
This doesn't mean that you can get away with being a junior in a senior role, but it might mean there is more of a focus on technical skills rather than university qualifications, that type of thing.
There are some crap contractors floating about the system and some crap permanent employees. And vice versa.
The working conditions are almost identical, except that in a downturn the contractors will be first out the door. They also get to avoid 'company building' meetings and crap like that.
I'm not an expert on this subject, but I don't think that income earned by an incorporation would be taxed if it's incorporated outside the United States. However, the incorporation would have to pay its employee, and that employee's income would be subject to taxation if the employee is a US citizen.
It's not quite as bad as it sounds though. The first $93000 of income earned abroad is not subject to taxation. Many countries (such as Canada and Germany) have reciprocal income tax treaties with the United States that keep citizens from being double-taxed. A US citizen in Germany, for example, wouldn't have to pay any US income tax on income earned in Germany as long as that income was subjected to German income taxes.
Other income such as stock dividends and capital gains is another matter. I'm not entirely certain if that is double taxed or not.
The IRS has a web page listing income tax treaties with various countries: http://www.irs.gov/Businesses/International-Businesses/Unite...
To your other paragraph: your relatives shouldn't have paid any extra tax multiply. You can end up filing 4 forms, US federal, US state, Canadian federal, Canadian province, but there is a pretty comprehensive tax treaty so you end up paying in one place and claiming a credit in the other. Overall it's often nearly a wash, and whether or not you pay a bit more or less will depend on where your tax residency is and where your income is generated.
You can get 50k if you're lucky in London, but you can earn 500 a day as a contractor.
500 * 230 conservative work days per year = 115,000 NET
I wish people would replicate this for as many countries as possible.
Having run my business in Australia and then the UK, I asked the founder of Crunch in the UK (Accounting support for contractors) if he planned to expand to Australia because I loved their service. While open to it at some point, iirc he said there just wasn't the volume of potential clients down under to justify the legislation and recruitment investment.
Are you a programmer? Yes? You are ready.
Seriously in the current market you don't need to be a very confident programmer to be contractor in the UK. Quit your stressful jobs and get into contracting NOW. Money is 3x better. Hours are better, employers are more flexible with contractors believe it or not. And when shit hits fans, just bail and go find another contract.
Could someone explain what kind of contracting work is talked about here? With examples of products, type of work, technologies, etc?
How much of it applicable to US?
Once you have a 6m+ contract under your belt, look at recruiters again. As distasteful as they are (and they are), 90%+ of the most valuable contracts go through them. I would love for these parasitic fucks to be disintermediated, but if that was going to happen it would have happened by now, so live with it.
Your problem with recruiters is that you are having 'friendly conversations' with them. This identifies you as a mark whom the recruiter can place into a £400/day contact and pay you £200. This happens ALL THE TIME and is the bread and butter of many recruiters.
The thing to remember about recruiters is that they have no clue about the industry they're recruiting for. If they did, they would be working in it, not recruiting for it. So, the only real clue they have of how good you are is how good you SAY you are.
So do not be friendly to recruiters - treat them was what they are - odious middlemen who need you. As you say, not signing anything with them is good. Another good strategy is to contemptuously dismiss the first contract a recruiter mentions. "This small-time crap? Sorry, I though you guys were top-drawer."
Recruitment is HELLISHLY competitive and the churn is savage. Recruiters are sharks, and they think like sharks. But they NEED you. They will absolutely fight over you if they think you are worth fighting over.
Don't bother until you have a contract under your belt. But once you have, start treating recruiters badly and see what happens. :)
Chasing clients for money is, particularly when starting out, something that you feel hesitant to do in case you adversely affect your relationship with the client, as you don't think you have much leverage and are risking a good contract. It's a confidence thing though, these days I'd have no problem putting my foot down and walking away from a non-paying customer's contract.
Of course, all you're really doing is moving the risk of non-payment on to the agency but, so far having worked with about 8 agencies, I've not had any trouble being paid on-time in 12 years. Working directly I've run into non-payment issues several times with non-payment periods upto almost a year (though I'd long moved on to another contract). But then I've got a friend who's been ripped-off by a recruitment agency, having folded with a couple of months pay due. So you do still need to chase them too and ensure you maintain an adequate pot of savings for breaks between contracts and covering non-payment issues.
Having been in the position of working directly for clients and being owed large amounts of money for long periods of time, I'd recommend finding a reputable (sic) recruitment agent until you are up and running for a good few months or even a couple of years. That all said, you do have to put up with the barrage of appalling sales pitches for unsuitable positions and a lack of technical knowledge while dealing with most of them.
You can easily earn over 100k if you're any good in your field.
I was thinking about writing a post about the ins and outs of the London contract market.
Being IR35 compliant is one of the biggest benefits of being a contractor(at least that was true before they changed the dividends rule), so it's important to get this right.
12, better 24 months for peace of mind.
>> It may take several weeks to find your first contract.
More likely, several months. It depends on the match between your skills and market demand.
In general, most companies will not commission you directly. There's always a company between you and your end customer.
fwiw i've jumped into this sort of work before without any savings or backup plans... it was much more 'exciting'. XD