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From permanent to first time contracting

Discussion in 'Employment & Jobs' started by Pete01, Aug 17, 2005.

  1. Pete01

    Pete01 Kilobyte Poster

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    Anyone made this transition recently?

    I've always been permanent, I'm used to payed holidays, sick leave (I don't take sickies though), PAYE, not having to worry too much about the immediate future and all the benefits of being a full time employee.

    I really really want to contract though, I know I can do it, I spent 3 years being a permanent employee of an outsourcing company that deployed me to all sorts of different sites for varied periods of time and I developed the ability to 'hit the ground running'. I've worked along side contractors doing the same job as me (helpdesk 1st/2nd line) and thought- 'why aren't I doing that?'.

    I'm ready to leave the comfort zone of permanent employment and become my own boss and make more money, I'll probably join an umbrella company to start with I have a couple of them phoning/emailing me to join them already.

    I suppose what I'm asking is for anyone's experience of the transition and what was it like. Did you give your notice to your permanent employer then start madly looking for that first contract? Did you sign on the dole after you finished your notice period if you hadn't got a contract to go straight into?

    I'm quite nervous about it but in the way you are when you're at the swimming pool looking down from the top diving board for the first time with a big lump in your throat.

    It's very scary but at the same time very exciting. Anyone at the same place I'm at now want to share your thoughts on the subject? I'm bricking myself to be honest.
     
    Certifications: MCP (NT4) CCNA
    WIP: 70-669, Learning MSI packaging
  2. tripwire45
    Honorary Member

    tripwire45 Zettabyte Poster

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    Actually, I went in the opposite direction. While still in school and trying to gain IT experience, I worked a dead end job to pay the bills and took all the contract work I could fit into my schedule. It was few and far between at first but eventually, my contract assignments started to cut into my day job. Almost two years ago, I had to make a decision as to which way to go and quit the day job and entered IT contracting.

    Mind you, my ultimate goal was to end up on staff at a company doing tech, but contacting enabled me to get the experience I needed to make that happen. I've done more Ethernet Rollouts, Equipment and Software upgrades and installations than I can count.

    It's kind of fun being on the road and being the "traveling tech" but as you say, you sacrifice a lot of security and work some pretty weird hours. Also, the work isn't always steady and you don't always have a dependable income so you have to be careful not to spend your rent money on something foolish, thinking that your next job is just around the corner.

    Benefits of course, are a thing of the past when you are an independent contractor. Also, you have to keep on top of your tax situation. I have no idea how taxes are done in the UK, but in the US, working as a contractor means doing it all yourself. Remember to save up a large chunk of your income and make sure the government gets their cut. Otherwise, you might find yourself in the uncomfortable position of owing the state a whole lot of money.

    I work full-time as a technical writer but take free-lance assignments that I can do evenings and weekends. The free-lance income isn't steady but it makes a nice supplement to my regular paycheck.

    Just some of my thoughts. Hope it works out for you.
     
    Certifications: A+ and Network+
  3. Pete01

    Pete01 Kilobyte Poster

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    Thankyou for the reply,

    I have no idea how the tax thing works in the US, I know over here it's pretty tight. The umbrella company (which one I haven't chosen yet) will take care of all the tax, NI etc etc. for a fee (5-9%) which I'm happy for them to do at this stage as doing my own books will be another step in itself when that time comes.

    Umbrella company fees vs. IR35 seem to be worth it for first timers like me.

    I'll stop getting ahead of myself though, my priority is my CCNA exam on Sept 30th. :twisted:
     
    Certifications: MCP (NT4) CCNA
    WIP: 70-669, Learning MSI packaging
  4. surfer_rosa

    surfer_rosa Nibble Poster

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    A very interesting post. I've always thought (well i'm just out of uni and have only just started considering CCNA etc) that you do the contracting until you have the experience to get a full time job.

    I presume when contracting you get paid more by the hour but then again there is that risk of not having anything on your plate for a while.

    I was just wondering how easy it is to get into one of these companies that sorts out the work (i think you called them umbrella companies). Do they have interviews to see if you're expierienced enough? Any names you could drop of such companies?

    Any help (By anyone infact) would be gratefully received.

    Cheers :D
     
    Certifications: None.... yet
    WIP: CCNA
  5. Pete01

    Pete01 Kilobyte Poster

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    Umbrella companies don't act as agents getting work for you as such, some of them will provide that service but that is not their priary role. I'm no contractor at the moment- there are probably a fair few people on this board who are and will be able to clarify a few points but from what I've found out my take on umbrella companies is:

    As a contractor you don't get paid a full time wage through PAYE and don't have the same tax rate as a permanent employee on PAYE, you are on a lower tax band and get paid more for the work you do. The government get round this by charging IR35, an extra 'contractor tax' which you can read about here:

    http://www.contractoruk.com/ir35/


    From what I gather the way around having to pay IR35 is to create your own limited company, pay your own taxes and do your own accounts (or hire an accountant) at the end of the tax year, OR- join an umbrella company who will pay you as a PAYE employee of their company thus protecting you from IR35 but still paying you what you'd earn as an independent contractor minus their commission. They will also handle all your accounting and tax if you don't want to do that yourself.

    Some umbrella companies can help you find work as a contractor but they are not the same as recruitment agents.
     
    Certifications: MCP (NT4) CCNA
    WIP: 70-669, Learning MSI packaging
  6. surfer_rosa

    surfer_rosa Nibble Poster

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    Ah gotcha - cheers for the reply. I've filled out self-assesment forms myself - not pretty at all :D

    Good luck :biggrin
     
    Certifications: None.... yet
    WIP: CCNA

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