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Switching over to Contracting

Discussion in 'Employment & Jobs' started by Pete01, Mar 14, 2007.

  1. Pete01

    Pete01 Kilobyte Poster

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    I started my new job in December and recently came to the conclusion that it's really not for me so while I was still on a 1 week notice period I thought I'd have a stab at 'getting into contracting'....

    Blimey!

    I've gone down the 'register your own Ltd' instead of go through an umbrella company because there's all sorts of hoo ha going on with umbrella companies and the government and tax with big shake ups and widespread panic etc going on right now.

    So I thought it would be quite straightforward buying a Ltd co off the shelf - so far here's the to do list I've done so far:

    * Register a company - I bought a private Ltd. Company off the shelf - relatively painless and cost £32

    * Apply for a company bank account - understandably more complicated than applying for a private account even when choosing the option for no financing, overdraft or company credit card. A fair amount of forms and stuff to read - took a couple of hours.

    * Fill out tax forms - Surprisingly quick - took about 15 mins, not the last I've heard from them though I'm sure…..

    * Get insured - this is a requirement of the contract and all contracts. You need to be insured in case you break something or cause an injury. Could only afford public liability this week, next week I'll get professional indemnity. This protects me from being sued by the client.

    On the list still to do is:

    * Register for VAT - not required while my turnover is below £60k but a good idea, need to look further into this.

    * Write a business plan - IT contracting is only part of the business model for this company, I want to go into Internet marketing/Search engine optimisation consulting as well as move my websites over to becoming revenue generating assets of the company.

    * Prepare dividend meeting minute templates

    * Decide on a salary/dividend ratio

    * Plan for tax - I have to save my tax payments as I go along and pay it all in one go after a business year (a year from when I started trading as a company)

    * Plenty more.

    All that and more just for:

    • No job security,
    • No sick pay,
    • No holiday pay,
    • No pension,
    • No other employee benefits,
    • Lots of playing cat and mouse with Gordon Brown over whether I have to pay IR35 tax or not,
    • Having to pay an accountant to do my accounts,
    • Having to buy insurance
    • Lots of fiddly tax/expenses/VAT stuff to claim things like travel expenses, lunch etc.
    • Having to look for work after each contract expires (every few months)

    It's not going to be an easy life I can tell now - it better be worth it!
     
    Certifications: MCP (NT4) CCNA
    WIP: 70-669, Learning MSI packaging
  2. BosonMichael
    Highly Decorated Member Award

    BosonMichael Yottabyte Poster

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    If it's similar to getting a business started in America (and it looks like it is), then it's a pain just to get through the red tape just to get started.
     
    Certifications: CISSP, MCSE+I, MCSE: Security, MCSE: Messaging, MCDST, MCDBA, MCTS, OCP, CCNP, CCDP, CCNA Security, CCNA Voice, CNE, SCSA, Security+, Linux+, Server+, Network+, A+
    WIP: Just about everything!
  3. simongrahamuk
    Honorary Member

    simongrahamuk Hmmmmmmm?

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    Good Luck Pete! :thumbleft

    I've always wondered what was involved in setting up your own business, thanks for sharing. I hope it all goes to plan, perhaps in the future you might even be recruiting! :biggrin
     
  4. Headache

    Headache Gigabyte Poster

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    There are quite a few upsides to this as well, Pete01.

    Although, I have no experience personally with contract employment, I know somebody who does and he's already been through the process you're about to go through.

    He's a CCNP/MCSE and he's been in the IT field for about eight years. He's currently working for an American Telco. He earns an incredible mount of money, something in the region of about eighty, ninety grand a year, more than even the company managers he works under.

    Because he is self-employed, he is able to write off a lot expenses and purchases against taxes. You can do that as long as you are able to convince Inland Revenue that these expenses are either business related, or are related in some form or another to personal career development. Mortgage payments, petrol, car and house repairs, insurance, all of these can be claimed back. And from what I understand, this isn't as difficult as you might think. It does require a bit of fancy footwork, but it's possible.

    For example you can buy loads and loads of IT equipment for your company and as long as you can justify these as a legitimate business requirement, or that they will be used by the employees of the company (i.e yourself) for training purposes, then these purchases can be written off against the tax bill. You probably wouldn't get everything back, but you'll get a lot of it back.

    My mate, the guy I'm taking about, we live in the same house. He on a buying spree at the moment and the house is chock-full of routers and switches and servers and sorts of stuff. His latest acquisition is an MMX 8830 frame-relay switch which cost a bomb. All of this stuff he's gonna claim back from the tax office. Anything he decides he doesn't need anymore, he'll simply flog off and pocket the cash.

    Another advantage is that you get to claim back VAT from customs and excise.

    Plus if you are marketable in terms of skills, qualification and experience, then there's no shortage of work. Infact you can pick and chose where and when you want work. My mate still gets numerous calls and e-mails everyday from his employment agency, even though he still hasn't come to the end of his current contract.

    All of this has convinced me that as soon as I start earning some IT qualifications for myself, contract employment will be the only way to go.
     
    Certifications: CCNA
    WIP: CCNP
  5. Boycie
    Honorary Member

    Boycie Senior Beer Tester

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    Interesting thread, good luck to the both of you.
     
    Certifications: MCSA 2003, MCDST, A+, N+, CTT+, MCT
  6. nXPLOSi

    nXPLOSi Terabyte Poster

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    My old workmate also went down this route, he as well is doing really well for himself. There are, as always, positive and negative points to being self employed, but if it all works out, you'll be laughing all the way to the bank :)

    Good luck with it mate, keep us posted! :)
     
    Certifications: A+, Network+, Security+, MCSA 2003 (270, 290, 291), MCTS (640, 642), MCSA 2008
    WIP: MCSA 2012
  7. Stoney

    Stoney Megabyte Poster

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    Good luck with it all Pete. :thumbleft

    You may want to consider getting a decent accountant to make sure you pay as little as you can to the robbing gits we affectionately call the government! If you know enough yourself then that's probably an expense you can do without!

    My college tutor mentioned that if you make a loss in your first year you don't have to pay as much tax the next year, if any! I don't know how much truth there is in that? Making a loss doesn't mean you end up broke, you just need to make it look like you made no profit, so make sure you buy lost of things for your company, e.g: company car, tools and equipment, plasma tv, etc........
     
    Certifications: 25 + 50 metre front crawl
    WIP: MCSA - Exam 70-270
  8. Bluerinse
    Honorary Member

    Bluerinse Exabyte Poster

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    Good luck Pete, i have done this too in Australia and i am enjoying it immensely - the only drawback for me is not having enough contacts here in oz as most of my friends and acquaintances are in England but i have been going for nearly three years now and it's all good. No earning anywhere near what i was in Blighty but due to my past earnings i can survive here with a better life style without earning a fortune.
     
    Certifications: C&G Electronics - MCSA (W2K) MCSE (W2K)
  9. onoski

    onoski Terabyte Poster

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    Thanks for the insight everyone, as this is true in terms of contracting that's the way to go in the IT world especially here in the UK. I am seriously considering going this route too. I know of a friend who left he's permanent role and started contracting the next thing I saw with was a very lovely convertible mercedezs benz :D

    With big smile on he's face one day on he's way home I came across him and he said to me why don't you go contracting. I guess am just too scare to commit to contracting and he said to me life is all about a risk and then I thought he has a very good point there. He did say though that it can get tough sometimes when your contract runs out your looking for another and so forth but he said he ain't going back to permanent position for the foreseeable future. Best wishes dude as am sure you'd do well.:D Cheerio

    One last thing he did say though was that you have to keep current with your game that is your skills set certs training etc.
     
    Certifications: MCSE: 2003, MCSA: 2003 Messaging, MCP, HNC BIT, ITIL Fdn V3, SDI Fdn, VCP 4 & VCP 5
    WIP: MCTS:70-236, PowerShell
  10. zebulebu

    zebulebu Terabyte Poster

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    I loved contracting, would go back to it in a heartbeat but I'm married, so can't afford to take the risk. I like the security that a government job provides me - the contract market is just too volatile for a married man!

    Seriously, its picked up a lot in the past 18 months or so, but all it takes is for some nut nut to fly another plane into a buidling somewhere, or for the rish ****ers in the States to decide they are pulling the plug on the sub-prime debt market to cause an immense economic crash and leave thousands of poor sods out of work.
     
    Certifications: A few
    WIP: None - f*** 'em

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