Landed my first IT contract, what to do now :S

19
Posted 8th Oct
Always worked as a permanent employee...

Landed first IT contract offer, however I got no clue what needs doing... with permanent position it was signing the contract and then hand over notice...

What happens with contracts ? do you sign the contract first then hand over notice... or other way around, also do you just create a ltd company, and a business bank account and that's it ?

Thanks in advance
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Probably should have investigated all this beforehand, no?
19 Comments
Are you LTD or under an umbrella? You need to find that out asap.

A limited company can take a few weeks to organise, you need your liability cover (how much do you need 1/5/10/25million??), Business bank account etc.

Personally it sounds like you're making the jump a bit rushed, there is a lot to focus on, and then build up your suplus "war chest" to cover the gap between contracts etc.
Also, companies can retract an offer at any time. You mind hand in your notice and then serve your notice period (1 month??) Only to find the offer has been cancelled or pulled as the requirement went away.

Also consider your employment cover for things like missed days, sickness, Jury Service etc.

What is your specialist area in IT?
And lastly, there are better places to ask these questions but a fundamental is whether you're Inside or outside of IR35, that has a huge impact on how you operate and whether it's viable.

Also consider your accountant\digital tax\VAT etc.
Probably should have investigated all this beforehand, no?
Babbabooey08/10/2019 13:42

Probably should have investigated all this beforehand, no?



Yes

But worry not. I did it for 20 years. Enjoyed most of it hugely and retired.

True, IR35 is now a bit of a bigger. Join PCG to discover your options and choices
darlodge08/10/2019 13:09

Are you LTD or under an umbrella? You need to find that out asap.A limited …Are you LTD or under an umbrella? You need to find that out asap.A limited company can take a few weeks to organise, you need your liability cover (how much do you need 1/5/10/25million??), Business bank account etc.Personally it sounds like you're making the jump a bit rushed, there is a lot to focus on, and then build up your suplus "war chest" to cover the gap between contracts etc.


I am permanent at the present and absolutely nothing in hand at the present.

I think I will go for LTD company, but would it be eaiser to go for umbrella now and after a month or 2 change it to limited company ?
A friend sent me a link to sign up accountancy firm, which takes £105 per month to do this, (didn't mentioned there name as I don't want to advertise them)


  • Free company set-up and use of our address as your registered office
  • Help setting up your business bank account and insurance
  • Unlimited expert advice from your dedicated Personal Accountant
  • 24/7 access to your accounts via the Intouch online portal
  • Free IR35 support services and guidance
  • Access to contractor-specific mortgage, wealth and protection services
  • Management and year-end accounts
  • Quarterly VAT returns
  • Calculation of your company’s tax liability
  • Monthly and annual payroll returns
  • Filing of all HMRC and Companies House returns
  • One annual Self Assessment tax return
  • Dividend advice and paperwork

Is it worth it ?
You need to get a business bank account asap. They will not pay to a standard bank account.

Make sure you understand IR35.

I was an IT contractor for 12 years, but just went permie. I don't think its as good as it used to be, and it looks like it will certainly get harder with all the government clamp downs.
Personally I'd rather have a face to face accountant as I wanted more guidance and it's a business expense at the end of the year so it's written off anyway whatever the cost.

Think long and hard what you're leaving behind and why you want to move to contracting. Money is only one part of it although it's the one that nearly everyone focuses on as it's the easiest to quantify.

Consider the positives job security, bonuses, sick leave, holiday pay etc. And negatives, freedom to work where and when, less politics, less mandatory HR rubbish.

On holiday\sick\leave I took 5 days leave in 10 months and was borderline dead, my wife forced me to take a week off. When you see a figure everyday you're not working its hard to keep running yourself into the ground.
darlodge08/10/2019 14:29

Personally I'd rather have a face to face accountant as I wanted more …Personally I'd rather have a face to face accountant as I wanted more guidance and it's a business expense at the end of the year so it's written off anyway whatever the cost.Think long and hard what you're leaving behind and why you want to move to contracting. Money is only one part of it although it's the one that nearly everyone focuses on as it's the easiest to quantify.Consider the positives job security, bonuses, sick leave, holiday pay etc. And negatives, freedom to work where and when, less politics, less mandatory HR rubbish.On holiday\sick\leave I took 5 days leave in 10 months and was borderline dead, my wife forced me to take a week off. When you see a figure everyday you're not working its hard to keep running yourself into the ground.


I will be taking double what I take home, in last 10 years I probably had 3 weeks sick pay, I am working almost as hard as a contractor as I am only permanent working with contractors (devs) at present company.

Also I want quick money then job security. as I need a year break anyway.
computer11008/10/2019 14:19

A friend sent me a link to sign up accountancy firm, which takes £105 per …A friend sent me a link to sign up accountancy firm, which takes £105 per month to do this, (didn't mentioned there name as I don't want to advertise them)Free company set-up and use of our address as your registered officeHelp setting up your business bank account and insuranceUnlimited expert advice from your dedicated Personal Accountant24/7 access to your accounts via the Intouch online portalFree IR35 support services and guidanceAccess to contractor-specific mortgage, wealth and protection servicesManagement and year-end accountsQuarterly VAT returnsCalculation of your company’s tax liabilityMonthly and annual payroll returnsFiling of all HMRC and Companies House returnsOne annual Self Assessment tax returnDividend advice and paperworkIs it worth it ?


is it worth it or is there any other firm someone wants to suggest...
computer11008/10/2019 14:19

A friend sent me a link to sign up accountancy firm, which takes £105 per …A friend sent me a link to sign up accountancy firm, which takes £105 per month to do this, (didn't mentioned there name as I don't want to advertise them)Free company set-up and use of our address as your registered officeHelp setting up your business bank account and insuranceUnlimited expert advice from your dedicated Personal Accountant24/7 access to your accounts via the Intouch online portalFree IR35 support services and guidanceAccess to contractor-specific mortgage, wealth and protection servicesManagement and year-end accountsQuarterly VAT returnsCalculation of your company’s tax liabilityMonthly and annual payroll returnsFiling of all HMRC and Companies House returnsOne annual Self Assessment tax returnDividend advice and paperworkIs it worth it ?


NO. Rip off
computer11008/10/2019 14:04

I am permanent at the present and absolutely nothing in hand at the …I am permanent at the present and absolutely nothing in hand at the present.I think I will go for LTD company, but would it be eaiser to go for umbrella now and after a month or 2 change it to limited company ?


Oh dear. Sounds easy. It won't be. You will have signed a contract. Getting into a contract is a pop. Getting out is substantially more difficult.

Rules 1, 2, 3, 4and 5 of being in business for yourself - RTFC
computer11008/10/2019 14:19

A friend sent me a link to sign up accountancy firm, which takes £105 per …A friend sent me a link to sign up accountancy firm, which takes £105 per month to do this,...it worth it ?


Random tiered comparison at taxevo.co.uk/pac…es/
computer11008/10/2019 14:40

is it worth it or is there any other firm someone wants to suggest...


computer11008/10/2019 14:39

I will be taking double what I take home, in last 10 years I probably had …I will be taking double what I take home, in last 10 years I probably had 3 weeks sick pay, I am working almost as hard as a contractor as I am only permanent working with contractors (devs) at present company.Also I want quick money then job security. as I need a year break anyway.



Don't let people put you off but do take into account the very valid comments and look into in carefully. I have worked in IT for 25 years, half of which has been contracting. The landscape is changing as our peers here have mentioned, IR35 had a major impact for me a couple of years ago as most of my work was public sector. As of April next year (2020) same will apply to private sector and I have seen rates or salaries for roles depressed as a result. I am fortunate that my missus is an accountant but being honest the paperwork (as Ltd company) can be a pain, and if you miss deadlines the penalties soon add up! Never used an umbrella so really can't comment, insurance is essential both public and professional, mines costs about £250 per year for £1million. If I read you comment correctly in that you plan to take a year off (which I have) consider the following.

IT moves quickly, when I started you could know a lot about a lot, now it is a lot about a little, so again if I read correct coming back into the market after a break may be difficult.

In my experience having a break (sabbatical) is a pain on applications, not impossible but something to keep in mind.

In short to recap been good to me to contract, now I would have a long hard think - still contracting btw
computer11008/10/2019 14:39

I will be taking double what I take home, in last 10 years I probably had …I will be taking double what I take home, in last 10 years I probably had 3 weeks sick pay, I am working almost as hard as a contractor as I am only permanent working with contractors (devs) at present company.Also I want quick money then job security. as I need a year break anyway.


As a permie I was much the same, 5-10 days in about 15 years but holiday pay I took every hour possible, same for Flexi\TOIL time. Some contractors cannot build up Flexi time and don't get the same luxury rules like TOIL, overtime etc.

A year out in IT as you know is a lifetime if you're not learning\training\working. By all means do it but the 2nd contract is always the hardest so plan that into your job search.

Some fields are being depleted by offshore labour so unless you're in a niche sector (data analytics, gov sector with a valid clearance, Cyber, BI etc. it makes it harder again
Edited by: "darlodge" 8th Oct
IR35 as of April next year is going to make a huge difference to the contract market. IR35 misrepresentation or ‘misinterpretation’ is going to become a criminal offence for the directors of hiring companies. It’s their responsibility now to determine if a contractor is IR35, then to deduct tax and NI if they make that determination.

Umbrella is far simpler but even if in IR35 it costs more. Try and find an accountancy that can offer both options. Then get them to give you a projection based on in IR35 but as Ltd or Umbrella.
Also, just one more thing to take into account (if you are in a city or not)... travel / work life balance.

I did it for 12 years, and I would regularly spend 3 hours a day commuting for much of that time, in any direction, to keep contracting, and to keep the money coming in. I had 1 month (without a contract) in 12 years, still took good holidays as I had to with the commuting and hours working.

I have now settled for the work life balance, with my 6 minute commute I can be home really quick and I really enjoyed this summer making the most of the evenings with my family rather than sitting in the car.

By all means go for the contracting but do some maths first, work out a few months take home, then deduct VAT, Corporation Tax, any NI, PAYE then your war chest for holidays / sick pay and work out if those extra £££ are worth it.

It can be lucrative and if its time for a change its good, I learnt a lot contracting and all that experiance working in different places different tect and business types will make your CV really good for when you look to settle down... work hard build up some decent money then re-evaluate... good luck
w1nd09/10/2019 09:33

Also, just one more thing to take into account (if you are in a city or …Also, just one more thing to take into account (if you are in a city or not)... travel / work life balance.I did it for 12 years, and I would regularly spend 3 hours a day commuting for much of that time, in any direction, to keep contracting, and to keep the money coming in. I had 1 month (without a contract) in 12 years, still took good holidays as I had to with the commuting and hours working.I have now settled for the work life balance, with my 6 minute commute I can be home really quick and I really enjoyed this summer making the most of the evenings with my family rather than sitting in the car.By all means go for the contracting but do some maths first, work out a few months take home, then deduct VAT, Corporation Tax, any NI, PAYE then your war chest for holidays / sick pay and work out if those extra £££ are worth it.It can be lucrative and if its time for a change its good, I learnt a lot contracting and all that experiance working in different places different tect and business types will make your CV really good for when you look to settle down... work hard build up some decent money then re-evaluate... good luck



Some fantastic points w1nd and mirrors my experience very closely
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