How to become a Contractor

Wrestlemania

Hi Guys,

How does one become a contractor ie. in IT.

I know several people who do this but are not very forthcoming with information.

Do I set myself up as a sole trader, how to I pay tax etc.

It is a new concept for me but I have no clue how to start or were to look for this info. before i even look for a such type job.

And do contractors pay income tax or just VAT or both ??

Cheers :-)

Ryvita

You need to get an accountant, they will sort everything out for you.

Peace

Originally posted by Ryvita
You need to get an accountant, they will sort everything out for you.

Wouldn't it be better if you learned to do your own taxes..

Wrestlemania - there are previous threads outlining what you are asking here.. search the forumn using "contracting" and a few helpful threads will pop up.

Johnny Versace

I do quite a bit of tax free work based on stuff going here -

http://www.webhostingtalk.com/forumdisplay.php?forumid=33

http://www.scriptlance.com

Wrestlemania

Cheers Dudes :cool:

Wrestlemania

What I am striving to do is work contracting for about 6 months a year and spend the other six months studying and travelling as the normal 9 to 5 doesnt give you a great deal of flexibility.

eth0_

Originally posted by Wrestlemania

Do I set myself up as a sole trader, how to I pay tax etc.

I wouldn't, a lot of contracting agencies won't accept you if you're a sole trader for liability reasons, you have to set up a limited company I think.

Johnny Versace

Originally posted by Wrestlemania
What I am striving to do is work contracting for about 6 months a year and spend the other six months studying and travelling as the normal 9 to 5 doesnt give you a great deal of flexibility.

There really isn't much work going though.

But good luck

Kernel32

Wouldn't it be better if you learned to do your own taxes..

If you setup your own limited company which is what most companies who would hire you will want I am pretty sure you are required to use an accountant to do your taxes, so learning to do them isn't an issue.
I contracted last year, I got the contact information for an accountant a friend used, he did everything for me, setup the company, did my taxes etc. Contractors pay income tax and VAT. You charge 21% on top of your invoice and then pay it to the VAT people every couple of months. Depending on your income you will pay income tax every couple of months as well or possibly once at the end of the year. A limited company will cost you more, meaning the accountant will charge you for his time but they are also good at figuring what expenses you can take.

Peace

Originally posted by Kernel32
A limited company will cost you more, meaning the accountant will charge you for his time but they are also good at figuring what expenses you can take.

Anyone have an idea how much it would cost?

Kernel32

I forget the exact amounts but I think around 400 euro for setup and 800 euro a year for doing taxes. Prices will vary of course, my accountant was good about not charging me for phone calls but I'm sure some would charge for every minute of their time. One of the problems with using an accountant though is that your piece of work is so small that its hard to get their attention sometimes so don't expect them to be falling over themselves to call you back.

Merrion

You can do 99% of your own tax stuff through the revenue on-line system (ROS) - the only thing you need an accountant for is your annual audit (if you are a limited company - don't know about sole trader).

Typically an accountant will charge between €400-€1200 for an audit - depending on how complicated it is. IT contractors usually have fairly easy accounst though so look towards the bottom end.

djtjob

what sort of contracting work are you doing wrestlemaina

i was thinking of doing some software tesing and to set up my own company

any advice?

Ryvita

Originally posted by djtjob
what sort of contracting work are you doing wrestlemaina

i was thinking of doing some software tesing and to set up my own company

any advice?

Best to set up as a sole trader and get work through a contracting company. It's a lot less hastle and it's easier to get regular work. Money is quite good.

It's better to have automation skills though.

Peace

Originally posted by Ryvita

It's better to have automation skills though.

Why do you say this... is there a higher demand for automation engineeers?

Kobie

The best thing to do is get a contract first. Only then should you get yourself an accountant who will set up your company & register you for VAT etc. It only takes a few weeks, so there's not much point doing it beforehand. A lot of accountants will set up a company for free on the understanding that you stay with them for a year or more. They tend to cost between €800 - €1500 p.a. depending on what they'll do for you (the €800 will do little more than the annual audit). If you can do your own books, then go for it, but personally I'm happier leaving all that to the experts.

With regards to working 6 months & taking 6 months off, well the money isn't quite that plush unless you're doing very well for yourself - though it is better than a permanent job. Also a lot of prospective clients will be put off by large gaps in the CV & don't really want to know that you've been mucking about in South America for the last 6 months. They want somebody who's an expert at the job & has as much experience behind them as possible, and these days there are plenty of people for them to choose from.

An alternative is to work for an umbrella company that's owned by an agenct or accoutant, but they'll take a large chunk of your wages. A Ltd. company is the proper way to do it.

Good Luck.

Ryvita

Originally posted by Peace
Why do you say this... is there a higher demand for automation engineeers?

That has been my experience, plus the money is a lot better.
It's a skill set that is a bit thin on the ground really.

Peace

Originally posted by Ryvita
That has been my experience, plus the money is a lot better.
It's a skill set that is a bit thin on the ground really.

Ach that sounds good. I'm a ledgend automation dev...

Ryvita

Originally posted by Peace
Ach that sounds good. I'm a ledgend automation dev...

You'll be sorted so. Contract work is definately the way to go.

Peace

Originally posted by Ryvita
You'll be sorted so. Contract work is definately the way to go.

The use of the word ledgend may have been a bit over the top ... i've got about 15months exp in automation.....

Wrestlemania

Originally posted by djtjob
what sort of contracting work are you doing wrestlemaina

i was thinking of doing some software tesing and to set up my own company

any advice?

Primarily QA Testing of Software and also a lot of Technical Support work on HW and SW at a senior level.

Ryvita

Originally posted by Peace
The use of the word ledgend may have been a bit over the top ... i've got about 15months exp in automation.....

It's still useful as long as you are confident with your abilities.

Wrestlemania

How exactly do I setup as a sole trader as it seems the lot simpler solution.

Ryvita

I'm sorting it out through an Accountant. It's a lot less hastle and it's all tax deductable anyway.

halkar

Wrestlemania, try getting the contract you want first and then decide which is suitable. To my experience agencies are moving away from sole traders and setting up Ltd., is not so difficult but requires some accountancy work yearly. You need to get your taxes and your company returns. Company office is very strict on company returns yearly and they take no excuse and fine you if they are late You can get an accountant for around 800 yoyos to get your taxes, audits and company returns done if you shop around. This goes as expense so you save on your taxes.
All the best...

Wrestlemania

Cheers Halkar;)