Contracting in IT

Roddy23

Hi, just a quick question, I'm due to start a short contract on Wednesday. Its about 6 weeks long. I have never before worked as a contractor and am looking for advice. I have about 2.5years experience working in IT, and have just finished my degree in Programming. However the contract is for an admin role.

I was hoping for some advice as I have heard one or two different ways of working as a contractor. I think the important thing here is that it is a short contract. Any help will be much appreciated. Thanks.

DubNside

What sort of advice are you looking for? In relation to the terms or payment or conditions etc?

TempestSabre

I assume he means setting up as a limited company, a sole trade or working via an umbrella company.

Roddy23

Sorry bout that, Sabre you are correct. IF somebody could give me some advice along which of the three options would be best.
I have heard of an umbrella company that allows ye to become an employee, and hence reduces the taxes. But I haven't a clue which would be the best road to go down, and was hoping that somebody who has experienced contracting in IT could shed some light.
Thanks

Modo06

ive been doing this for about 6 months now. there are good points and bad. good being i reackon by setting yourself up as a ltd company you save about €5000 a yr claiming tax back. there is pretty much nothing that cant be claimed back once the accountant is good. Bad point however there is very little security.

I worked under and umbrella company provided by CXC ireland. not bad, although i thought they could have been more creative with my receipts.

MrPudding

Be careful who you go with. In my opinion you should stay away from management companies that charge a percentage of your earnings rather than a fixed fee. They do the same amount of work regardless of what you earn so why should they charge more?

If you plan to continue to contract I would say setup the LTD company. If you just plan on doing the 6 weeks then I don't think it would be worth it, the umbrella optino would probably be the cheapest option. Again, make sure you will be charged a fixed fee and not a %.

MrP

DublinWriter

OP - are you working through an agency? If so, I'd be surprised if they took you on if you're not working via your own Limited company as they could be held liable if you default on your own PAYE/PRSI.

TempestSabre

None of the agencies I ever dealt with deal with you as a sole trader. You had to have a LTD or a umbrella company.

Roddy23

Ye, I will be working with a recruitment agency. DublinWriter and Sabre, I havent met with the agency yet to draw up my contract, but I just wanted to know the options that i would have, and what exactly I am getting myself into but I do know how much I am getting paid /day.

When dealing with the agenices, as Mr.Pudding says to get a "fixed rate" would it make much difference?
Thanks again.

TempestSabre

Pudding is talking about the umbrella companies. I used 360 in the past who were expensive, but it was a fixed amount and they were quite good to deal with. I tried other ones and many were a serious pain to deal with.

The agency will give likely only give you the option of an umbrella or an existing ltd company. If you haven't one setup they might not want to wait for you to set one up. If you are planning on contracting for 6 months or more, go with the limited company. I seriously doubt they'll deal with a sole trader as contractor.

Personally I didn't want the hassle and used umbrella companies.

DublinWriter

TempestSabre wrote:

Personally I didn't want the hassle and used umbrella companies.

Personally, I thought agencies were taking enough of my earnings as was, and didn't want another third party layer jumping in.

Running my own Limitied Company for the past 8 years has thought me a lot.

TempestSabre

That fine if you've got the time. For short contracts I didn't think it was worth it.

podowd

Limted Companies are the better option for long term contractors but for a 6 week contract its not worthwhile so the umbrella company option is the better option initially. Definitely best to avoid management companies that charge a %, unless on you're on a low daily rate. Prima Management (www.prima.ie) charge a fixed monthly fee and deal with all VAT, PAYE, PRSI, expenses etc.

The Insider

Prima are an excellent company I used them myself when I was contracting. The only charge a fixed fee and are very good to deal with. For short contracts its not worth the bother of setting up a limited company. If you think you might be contracting for anything over a year it might be worth your while.

pele10

I am currently setting up my own Limited company as I have a 9 month contract starting at the end of the month. Its costs near 400 to setup, you need to setup a Company, Company Bank Account and register for VAT, this can take six weeks alone from start to finish. I think I also need some sort of insurance, so for a 6 weeks contract i would defo go with an umbrella company.

I was advised that anything over 6 months, would be better with an LTD.

royster999

Going with a contractor such as prima, do they sort everything out?
Do invoices still have to go to a company or can they be paid to contractor directly.