Being a "middle man", how should I set myself up?

Cianos

Hi there,
I want to set up a business being a consultant to clients, designing solutions and then getting the actual work outsourced. The client would not have any contact with the workers themselves, as this would be part of the service. I essentially act as the middle man to make it totally hassle free for the client. Their value in hiring me is that I spend the time designing a solution that would best suit their needs and then looking for and dealing with competent workers, to deliver an end product that is still very good value.

My question is, how should I set myself up to make this run smoothly? In terms of billing, ideally I don't want the client to have any contact with the outsourced provider as it would make things quite messy. So I would like to bill the customer myself and then for me to pay the outsourced workers from that. How would that work in terms of tax and so on?

Or would there be a better alternative?

Thanks very much for any help.

whippet

Cianos wrote: »

Hi there,
I want to set up a business being a consultant to clients, designing solutions and then getting the actual work outsourced. The client would not have any contact with the workers themselves, as this would be part of the service. I essentially act as the middle man to make it totally hassle free for the client. Their value in hiring me is that I spend the time designing a solution that would best suit their needs and then looking for and dealing with competent workers, to deliver an end product that is still very good value.

My question is, how should I set myself up to make this run smoothly? In terms of billing, ideally I don't want the client to have any contact with the outsourced provider as it would make things quite messy. So I would like to bill the customer myself and then for me to pay the outsourced workers from that. How would that work in terms of tax and so on?

Or would there be a better alternative?

Thanks very much for any help.

I would imagine as you are going to be invoicing for the 'full service' including time and materials, you will have to register as a business and get a VAT number.

You will suffer from one problem, you will be invoicing your customer, obviously giving 30days or so credit and then in turn invoicing your suppliers who will expect at least 30 days credit.

The big problem will be ensuring you have the working capital to allow for the spread between debtor and creditor days.

Cianos

whippet wrote: »

I would imagine as you are going to be invoicing for the 'full service' including time and materials, you will have to register as a business and get a VAT number.

You will suffer from one problem, you will be invoicing your customer, obviously giving 30days or so credit and then in turn invoicing your suppliers who will expect at least 30 days credit.

The big problem will be ensuring you have the working capital to allow for the spread between debtor and creditor days.

Thanks for the reply. Yes that could be tricky if I have a bunch of providers to pay but am waiting on clients to send payment to me.

Would it be possible to run this as a sole trader or out of the question given what I've described?

Thanks

Eoin

Are you talking about IT solutions? You can still operate as a sole trader, though you'd want to check out your potential liabilities.

So I would like to bill the customer myself and then for me to pay the outsourced workers from that. How would that work in terms of tax and so on?

I presume that the people you're outsourcing to are themselves just providing you with an invoice for services, so would it not just be a straight forward expense that you write off?

John368

Cianos

I assume you are providing some sort of service like web-design or graphic design.

You have to ask yourself, what value are you providing to your client. and what value are you to your freelance workers.

You have already said that you will take away the "hassle" from your clients. That might be just enough in a lot of cases. That is the way retailing works. A shop does not want to go to each individual farm to get its vegatables - in most cases. Many now do though and are quite willing to put up with the hassle. There are things that you can add like a face-to-face contact which they might not be able to get elsewhere. Also, preliminary advice on maybe projects clients might want to investigate, but are not sure how to go about it, but they want someone they can trust to talk it over with. (on the understanding that they will get advice only if you have a good chance of getting that work).

With regard to what the freelancers get out of it, in my experience the number one thing is getting paid on time. They are often people who are very good at what they do, and love what they are doing, but do not want the hassle of and pitfalls of setting up their own business. Lets face it, if they wanted all that hassle they would be setting up their own business themselves.

If you are going to set up this business, do not under charge. Otherwise you will end up providing safe employment to people with all the responsibility taken on your own shoulders and with very little to show for your troubles.

John

Cianos

Thanks for that John, some interesting points there.