Contractor Rates

antodeco

Hi all,
One of the guys in work has been offered a contractor job in another company. It is for an off-site trainer (based in Dublin). He has been asked for what his daily rate is, but of course, he doesnt have a clue (like me he's always been salaried). He asked me, and I also dont have a clue, so I thought I would ask here.

Can anyone shed some light for me on what a "daily rate" should actually be?

Thanks

Nody

2x current salary is a easy number to go with as a rule of thumb (keeping in mind you need to pay your own taxes, social security, training, holidays, possible umbrella fees etc.) so break down (gross) salary into daily, double it and round to a suitable looking number.

the keen edge

I've been sub-contractor for most of my working life so far.

Some pointers: basically sit down with a pen and paper and starting with you want your net wage to be, then start adding on taxes and expenses.

Its sometimes useful to imagine and narrate on paper what the working day, hour by hour, will entail. Be as detailed as possible with the description; you'd be surprised how many incurred costs, to yourself, you may otherwise overlook.

Don't forget to add in the accountant if you're going to need their services, could be that you have to cover that cost and they don't come cheap.

antodeco

Thanks for the replies, Ill pass the information on.

Just so I am correct, he will have to form a ltd company, keep track of all invocies and expenses and give all of these to the accountant? My understanding of the role is that he is being offered a daily rate and thats it. He will have to so a self assessment, or can pretty much everything be left up to the accountant?

Thanks

Kristopherus

antodeco wrote: »

Thanks for the replies, Ill pass the information on.

Just so I am correct, he will have to form a ltd company, keep track of all invocies and expenses and give all of these to the accountant? My understanding of the role is that he is being offered a daily rate and thats it. He will have to so a self assessment, or can pretty much everything be left up to the accountant?

Thanks

He should try and do as much as possible of the bookwork himself, as an accountant could charge anything up to €1000.00 to do the books. Will he be able to afford that?

Graham

Daily rate really depends on what he's going to be giving training in. If he's showing people how to make sandwiches, it's likely to be fairly low. If he's demonstrating the latest techniques in open heart surgery it'll be a bit higher.:pac:

For a first contract it might be worth using an umbrella company for tax/payroll/expenses/book-keeping, at least until he decides whether it's going to be a long term thing.

antodeco

I just had a google there, and came across Contracting PLUS. These guys seem to be an umbrella company?
Its a decent enough training position, something IT related anyway! (I really should get him to register for boards!).

I suppose he needs to find out if its actually worthwhile to become a contractor!

Graham

If it's a short term contract, Umbrella company is easier to walk away from at the end. There are costs associated with running/winding-down a LTD company. Most organisation won't take on a sole trader so really Umbrella/LTD are the main options.

If it's a short-term gig, could he take time off the current job to give it a go?

antodeco

We're all on a rolling contract at the minute in here (although its more of a rolling temp), so if you leave, you are gone! I suppose it will come down to salary.

If for example, current salary was 40k, what roughly should a daily rate be to better that amount? Based in one place, very little expenses. Assuming standard tax rates (?) are deducted? (Im acutally interested in this myself as I do similar work to him!)

Graham

If he's currently getting permie rates, I'd double it and work up from there.

This has to be balanced with the length of the contract and the risk he wont get work straight away once the contract ends. Consider how long is the contract, how in demand are your friends skills.

antodeco

His role doesnt come up a huge amount. I suppose I will tell him to see what the daily rate being offered is first, and then work from there!

Thanks for all the help.

Graham

If the role doesn't come up that often this should have an upward effect on the rate, unfortunately it also has an upward effect on the chances of not being able to find similar work once the contract ends.

antodeco

Thanks again for all the advise. It seems that a PAYE Umbrella employee works out best. Can any advise who the best are?

Graham

Not something I've had any experience with in years. A few a mentioned in these threads, most of them I recognise and have been around a good while.

http://www.boards.ie/vbulletin/showthread.php?t=2056848757

http://www.boards.ie/vbulletin/showthread.php?p=83064839

antodeco

How is PRSI calculated for umbrella members? There a difference of a couple of grand between a "normal" employee's PRSI and a particular Umbrella Companies PRSI (going in as PRSI A as an employee "contractor").

EDIT: Nevermind. Its employee PRSI (4%) and employers PRSI (10.75%)!

srsly78

Yes the umbrella won't pay the employers contribution for you.

Some umbrella companies offer another option where they make you a proprietary director of an "off the shelf" company. Then you only pay 4% class S prsi, but does not count as contributions for certain things like JSB. This is same situation as if you had your own company, but the umbrella will charge you lots for this. Cheapest and most tax-efficient option is to administer your own company (assuming you can keep getting new work of course), probably with help from an accountant.

Stheno

Is he training in apps (eg MS office) or something more specialised like PRINCE, PMP, VmWare, Cisco, Windows server?

Rates vary massively depending on the skillset, apps trainers earn about half or less what the serious technical trainers earn

NullZer0

antodeco wrote: »

Thanks again for all the advise. It seems that a PAYE Umbrella employee works out best. Can any advise who the best are?

Call contracting plus. They have gone out of there way for me anytime I've dealt with them.