IT contractor on a daily rate

Cona · 05-01-2018 5:26pm #1

Hi folks,
I am looking for some advice, help and general understanding of the process that I need to undertake to move to a contracting role. I have already been offered the role and have already spoke to an accountant (setting up a LTD company, taxes etc).
The part I don't understand is how I get payed and how the contract works...I am not going through an external recruitment company as in this case, I am going direct to the client. The client has a company onsite who they use for external payroll. Has anyone any experience with this? The next steps I need to follow is setting up a contract with them to arrange my payments term etc. Anything else I need to include in a contract...Any advice??
I am kind of going into this blind, hence I am very apprehensive

srsly78 · 05-01-2018 5:28pm

Your company sends them invoice, they pay it into company account. Then you pay yourself from company.

You pay accountant to answer questions like this, get your moneys worth.

ellejay · 05-01-2018 5:34pm

Usually, on a contract basis, means you're not an employee.
You submit an invoice to your client, inc vat if you're registered.
Agree payment terms eg 30 days.
Your client pays you the amount on your invoice.

So basically you go on their Supplier List, not their Payroll.

It would be worth your while to speak to an accountant to find the most cost effective way to do business.
Eg operate as Self Employed, Sole trader, Set up a limited company, expenses etc.
Quite a change going from PAYE to Contractor.

Hope that helps.
I'm sure other posters in similar positions can give their experiences.

St1mpMeister · 05-01-2018 5:41pm

Considering going contractor route myself too so thanks OP for starting thread, will follow with interest.

Sorry to jump on your thread but one question I have is, can I use the accountant for the first few months, but then do my own returns after everything is setup correctly, or are you tied to use the accountant for the full year?

I currently do my own sole trader Form 11 annual returns, but I'd probably need the accountant to show me how to do the VAT returns if I go ltd (which I'd need to as the turnover would be higher than the small amount I earn as a part-time sole trader).

After doing one return the remaining months should be fairly similar (give or take expenses etc) so I could do those myself.

srsly78 · 05-01-2018 5:42pm

VAT returns are easy, it's the end of year company returns you will want accountant to help with. Also need accountant available for general advice.

St1mpMeister · 05-01-2018 5:44pm

srsly78 wrote: »

it's the end of year company returns you will want accountant to help with

Really? I don't need any assistance with the Form 11 after an accountant showed me how to do them the first time, so are the annual returns a lot more complicated than the sole trader Form 11 ?

srsly78 · 05-01-2018 5:45pm

Yes. Note as a proprietary director you ALSO have to do a form11 (which is easy).

St1mpMeister · 05-01-2018 5:47pm

srsly78 wrote: »

Yes. Note as a proprietary director you ALSO have to do a form11 (which is easy).

Right, so do I need to get an accountant for the whole year, or just hire them at the end of the year (and the start in order to assist with setting up the business) ?

srsly78 · 05-01-2018 5:49pm

You will want one on retainer for general advice. Usually they will offer a package deal with general advice+company EOY+personal for whatever price. Cost should depend on complexity of business, IT contracting is not complicated - don't pay over e1000/year. Shop around.

Cona · 05-01-2018 5:50pm

2 more questions if you don't mind:

- is there ever an issue with delayed payments? Or should it arrive shortly after submitting your invoice?

- what do I use to submit an invoice? Do I need software to create invoices or what?

elbyrneo · 05-01-2018 5:58pm

You don't have to go the Ltd company route. You can use an umbrella company. Won't name but Google "ireland contractor umbrella company" and you will find plenty offering a service.

If you are on a high daily rate (such that company set up cost and annual accountant fees are relatively low % of earnings), you are committed to doing this long term, and think you will be good to manage expenses (keep all receipts that can be construed as business relevant, charge portion of utility bills as expenses if using home address etc) then def makes sense to go Ltd company.

But, as it seems this is all relatively new to You, and if this might be short term, might be an idea to start umbrella route and convert to Ltd company in the future if you are more longer term committed and experienced etc.

elbyrneo · 05-01-2018 6:03pm

Factor in the one off costs of opening and ultimately winding down the company too which is avoided with umbrella route. Daily rate and duration/commitment key in decision

srsly78 · 05-01-2018 6:24pm

Cona wrote: »

2 more questions if you don't mind:

- is there ever an issue with delayed payments? Or should it arrive shortly after submitting your invoice?

- what do I use to submit an invoice? Do I need software to create invoices or what?

Is there ever an issue with wages as a permanent employee? Yes!! **** happens sometimes. Same with contractor. Just make sure your invoices are sent in on time and approved. If customer messes around paying you then ditch them.

What do you use to submit an invoice? Email. Yes you probably use software, not many people do their invoices in plain text format. Just use whatever free office software you like (office365 online, libreoffice etc). Find a template online and edit it - put your own company name and vat number in etc.

One note on umbrella companies: Be wary of paying employers prsi - 12.5% extra tax maybe.

IT contractor on a daily rate

Comments