Contract rates 2019

mrcheez

Anyone know where you can find the average range of contract rates for IT dev ? In particular a lead dev role.

I read somewhere that a guideline is:

- Take your current full time salary
- Double it
- Figure out the daily rate from that

Question is, when figuring out the daily rate, do you divide by 365 or 261 (number of working days) ?

14ned

Doubling a permie salary is definitely overkill. The whole doubling thing is more applicable to London or Silicon Valley, and it leaves out the recruiter fee, which is usually 15%.

I'm a bit out of date wrt current permie salaries, but if you earn €75k as a permie, +50% is €112k which is about right for a 48 week work year as a contractor in the same type of work. Divide by 48, then by 5, and you get €469/day.

Ask for €500, accept €475, maybe even €450 if it's in a skill area you want latest on your CV. And be aware that you won't work 48 weeks, as a contractor you'll need to invest in at least two weeks a year in CPD. Before I went permie earlier this year, I usually worked a 42 to 44 week year. I took usually five weeks vacation a year, and spoke at three international week long conferences. The rest went on sickness, public holidays, etc. As a contractor, you get that sort of flexibility to improve your long term hireability. You should take that opportunity if you want to remain in contracting.

Niall

mrcheez

14ned wrote: »

I'm a bit out of date wrt current permie salaries, but if you earn €75k as a permie, +50% is €112k which is about right for a 48 week work year as a contractor in the same type of work. Divide by 48, then by 5, and you get €469/day.

circa €469/day sounds about right, I think €450 is regarded as the baseline for a lead dev, though I'm guessing €500 will become the baseline rate soon enough.

14ned

mrcheez wrote: »

circa €469/day sounds about right, I think €450 is regarded as the baseline for a lead dev, though I'm guessing €500 will become the baseline rate soon enough.

That said, https://irishtechnews.ie/irish-it-contractor-rates-jump-25-since-2018/

(those figures are what the employer pays before recruiter and placement fees, so they're a good bit higher than what the contractor gets. Still though ...)

Niall

mrcheez

cheers!

moycullen14

I'd say the rates are location dependent. Cork would be a good €50 a day less than Dublin

14ned

moycullen14 wrote: »

I'd say the rates are location dependent. Cork would be a good €50 a day less than Dublin

And Limerick, Galway etc much less again.

Again, I haven't looked recently, but back when Dublin was 450-500/day, Limerick would be 250-300/day, Galway 300-350/day. I very much doubt that the ratios have changed by much.

Also, when considering Dublin rates, don't forget such figures are for city centre. County Dublin or further out are far lower. Same goes for Cork, if you draw a line around Mahon and the city centre, anyway.

Niall

mrcheez

14ned wrote: »

back when Dublin was 450-500/day

back when :eek:

I thought those would be the current range

s7ryf3925pivug

There are 400 euro per day contracts available in Limerick. I was contacted about one this year.
There are good salaries available in Limerick for senior devs now. My package would be competitive in Dublin.

14ned

mrcheez wrote: »

back when :eek:

I thought those would be the current range

Contract rates rise and fall by a good margin over time. For C++ it was 450-500/day around 2014, all the experienced people had left after the 2009 crash, they couldn't find anyone. Then it dipped by 10-15% by 2017, since it's back up.

Ultimately it's supply and demand, and Ireland is a shallow pool of both contracts and contractors, so we see larger swings in day rate than in other locations with deeper pools. I've also noticed a larger variance between individual contracts here. Fewer placements means more inaccurate information going around for longer, and most multinationals pay whatever the recruiters tell them is the market rate. After all, for them day rates are a rounding error, they just don't want to get caught "wasting money".

Niall

colm_c

Is 450/500 the going rate for a lead dev?

For a 44 week year, permanent staff are getting that as salary.

IMO, there should be a bigger gap between contractor and permanent, otherwise it doesn't seem worth it for the risk.

14ned

colm_c wrote: »

Is 450/500 the going rate for a lead dev?

For a 44 week year, permanent staff are getting that as salary.

IMO, there should be a bigger gap between contractor and permanent, otherwise it doesn't seem worth it for the risk.

Don't forget the expenses, VAT etc which can be set off as a limited company.

I always reckoned there's about +15% in it for equivalent benefits, if you don't have much downtime between contracts.

You don't choose contracting for the money, in Ireland at least. You choose it for the lifestyle.

Niall

colm_c

14ned wrote: »

Don't forget the expenses, VAT etc which can be set off as a limited company.

I always reckoned there's about +15% in it for equivalent benefits, if you don't have much downtime between contracts.

You don't choose contracting for the money, in Ireland at least. You choose it for the lifestyle.

Niall

I agree, it's about the lifestyle, but a lot of people think it's better money and give up well paid permanent jobs.

mrcheez

It can be better money when taking into account the way you can handle what is earned rather than just 40% tax on all that lovely dinero.

Expenses, executive pension, company car, fuel allowances, reclaimed VAT etc etc

s7ryf3925pivug

can you not set yourself up as a company and pay 25% tax on profit instead of 40% income tax?

colm_c

Ezequiel Purring Witchcraft wrote: »

can you not set yourself up as a company and pay 25% tax on profit instead of 40% income tax?

You can't pay yourself profit. They only legitimate way to take out money, is salary, dividend, pension etc, which is taxed at the 40%

So it's usually better not to have profit when contracting, otherwise you are doubling your tax.

colm_c

mrcheez wrote: »

It can be better money when taking into account the way you can handle what is earned rather than just 40% tax on all that lovely dinero.

Expenses, executive pension, company car, fuel allowances, reclaimed VAT etc etc

Yeah, but that's a lot of hassle and paperwork IMO.

You're also not getting the perks that companies are offering these days: pension contribution, healthcare, bonus, stock, free food, training fund etc.

It's swings and roundabouts, but as said before contracting should be about the lifestyle not the money, because in the current climate there is nothing in it financially unless you're on an extremely high daily rate.

OfflerCrocGod

colm_c wrote: »

Is 450/500 the going rate for a lead dev?

For a 44 week year, permanent staff are getting that as salary.

IMO, there should be a bigger gap between contractor and permanent, otherwise it doesn't seem worth it for the risk.

€110k perm? Not even in London is that standard.

smacl

colm_c wrote: »

You can't pay yourself profit. They only legitimate way to take out money, is salary, dividend, pension etc, which is taxed at the 40%

So it's usually better not to have profit when contracting, otherwise you are doubling your tax.

Pension isn't taxed and can be the most efficient way of getting money out of the company, albeit you won't get your hands on it for a long time. I started my first company in the late 80s and set up a pension back then and it made a lot of sense. If you're paying tax on S1 as a director, banks shy away from you when you come to get a mortgage where showing a commitment to saving such as in a pension is looked on favourably. As for profits, if you're self employed it makes sense to keep retained income in the company rather than your own account for the inevitable lean periods, where you can offset one years loss against another years profits. You can also charge back very many reasonable business expenses. While I've no big love of accountants, they're a necessity in this game and a decent one will pay for themselves many times over.

colm_c

OfflerCrocGod wrote: »

€110k perm? Not even in London is that standard.

It's fairly standard when you take in to account pension contribution and bonus in Dublin at least.

Generally for senior engineer and above positions.

You won't get it everywhere, but most if not all of the tech companies are paying it.

mrcheez

colm_c wrote: »

It's fairly standard when you take in to account pension contribution and bonus in Dublin at least.

Generally for senior engineer and above positions.

You won't get it everywhere, but most if not all of the tech companies are paying it.

Highly debatable.

I'd say most contract positions are paying that, but a minority of permie positions are paying that. And competition to get such a rate would be far higher for full timers.

Additionally the level of responsibility expected of the earner would be far greater in the permanent position, so you need to take into account the expectation and additional stresses laid on your shoulders.

mrcheez

Ezequiel Purring Witchcraft wrote: »

can you not set yourself up as a company and pay 25% tax on profit instead of 40% income tax?

You can pay yourself at the 20% tax rate, then the remainder goes into the company and is taxed 19% corporation tax Vs 40% that would be taxed on the same amount if you were permanent.

But ..

You can lower the amount that is taxed at 19% by using the company funds to pay for eligible costs like car costs, or portions of gas/electricity, or new computer, or training/conference trips, etc etc or putting a lot into an executive pension.

No paperwork as that's what you hire an accountant for

Charles Ingles

400 a Day + vat going rate

smacl

mrcheez wrote: »

Additionally the level of responsibility expected of the earner would be far greater in the permanent position, so you need to take into account the expectation and additional stresses laid on your shoulders.

This does seem to be a big difference. For a contractor in development the emphasis is get the job done quickly and provide high quality results, as you're on the clock. For a permanent employee there is far more emphasis on putting the hours in to (theoretically) get the best return on the salary. Personally, I prefer the former.

mrcheez

colm_c wrote: »

You're also not getting the perks that companies are offering these days: pension contribution, healthcare, bonus, stock, free food, training fund etc.

Most places you contract in will give you free food if that's what the full timers get

Also the place I'm in now is actually paying for the training. Nice

colm_c

mrcheez wrote: »

Highly debatable.

I'd say most contract positions are paying that, but a minority of permie positions are paying that. And competition to get such a rate would be far higher for full timers.

Additionally the level of responsibility expected of the earner would be far greater in the permanent position, so you need to take into account the expectation and additional stresses laid on your shoulders.

I can't this is true for anyone I know working at this level.

I'm not saying it's not true for companies and positions, it's just not the case for all companies.

There's also hot competition for talent, so companies generally want to have lower stress and lower burnout.

OfflerCrocGod

colm_c wrote: »

It's fairly standard when you take in to account pension contribution and bonus in Dublin at least.

Generally for senior engineer and above positions.

You won't get it everywhere, but most if not all of the tech companies are paying it.

I'm not sure what you mean by tech companies, you mean Google/FB, the cream of the crop? What roles are these? Back end I guess? Doubt front end is €110k standard. The majority top out at €75k from what I see in the recruiter emails I get.

mrcheez

75k is what I would call the average as well for permanent for a senior/lead dev in Dublin.

Google, Amazon, FB and perhaps some banks might be paying what the other poster mentions but I'd say competition is fierce for those as they'd be in the smaller percentile.

colm_c

OfflerCrocGod wrote: »

I'm not sure what you mean by tech companies, you mean Google/FB, the cream of the crop? What roles are these? Back end I guess? Doubt front end is €110k standard. The majority top out at €75k from what I see in the recruiter emails I get.

By tech companies, I mean companies whose primary business is a software product.

Rather than the other categories, enterprise, consulting, in house etc.

Google/FB are much higher than 110k for a senior/lead role.

There are plenty of companies paying at this level, yes you need to be above average, but we are not talking top 10%.

Most are either well funded startups with VC, or US backed multinationals.

Right now there is also a premium for good frontend and full stack.

Have a look at the DevelEire salary survey from last year, to give you an idea of the companies involved.

https://docs.google.com/forms/d/e/1FAIpQLSer0VQAWHVSBl-JIqoH8kjAixGVOVwf5J-I2RVyN116mrP9yg/viewanalytics

mrcheez

Your doc shows it's a minority paying the amount you're talking about.

Doing the same graph for contracting will show around 40-60% positions offering the rate you're saying is "the average" in permanent but in actuality is approx 7% according to the graph.

i.e. more chance of getting the same cash via contracting as more positions available at that level.

14ned

colm_c wrote: »

It's swings and roundabouts, but as said before contracting should be about the lifestyle not the money, because in the current climate there is nothing in it financially unless you're on an extremely high daily rate.

Actually there's tons in it if you contract remotely. Then you can live somewhere with €500/month rent for a house with garden in beautiful rural Ireland, and still offset a quarter of all housing costs (rent, electric, internet, heating etc) against the business. Plus you can live very well on the 20% tax band, and divert the substantial annual surplus into your executive pension, thus reducing company annual profit to zero. Effective permie equivalent salary can easily exceed €250k to reach a similar disposible income, and that's not including that view you get every morning.

If you contract onsite, I completely agree there's little in it over permanent, especially if more than two weeks pass between contracts. Lots of people are very mistaken on this. They'll learn the hard way.

Niall

14ned

smacl wrote: »

As for profits, if you're self employed it makes sense to keep retained income in the company rather than your own account for the inevitable lean periods, where you can offset one years loss against another years profits. You can also charge back very many reasonable business expenses. While I've no big love of accountants, they're a necessity in this game and a decent one will pay for themselves many times over.

I think you're referring to how things work in the UK, where there isn't a close company surcharge on undistributed profits. In Ireland, closely held service companies have a tax penalty on retaining any income in the company. It's deliberately designed to almost always be worse for you tax-wise to retain income. Irish Revenue really, really, really want close service companies to pay out all revenues within 18 months to somewhere, with a clear preference for PAYE or pension.

+1000 on a decent accountant, though there is no substitute for learning the tax system and learning how to manage cash flow. My wife is currently training to become a chartered accountant, and an interesting thing we've learned is that I could probably pass most of the Irish CAP2, which is the second year of training. I would expect that any experienced business owner in Ireland would be the same. We have a deeply unfair, but simple, tax system in Ireland. It's easy to master, compared to other tax jurisdictions e.g. the UK's.

Niall

14ned

mrcheez wrote: »

You can pay yourself at the 20% tax rate, then the remainder goes into the company and is taxed 19% corporation tax Vs 40% that would be taxed on the same amount if you were permanent.

This is all wrong. You only pay corporation tax on profits, which is 12.5%. No IT contractor incorporation should ever, ever make a profit which is not offset by a loss rolled forward, which reduces that corporation tax charge to zero. If you ever pay corporation tax, then you need a new accountant pronto.

You also seem to not realise that company profits must be paid out as dividends, else the close company surcharge arises. Dividend payments are taxed identically to PAYE income, USC, PRSI, the works. So it makes zero difference whether your contracting company pays you via PAYE or dividend in Ireland. As PAYE is easier (less paperwork), that's what everyone does. In the UK all this is very different, but in Ireland it's very simple: all income is taxed identically.

You cannot escape the 52% marginal tax rate in Ireland by any means, except by paying into a pension, or becoming a farmer, or becoming a creative artist. Or emigrating. Or being rich enough to afford setting up a multinational network of cross-owning entities and charities like that Ikea founder.

I'll grant one compliment to Irish Revenue, they have the tax system here sewn up. Very, very hard for individuals to avoid taxes over here compared to anywhere else in the OECD. I do recognise the elegance in their tax system design, but it is horribly horribly unfair. Corporations get off scot free with almost anything. Individuals cannot escape tax without going into farming.

Niall

funnyname

Thanks Niall, so basically you're saying, anything you don't pay yourself above the 20% tax amount allowed or put into a pension is going to get hit at the 52% rate?

14ned wrote: »

This is all wrong. You only pay corporation tax on profits, which is 12.5%. No IT contractor incorporation should ever, ever make a profit which is not offset by a loss rolled forward, which reduces that corporation tax charge to zero. If you ever pay corporation tax, then you need a new accountant pronto.

You also seem to not realise that company profits must be paid out as dividends, else the close company surcharge arises. Dividend payments are taxed identically to PAYE income, USC, PRSI, the works. So it makes zero difference whether your contracting company pays you via PAYE or dividend in Ireland. As PAYE is easier (less paperwork), that's what everyone does. In the UK all this is very different, but in Ireland it's very simple: all income is taxed identically.

You cannot escape the 52% marginal tax rate in Ireland by any means, except by paying into a pension, or becoming a farmer, or becoming a creative artist. Or emigrating. Or being rich enough to afford setting up a multinational network of cross-owning entities and charities like that Ikea founder.

I'll grant one compliment to Irish Revenue, they have the tax system here sewn up. Very, very hard for individuals to avoid taxes over here compared to anywhere else in the OECD. I do recognise the elegance in their tax system design, but it is horribly horribly unfair. Corporations get off scot free with almost anything. Individuals cannot escape tax without going into farming.

Niall

14ned

colm_c wrote: »

Have a look at the DevelEire salary survey from last year, to give you an idea of the companies involved.

https://docs.google.com/forms/d/e/1FAIpQLSer0VQAWHVSBl-JIqoH8kjAixGVOVwf5J-I2RVyN116mrP9yg/viewanalytics

36% of the responses are in Data Science. 18% are SRE.

So over half are hardly representative of the Irish tech industry. You're talking top 5% of highly paid roles here. So no wonder the figures are what the survey shows.

Last time I interviewed with Google was in August 2015. The salary on offer was €130k. I wouldn't be surprised if pay has risen at least 7% p/a since, so that would make it €170k or so. That matches the survey.

All that said, last year I was onsite in Verizon, and I know for a fact that none of the team I was in were on more than 80k. All very senior software devs, but not in a currently hot niche.

A famous engineer I knew in the cloud division in Verizon was on 105k. He left for another tech multinational I won't mention for 150k, and he seemed quite pleased with that.

So I'd surmise from all that that in the "hot" tech sectors, pay has been ramping quickly for years now. If you're not in a "hot" tech sector e.g. web stuff, then pay has been far more static. I'd still consider 70k-80k a perfectly reasonable senior software developer salary in central Dublin for most kinds of software development.

For machine learning et al, then sure, a senior software dev ought to be on twice that. Cloudy senior devs nearly as much.

As always, supply and demand.

Niall

14ned

funnyname wrote: »

Thanks Niall, so basically you're saying, anything you don't pay yourself above the 20% tax amount allowed or put into a pension is going to get hit at the 52% rate?

I think for 2018 it was 50% or 52% (add 40% income tax x USC x 4% PRSI), yes. It's very hard for ordinary individuals to avoid tax in Ireland.

smacl

14ned wrote: »

I think you're referring to how things work in the UK, where there isn't a close company surcharge on undistributed profits. In Ireland, closely held service companies have a tax penalty on retaining any income in the company. It's deliberately designed to almost always be worse for you tax-wise to retain income. Irish Revenue really, really, really want close service companies to pay out all revenues within 18 months to somewhere, with a clear preference for PAYE or pension.

Slightly different for me as I own and run a small software house, where we develop product and sell licenses. That classifies as manufacturing in Ireland for tax purposes which works our far better than selling services. (Edit:Historically, not any more) Sales based revenue streams can be very lumpy and it is vital to keep money in the bank to smooth things out. I've made the mistake of putting too much money in the directors pension in the past and regretted it in tighter times. It would be interesting whether moving to a SaaS model would change this, I'm guessing it probably would. In terms of profit and loss, it often makes sense to have a loss near year end if the pipeline is strong, as you can offset the loss against a future profit. This can be done by buying assets, or deferring a sale slightly.

+1000 on a decent accountant, though there is no substitute for learning the tax system and learning how to manage cash flow. My wife is currently training to become a chartered accountant, and an interesting thing we've learned is that I could probably pass most of the Irish CAP2, which is the second year of training. I would expect that any experienced business owner in Ireland would be the same. We have a deeply unfair, but simple, tax system in Ireland. It's easy to master, compared to other tax jurisdictions e.g. the UK's.

Niall

Similar enough story. My wife comes from a financial management background, is top notch at cash flow management and knows the tax laws well. Just as well as it is something I'm weak enough on and have little interest in myself. Once you avoid taking on employees until strictly necessary and always keep in the black, things are easy enough to control. We had a second company before having kids that grew to sixteen employees. Hugely stressful but luckily we managed to sell it for a decent sum before going entirely nuts. Never again.

Royale with Cheese

Been contracting in .net for 4 years. In my experience the money is considerably better than permanent and on top of that you don't need to do anything other than dev to get it. No leading teams, taking on extra responsibilities etc. I also don't miss performance reviews or having to feign an interest in corporate culture like in some bigger companies I worked in as full time staff. There's no way I'd go back to permanent unless I'm forced to.

OP, I've always found the Morgan McKinley salary guides (there is a contract rates section) to be reasonably consistent with what I've been offered in Dublin. I have friends who work full time in other IT roles like project management who would agree:

https://www.morganmckinley.ie/salary-survey

retalivity

My 2c...
I'm contracting 5.5years now, focused on data analysis and engineering. I too do not miss all the hr crap associated with perm jobs - performance reviews, goals, targets etc., As well as town halls, corporate events etc. Just get in, do my hours and get out. My rates have increased ~40% in my time contracting, to the point that i do not think i could earn something similar for the same work unless i went into google, fb etc. Ive no interest in management or leading people, nor have i done any additional training over and above my work - any additional skills or experience gained have been on the job.
Data focused jobs range from 400-550 in dublin, with niche roles like senior ds or hardcore python rising exponentially - paying up to 700+. Im not really uo to date on dev but from being in touch with recruiters and on linkedin a fair bit, i think the rates are similar to the above.

s_mcloughlin

14ned wrote: »

36% of the responses are in Data Science. 18% are SRE.

So over half are hardly representative of the Irish tech industry. You're talking top 5% of highly paid roles here. So no wonder the figures are what the survey shows.

I think you may have misread - from the last graph, 36% of the responses are Full Stack and 18% are Distributed Systems

mrcheez

14ned wrote: »

This is all wrong. You only pay corporation tax on profits, which is 12.5%. No IT contractor incorporation should ever, ever make a profit which is not offset by a loss rolled forward, which reduces that corporation tax charge to zero. If you ever pay corporation tax, then you need a new accountant pronto.

I just double checked the annual return, and yes sorry you are right it's 12.5% not 19%

mrcheez

14ned wrote: »

I think for 2018 it was 50% or 52% (add 40% income tax x USC x 4% PRSI), yes. It's very hard for ordinary individuals to avoid tax in Ireland.

Well it's not hard if you put it into a pension, or well, lower the taxed amount by spending it on expenses!

So at the end of the year if you are permanent on 100K, vs contracting on 100K, so you probably end up with a little more on the contracting front.

gnf_ireland

14ned wrote: »

This is all wrong. You only pay corporation tax on profits, which is 12.5%. No IT contractor incorporation should ever, ever make a profit which is not offset by a loss rolled forward, which reduces that corporation tax charge to zero. If you ever pay corporation tax, then you need a new accountant pronto.

I have been a contractor for nearly 2 decades, both in Ireland and abroad, and while I agree somewhat with the above statement I have to disagree with the line that you should never pay corporation tax. Everyone's circumstances are different and everyone has different objectives when it comes to handling finances.

I have made profits in the past and left them in the company, and paid CT and surcharge on them - but I had a valid reason for doing so.

I agree that in general there are only three ways to take money out of the company
1. Salary
2. Dividends
3. Capital Gains
You can also extract funds out via pension contributions, but will leave that one for the moment.
In normal circumstances, they all work out much the same and the revenue have set it up that way to avoid people being creative. But a number of years ago, CGT was 20% for example - so rates do change !

However, it is very possible that people can be carrying forward a capital loss from a poor investment choice during the boom times. It is also possible that people may be considering working abroad for a few years in the future which would change their tax status especially around dividends and capital gains. Others could be looking at entrepreneur relief at 10% and wondering what may be around when its their turn - depending on their age. There is also the discussion around a potential redundancy payment in the future, if things went to hell completely.

Over the years my approach has changed a number of times, depending on the security of the contract I was in, the economic conditions and my financial commitments. Overall I have tended to pay myself the going market rate for the permie role I was doing. I then tended to either pay myself a bonus if I had a need for it and/or made a one off pension contribution (paid into the pension as I went along). Sometimes I held money in the account, especially if I was coming up towards the end of a long term contract and planning to take some time off between them (either planned or forced).

Personally, a few years ago I decided to build a reserve of 6 months expenses (including salary, pension etc) in the company. This was to smooth over any downtime between contracts and make it as seamless as possible. I paid CT & surcharge on this - at the time USC & Income tax were slightly higher, so this swayed me a bit also.
I would urge all contractors to consider how they would fund a 3-6 month gap between contracts and not think they will automatically roll from one contract to another.

Other scenarios which may sway decisions is if you are on a threshold for a grant (e.g. 3rd level education) etc. As I said, everyone's financial circumstances are different and need to be considered accordingly !

gnf_ireland

retalivity wrote: »

My rates have increased ~40% in my time contracting, to the point that i do not think i could earn something similar for the same work unless i went into google, fb etc. ............ nor have i done any additional training over and above my work - any additional skills or experience gained have been on the job.

I have been contracting a lot longer than you - very close to 20 years at this stage. I dont work in development either - more the architecture, strategy, programme delivery space. I have seen rates rise and fall, rise again, fall again and recover to various levels. What I have learned though is its always the niche skills that pays the premium rates, and its very difficult to remain cutting edge while you are in the middle of a premium rate contract. No one will want to give up days towards training when on a premium.

However, after a while the skills you have start to become outdated and while you can plod along for a bit (and lots do), ultimately a reset is needed. Its also very easy to get pigeon holed in an area and very difficult to get out of it after a while. I have seen so many people end up back permanent at this point mainly out of desperation !

I would strongly advise to stay current in skills, devote a week a year to some sort of training/certification or go to a conference - even if not 100% aligned to what you are doing, as it gives options and shows interest. Its also much easier to do courses now with virtual classroom/on demand courses than it was 20 years ago when I started.

Tech moves fast. I have ~20 years working life left (I only spent 3 years as a permie after leaving uni). There is no way to survive on your existing skills in the long term, and the longer you leave it the bigger the investment required. You don't want to be the 40-50 year old unable to get a job as they have become a dinosaur in their industry !

gnf_ireland

14ned wrote: »

+1000 on a decent accountant, though there is no substitute for learning the tax system and learning how to manage cash flow. My wife is currently training to become a chartered accountant, and an interesting thing we've learned is that I could probably pass most of the Irish CAP2, which is the second year of training.

I think you may be a bit generous there on your knowledge Most accounting degrees only offer exemptions to subjects within CAP1 and there is a bit jump in knowledge beyond that. For my sins, I have a masters in accounting before I went down the IT route just before the dot.com bubble and would have had a CAP2 exemption at the time - but seriously doubt anyone would pass it without some serious commitment. I do agree though that an understanding of finance, accounting and tax is invaluable for all business owners, and courses are run on the subjects regularly by a variety of groups

Gone a quick google and see that the pass rate in 2017 was 66% !!
https://www.charteredaccountants.ie/News/cap2-june-2017-exam-results-released

gnf_ireland

14ned wrote: »

I'm a bit out of date wrt current permie salaries, but if you earn €75k as a permie, +50% is €112k which is about right for a 48 week work year as a contractor in the same type of work. Divide by 48, then by 5, and you get €469/day.

To be fair, its pretty easy to do a search online and find contract rate guidelines. Enough adverts have some sort of indication and even if its not a direct match, it can be give an indication.

I agree that adding 50% to the permie salary is a good guideline in a lot of cases. However, that 50% is not the premium for contracting - you need to take accounting fees out, and then factor in the benefits you are going without including
- employer PRSI (and the benefits that go with it)
- employer pension contribution
- death in service benefit
- income protection (which is expensive!!)
- sick/maternity/paternity cover
- training costs
- parking (in a number of cases)
- RISK - of being out of work between contracts etc. This has a cost associated to it, even if it is hard to quantify. Never plan to walk from one contract to another !
- CAREER DEV - in most cases you lose out on career dev and future earning growth being a contractor. This may be more relevant to some than others, but it is worth keeping in mind. Very rarely will you climb the ladder and get offered new opportunity as a contractor !

There have been times I have done the numbers and the figures have been very tight between the two. Other times, fortune has shone on me and the gap has been decent. The question is more what is important to you, not just now but also in the future.

For example, how many contractors do you think were offered mortgages in 2010 when money was tight and prices had crumbled ? There is always a trade off to be made....

zephyro

14ned wrote: »

This is all wrong. You only pay corporation tax on profits, which is 12.5%. No IT contractor incorporation should ever, ever make a profit which is not offset by a loss rolled forward, which reduces that corporation tax charge to zero. If you ever pay corporation tax, then you need a new accountant pronto.

You cannot escape the 52% marginal tax rate in Ireland by any means, except by paying into a pension, or becoming a farmer, or becoming a creative artist. Or emigrating. Or being rich enough to afford setting up a multinational network of cross-owning entities and charities like that Ikea founder.

What if you plan on availing of Entrepreneur Relief or Retirement Relief? Also how do you deal with the applicable limits on Executive Pension contributions?

gnf_ireland

zephyro wrote: »

Also how do you deal with the applicable limits on Executive Pension contributions?

The limits on executive pensions can be low enough depending on how long you have worked for the company, your current salary and current pension value. The monthly limits are much more generous than one off payment ones.

Also worth noting that executive pensions can be accessed at 50 currently, so again depends on someones age profile may be very beneficial to extract a chunk of cash from the company.

srsly78

gnf_ireland wrote: »

T
- CAREER DEV - in most cases you lose out on career dev and future earning growth being a contractor. This may be more relevant to some than others, but it is worth keeping in mind. Very rarely will you climb the ladder and get offered new opportunity as a contractor !

Are you kidding me? Contractors get way more experience/career development, because they aren't stuck in the same place vegetating. Climbing the ladder? Haha good one.... Everone knows that the best way to increase earnings is to find another job. Permanent salaries for dev roles are a joke at the higher end.

gnf_ireland

srsly78 wrote: »

Are you kidding me? Contractors get way more experience/career development, because they aren't stuck in the same place vegetating. Climbing the ladder? Haha good one.... Everone knows that the best way to increase earnings is to find another job. Permanent salaries for dev roles are a joke at the higher end.

That may be particular to development roles, where a senior developer is the top of the ladder for most and you achieve that in your mid-30's after say 15 years experience. What then? Some people may be happy to stay at this level and others will want to try and move on, maybe into a software architect role, or product architect or potentially into a development manager role and beyond. I am sure most of those roles are not made available to contractors in the vast majority of cases. You are there to do a job NOW, not in the future.

Yes variety of work is good and you get to see different ways of doing things, but chances are you will always be directly under someone elses technical guidance. Some people don't like this

But back to your point, some people value career guidance and development. Others don't, but you should not assume a one size fits all scenario. Just because its not for you, does not mean its not for everyone !

I am not saying contracting is bad - I have been one for close to 20 years, but its not all roses either. Its very easy be a contractor in the good times when roles are readily available. Different story when things slow down, and I wonder how many on here have been contracting long enough to witness a bad cycle !!!

s7ryf3925pivug

srsly78 wrote: »

Are you kidding me? Contractors get way more experience/career development, because they aren't stuck in the same place vegetating. Climbing the ladder? Haha good one.... Everone knows that the best way to increase earnings is to find another job. Permanent salaries for dev roles are a joke at the higher end.

Yeah I thought I was progressing fine in my role until I quit and was offered a 30% raise and promotion as a counter offer. Loyalty doesn't pay in most places, which is dumb. New place seems to recognize the value of retaining employees.