Contracting Rates

Loopylineking

Hi Folks, Thinking of going contracting to give me a bit more freedom.

Background:

Currently earning 52000 a year and getting 3200 a month. I’m renting with friends in Kilkenny paying 300 a month and commuting to Dublin.

I’m 34 and have no real intention of getting a mortgage. Money doesn’t mean a lot to me

Jobs available:
After contacting a few recruitment agencies there’s plenty of jobs available in my field contracting wise ranging from 180 to 250 a day from two months to a year.

What I Know:
You don’t get paid holidays or bank holidays paid. There are 253 working days in a year. You have to set yourself up as a limited company.

What I need to know:

If my daily rate added up to what I was getting 52000 grand a year and 3200 a month how much would I get if I was contracting? Would it work out the same at 3200 take home pay or a good bit more. Also if I had to commute to Cork, Galway or Dublin how much of a tax break would I get on fuel? Can I get a tax break on equipment like laptop or even a different car.

Any help would be appreciated. Ideally I plan on working six months of the year and don’t mind commuting at all.

I have about 60K saved as well so not too bothered if it doesn’t work out

dubrov

I think you are mad to consider 250 per day vs 52k per year.
I would've though 350-400 per day might be more comparable.

You would lose benefits like pension, holidays, paid sick days and contractors are always the first to go in a downturn.
Worse than that, you would have to move job regularly and some employers can demand a lot from contractors.

Tax-wise you may do slightly better but we are talking small change.
You can write off things that you need for work but not for getting to/from work.
E.g.
Car - You can write it off if you need it for work regularly (think travelling salesman). Most companies will already do this where available for full time employees anyway.
Laptop - Yes, if you can argue you use it for work. This is probably a runner if your job is any way IT related.
Work Clothes - Yes, you can write off suits if you can argues you use them for work.
Home Broadband - IF you work from home you can write off a proportion of your bill.

You are literally talking hundreds rather than thousands in the difference.

dubrov

By the way, when I say write off. I mean it will cost you about half of what it would otherwise.

Mobile phones are another one you could write off as long as you don't get a separate work phone.

Loopylineking

So basically no difference a month in take home pay if the contracting rates add up to what you are currently getting, well that sucks.

I was thinking the 3200 I’m currently getting a month might bump up to 4K or something and I would be happy with working six-nine months of the year.

Time to re-evaluate so!!

Marcusm

Loopylineking wrote: »

So basically no difference a month in take home pay if the contracting rates add up to what you are currently getting, well that sucks.

I was thinking the 3200 I’m currently getting a month might bump up to 4K or something and I would be happy with working six-nine months of the year.

Time to re-evaluate so!!

How would it? You would lose holiday pay, any pension contributions, health care etc but have to pay 100-250 per month to run the ltd company. An employer should be paying a higher daily rate for contract staff as they are easier to pay off, may not have employer’s PRSI etc. If the daily rate for you is not 20-25% higher than a salary then absent other factors (location, new skills, imminent ubemployment), it would not be a sensible approach.

marieholmfan

This is a TERRIBLE idea.
Contract rate for a permie role paying 52K should be about 375 MINIMUM and wouldn't be worth taking at that rate.
You should work the comparison off 46 weeks of 5 days each week.
I use 43 weeks.


253 working days in a year ?
253 working days in a year ?

So there's 12 non working days?

Are you mad?


It's not just the company setup fees 250 minimum.
There's professional indemnity insurance, tax clearance ,VAT etc.

And contractors have to be very very money motivated or they get into all kinds of troubke.

Loopylineking

marieholmfan wrote: »

This is a TERRIBLE idea.
Contract rate for a permie role paying 52K should be about 375 MINIMUM and wouldn't be worth taking at that rate.
You should work the comparison off 46 weeks of 5 days each week.
I use 43 weeks.


253 working days in a year ?
253 working days in a year ?

So there's 12 non working days?

Are you mad?


It's not just the company setup fees 250 minimum.
There's professional indemnity insurance, tax clearance ,VAT etc.

And contractors have to be very very money motivated or they get into all kinds of troubke.

There’s 365 days in a year Not 265 as you seem to be suggesting

Like I said I don’t care if money is down every year, if I can say get 2/3 of my current salary working six months a year I would be happy.

I think I’m gonna contact one of the professional firms to see what I would happy with as most here seem to think you have to earn nearly double of your current salary which is not the case whatsoever.

As a young person with no obligations it would suit me down to the ground I think, but again going to contact someone who knows what their talking about.

By the way I don’t bother with the pension as I don’t need it or health insurance. I’ll have the family home in the future

marieholmfan

Loopylineking wrote: »

There’s 365 days in a year Not 265 as you seem to be suggesting

Like I said I don’t care if money is down every year, if I can say get 2/3 of my current salary working six months a year I would be happy.

I think I’m gonna contact one of the professional firms to see what I would happy with as most here seem to think you have to earn nearly double of your current salary which is not the case whatsoever.

What about the Weekend; do you plan to work every Saturday and Sunday while you're downshifting. Listen I owe you nothing - send your CV to Sun Alliance in Waterford they are always looking for contractors and they pay good rates.


Contact all of the professional firms the difference in rate can be €100 a day.

Loopylineking

marieholmfan wrote: »

What about the Weekend; do you plan to work every Saturday and Sunday while you're downshifting. Listen I owe you nothing - send your CV to Sun Alliance in Waterford they are always looking for contractors and they pay good rates.


Contact all of the professional firms the difference in rate can be €100 a day.

No plan on working Saturday and Sunday just six months a year to be honest or at a push 9 months. I’ve mailed one of the companies who look after IT contracting accounts and setups and waiting to see what they come back with.

listermint

You don't care much for money. Your words...

So you want to do contracting for money...



Sorry.i have to think this is a windup.

Loopylineking

listermint wrote: »

You don't care much for money. Your words...

So you want to do contracting for money...



Sorry.i have to think this is a windup.

Nope, what I care for is better life work balance. E.G work six months or 9 months of the year instead of 12.

Work on my own terms. Obviously be different if I had a family to support I wouldn’t even consider it unless there was huge benefits to it.

I don’t need a huge amount of money to be honest. 2K a month to me could be 4.5K a month to someone with family and kids.

irishguy

Loopylineking wrote: »

There’s 365 days in a year Not 265 as you seem to be suggesting

Like I said I don’t care if money is down every year, if I can say get 2/3 of my current salary working six months a year I would be happy.

I think I’m gonna contact one of the professional firms to see what I would happy with as most here seem to think you have to earn nearly double of your current salary which is not the case whatsoever.

As a young person with no obligations it would suit me down to the ground I think, but again going to contact someone who knows what their talking about.

By the way I don’t bother with the pension as I don’t need it or health insurance. I’ll have the family home in the future

You do understand that you only get paid that rate for the days you work, hence the mention of 265 days. For that low a rate contracting isn't worth the effort/risk/cost of running a company.

Calahonda52

Marcusm wrote: »

How would it? You would lose holiday pay, any pension contributions, health care etc but have to pay 100-250 per month to run the ltd company. An employer should be paying a higher daily rate for contract staff as they are easier to pay off, may not have employer’s PRSI etc. If the daily rate for you is not 20-25% higher than a salary then absent other factors (location, new skills, imminent ubemployment), it would not be a sensible approach.

Can you elaborate please on this?

Calahonda52

marieholmfan wrote: »

This is a TERRIBLE idea.
Contract rate for a permie role paying 52K should be about 375 MINIMUM and wouldn't be worth taking at that rate.
You should work the comparison off 46 weeks of 5 days each week.
I use 43 weeks.


253 working days in a year ?
253 working days in a year ?

So there's 12 non working days?

Are you mad?


It's not just the company setup fees 250 minimum.
There's professional indemnity insurance, tax clearance ,VAT etc.

And contractors have to be very very money motivated or they get into all kinds of troubke.

How do arrive at that?
IIRC it can be done for 50 lids here

https://www.cro.ie/Registration/Company

Calahonda52

Loopylineking wrote: »

There’s 365 days in a year Not 265 as you seem to be suggesting

Like I said I don’t care if money is down every year, if I can say get 2/3 of my current salary working six months a year I would be happy.

I think I’m gonna contact one of the professional firms to see what I would happy with as most here seem to think you have to earn nearly double of your current salary which is not the case whatsoever.

As a young person with no obligations it would suit me down to the ground I think, but again going to contact someone who knows what their talking about.

By the way I don’t bother with the pension as I don’t need it or health insurance. I’ll have the family home in the future

You came on here looking for ideas and you pi$$ in on them

You really have no idea here, none, period!

Loopylineking

I don’t think people here actually understand the concept of IT contracting and the questions I’m asking.

1) Want to work six month of the years at a stretch nine. This is why I want to go contracting.
2)I’m happy to work for 2/3 of the salary if it gives me 3-6 months off a year.
3) I’m currently only renting at 300 a month. No plan on mortgage.

I have no loans no commitments.

I want a better work life balance, I don’t pay into a pension as don’t need to, don’t have health insurance. Happy to work 6-9 months solid without holidays.


What I’m asking is what you can expect each month into your bank account with daily rates. I quoted the daily rates on offer previously. I actually went to a different recruiter who quoted 230 to 350 a day contracting

Thanks

Loopylineking

Calahonda52 wrote: »

You came on here looking for ideas and you pi$$ in on them

You really have no idea here, none, period!

Didn’t mean to come across as ignorant but someone quoted 250 a month to setup as a limited company, that’s nonsense.

barneystinson

dubrov wrote: »

Work Clothes - Yes, you can write off suits if you can argues you use them for work.

Absolutely out of the question - no way.

dubrov

barneystinson wrote: »

Absolutely out of the question - no way.

Yes, you are right. I have edited the original post.

Rulmeq

dubrov wrote: »

Yes, you are right. I have edited the original post.

This was even tested by a barraster, who argued that those stupid wigs and gowns were never going to be used outside of her work, and she lost (I don't have the case number, and this could be badly remembered)

Rulmeq

Loopylineking wrote: »

Didn’t mean to come across as ignorant but someone quoted 250 a month to setup as a limited company, that’s nonsense.

My accountant charges €2k per year, I also have to pay the €20 CRO fee on top of that. I have additional costs of about €300 for banking, and €1k for a company to manage my pension (you won't have to worry about that apparently). So €250/month isn't off the wall, sure you can get it done for less, but not by much (also that's just annual running costs, the setup costs are separate as well, and 15 years ago it cost me €500 to setup)

You would need to be getting at least €375 per day to make it worth your while, and if you only want to do 6 months, you would need to be making nearly double that per day. Contracting isn't worth it if you aren't getting at least 25% more than you would as a permie, and frankly you should be getting much closer to 50-100% more.

barneystinson

Rulmeq wrote: »

This was even tested by a barraster, who argued that those stupid wigs and gowns were never going to be used outside of her work, and she lost (I don't have the case number, and this could be badly remembered)

Mallalieu v Drummond

Stratvs

Rulmeq wrote: »

This was even tested by a barraster, who argued that those stupid wigs and gowns were never going to be used outside of her work, and she lost (I don't have the case number, and this could be badly remembered)

You remember it well ok. This was a UK case, Mallalieu v Drummond from 1986.
The full details are here ( it's a long read )
https://library.croneri.co.uk/cch_uk/btc/57-tc-330

un5byh7sqpd2x0

Rulmeq wrote: »

My accountant charges €2k per year, I also have to pay the €20 CRO fee on top of that. I have additional costs of about €300 for banking, and €1k for a company to manage my pension (you won't have to worry about that apparently). So €250/month isn't off the wall, sure you can get it done for less, but not by much (also that's just annual running costs, the setup costs are separate as well, and 15 years ago it cost me €500 to setup)

You could just become a director of an umbrella company which'll cut that cost down to about 60 a month (and only for the months worked) after tax with no setup or windup or indeed other fees.

barneystinson

Arian Vast Fireplace wrote: »

You could just become a director of an umbrella company which'll cut that cost down to about 60 a month (and only for the months worked) after tax with no setup or windup or indeed other fees.

What’s the situation with PRSI in that case, is it class A or S?

Rulmeq

Arian Vast Fireplace wrote: »

You could just become a director of an umbrella company which'll cut that cost down to about 60 a month (and only for the months worked) after tax with no setup or windup or indeed other fees.

It wouldn't make sense for me, but would be a good option for the OP

Stratvs

barneystinson wrote: »

What’s the situation with PRSI in that case, is it class A or S?

I've recently seen promotional documentation from one of the operators in this area and they say
Umbrella (PAYE) is Class A
Umbrella (Director) is Class S ( you become a prop dir )

un5byh7sqpd2x0

barneystinson wrote: »

What’s the situation with PRSI in that case, is it class A or S?

What he said:

Stratvs wrote: »

I've recently seen promotional documentation from one of the operators in this area and they say
Umbrella (PAYE) is Class A
Umbrella (Director) is Class S ( you become a prop dir )

Class A, obviously you have to pay Employers PRSI out of your day rate (8.8-11.05%) whereas with Class S you don't.

Marcusm

Calahonda52 wrote: »

Can you elaborate please on this?

The are a number of ways of doing contracting, some can involve umbrella companies, some an independently owned vehicle with your own name. A number of service providers exist who will manage the admin for you from issuing invoices, managing bank accounts, VAT returns, PAYE, right through to annual accounts, CT returns and personal tax returns. The highest cost for this is approx €250 per month with cheaper options available.

Marcusm

Loopylineking wrote: »

Didn’t mean to come across as ignorant but someone quoted 250 a month to setup as a limited company, that’s nonsense.

It’s not nonsense, it is at the upper end of the scale but is what I pay. It’s for the full service and I have my own Ltd company and have multiple clients for whom I contract. Some for set days per week, some for one offs etc. I’ve had the same service for 3 years. It’s not the cheapest but allows me segregation which I wouldn’t get with an umbrella set up.

fankity flank

Loopylineking wrote: »

Hi Folks, Thinking of going contracting to give me a bit more freedom.

Background:

Currently earning 52000 a year and getting 3200 a month. I’m renting with friends in Kilkenny paying 300 a month and commuting to Dublin.

I’m 34 and have no real intention of getting a mortgage. Money doesn’t mean a lot to me

Jobs available:
After contacting a few recruitment agencies there’s plenty of jobs available in my field contracting wise ranging from 180 to 250 a day from two months to a year.

What I Know:
You don’t get paid holidays or bank holidays paid. There are 253 working days in a year. You have to set yourself up as a limited company.

What I need to know:

If my daily rate added up to what I was getting 52000 grand a year and 3200 a month how much would I get if I was contracting? Would it work out the same at 3200 take home pay or a good bit more. Also if I had to commute to Cork, Galway or Dublin how much of a tax break would I get on fuel? Can I get a tax break on equipment like laptop or even a different car.

Any help would be appreciated. Ideally I plan on working six months of the year and don’t mind commuting at all.

I have about 60K saved as well so not too bothered if it doesn’t work out

Jesus, the OP was asking a simple question, all she got back was accountants and know-it-alls flinging dung at each other.

Let's say you earn €250 per day as a contractor, pretty achievable I'd imagine in the current market. And let's say 240 working days in the year = €60K per year.

People think this is too optimistic? OK, for argument's sake let's say you have the same gross figure of €52K (after deducting accounts/admin fees & unpaid days off...etc)

From this figure you could claim expenses that you incur as an employee anyway - mobile phone, travel to/from clients (assuming usual place of work is your home, and you have multiple clients to whom you must travel to)

If working from home you could claim some light & heat, broadband, other costs that exist with or without the company.

While your company can't claim for 'client entertainment', you can nevertheless use company funds to pay for these meals and purchases, which gives another tax advantage.

It's not beyond the realms of possibility that you have 5K of these pre-existing expenses that are now tax deductible in the company structure, at your top rate of tax and levies of 48.5%.

So on that basis you are maybe €2.5K better off every year, assuming you can achieve at least the €52K after deducting additional admin/company costs.

Who knows, you might come out with more than that, I think your estimated daily rate is a little on the low side.

But more importantly you can become your own boss, decide your own working hours, and have control of your life.

You're young, with no dependants, little in the way of financial commitments. if you don't do something like this now, when will you ever do it?

wandererz

€250 per day at 18 days per month is about €3151.


https://www.iconaccounting.ie/tax-calculator

dogbert27

fankity flank wrote: »

Jesus, the OP was asking a simple question, all she got back was accountants and know-it-alls flinging dung at each other.

Let's say you earn €250 per day as a contractor, pretty achievable I'd imagine in the current market. And let's say 240 working days in the year = €60K per year.

People think this is too optimistic? OK, for argument's sake let's say you have the same gross figure of €52K (after deducting accounts/admin fees & unpaid days off...etc)

From this figure you could claim expenses that you incur as an employee anyway - mobile phone, travel to/from clients (assuming usual place of work is your home, and you have multiple clients to whom you must travel to)

If working from home you could claim some light & heat, broadband, other costs that exist with or without the company.

While your company can't claim for 'client entertainment', you can nevertheless use company funds to pay for these meals and purchases, which gives another tax advantage.

It's not beyond the realms of possibility that you have 5K of these pre-existing expenses that are now tax deductible in the company structure, at your top rate of tax and levies of 48.5%.

So on that basis you are maybe €2.5K better off every year, assuming you can achieve at least the €52K after deducting additional admin/company costs.

Who knows, you might come out with more than that, I think your estimated daily rate is a little on the low side.

But more importantly you can become your own boss, decide your own working hours, and have control of your life.

You're young, with no dependants, little in the way of financial commitments. if you don't do something like this now, when will you ever do it?

This is one of the greatest myths of contracting. You're client becomes your boss who sets you deadlines and if you're behind you have to put extra time in to meet that deadline.

While this may work out on an hourly rate it doesn't on a day rate as the day rate will be based on an 8 hour day but you could end up working 10 to 12 hours to meet the clients deadline.

Also if you are only going to work 6 months of the year you need to earn enough money to live for the other 6 months.

At the rates mentioned you would not be able to sustain yourself for 6 months without work whether you have a family or not or only pay 300 euro rent with cost of living in Ireland.

fankity flank

dogbert27 wrote: »

This is one of the greatest myths of contracting. You're client becomes your boss who sets you deadlines and if you're behind you have to put extra time in to meet that deadline.

While this may work out on an hourly rate it doesn't on a day rate as the day rate will be based on an 8 hour day but you could end up working 10 to 12 hours to meet the clients deadline.

Also if you are only going to work 6 months of the year you need to earn enough money to live for the other 6 months.

At the rates mentioned you would not be able to sustain yourself for 6 months without work whether you have a family or not or only pay 300 euro rent with cost of living in Ireland.

It's not a myth if you're doing it right.

If you're contracting and allow the client to become your boss like you described, then you're either not good at what you do, or you don't value what you do.

And we don't have enough information to decide whether the OP will earn enough money to live on or not.

Speaking more generally, explore it some more and have the courage of your convictions.

In life you tend to regret things that you didn't do, more than the things that you did do, so what have you got to lose?