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Contracting

Rua1

Hi,

I'm considering a move to contracting from a permanent role. I'm based in Wicklow, but work in Dublin. I'm a SQL server/C sharp developer.

I have a one year old, am I crazy to be considering this?
We wouldn't need a regular income, but I'd need to bring something in throughout the year. I'm currently in a permanent position, but it's driving me crazy so am considering all of my options.

What happens if either myself or the nipper is sick and my husband is unable to take the day to look after him?

Is it OK to leave at regular times e.g. 5pm?

How do people manage their affairs here - e.g. do you go the umbrella company route? Any recommendations?

What about holidays planned mid contract?

Thanks for any advice!

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dazberry

I tend to mix going back and forth between contracting and permanent roles, going the other way at the moment, sort of regretting the decision but we'll see.

Anyway, in my experience I've always found contracting a lot more flexible than permanent employment, simple put if you're not there you don't get paid. You'll likely still need to follow company procedures in looking for time off etc., but your time off isn't pulled from a pool of holiday days for instance.

In general contracting days are averaged at 220 days per year, so that takes into account public and personal holiday days. Of course you can work more, or possibly less, really depends on the company and their requirements. My last contract was extended by a pool of days, and I was able to stretch those days over a longer period by working slightly shorter weeks as it fitted in better with others on the project - worked a treat.

Likewise 9 to 5ish etc, you're only paid for an amount of hours per day, but like anywhere this sort of things tends to be based on company culture, some contractors are very much 9 to 5.xx only, I've always tended to be a bit more flexible, definitely the more flexible the company is the more flexible I tend to be.

If this is your first contract, and you're testing the water as it where, it's probably easier to go via an umbrella company. It's a little more expensive and less flexible than having your own company, but all you need to do is supply timesheets and it pretty much takes care of itself. If you're contracting longer term, then you should probably look at forming your own company.

HTH

D.

msq

I pm'd you.

a fat guy

How much more money do people get contacting anyway? I've heard three to four times as much as a regular employee, which sounds great.

Although I imagine you're giving up job security, severance and job perks.

NeutralHandle

a fat guy wrote: »

How much more money do people get contacting anyway? I've heard three to four times as much as a regular employee, which sounds great.

Although I imagine you're giving up job security, severance and job perks.

About 40% more than the equivalent rate for salaried employee.

msq

a fat guy wrote: »

How much more money do people get contacting anyway? I've heard three to four times as much as a regular employee, which sounds great.

Here - check that yourself.

a fat guy wrote: »

Although I imagine you're giving up job security, severance and job perks.

With current job market in IT the job security is not a problem for most experienced people.

awec

a fat guy wrote: »

How much more money do people get contacting anyway? I've heard three to four times as much as a regular employee, which sounds great.

Although I imagine you're giving up job security, severance and job perks.

Three times as much as a regular employee doing the same job at the same level? No chance. You get more but not that much more.

Job security isn't a problem, but you do make sacrifices to make up for your larger salary. No paid holidays, lack of other perks (i.e. no paid health insurance, company pension contributions, car allowances etc), potential for moving around a lot (may suit you, may not).

You will probably also be treated a bit differently to people you work with and be excluded from certain activities. You'll probably find yourself outside the loop at times. This isn't a big thing though some people might find it a bit frustrating if you are working on something you find really interesting.

Graham

awec wrote: »

Three times as much as a regular employee doing the same job at the same level? No chance.

Three times wouldn't be particularly unusual.

Much depends on the skill, the particular requirement, the duration of the contract, the urgency, the availability of qualified contractors

awec

Graham wrote: »

Three times wouldn't be particularly unusual.

Much depends on the skill, the particular requirement, the duration of the contract, the urgency, the availability of qualified contractors

I wouldn't say it's normal though, for the average contractor.

slyph

How do you even 'break-in' to contracting per-se ? Is it really only for people at a senior ( 5-10 years ) level ?

Do you need a speciality ?

I am only a junior developer (2-3 years exp.) working in a multi-national, but long term I want to be a contractor. Does anyone have any advice to put myself on the path to getting there ?

msq

slyph wrote: »

Does anyone have any advice to put myself on the path to getting there ?

Yes. Just look for positions open for contractors.
And some contracts are really long term, contract is not always equal to jumping from one place to another every six months or so.

awec

I imagine most people get into it initially by going through those IT outsourcing companies who will hire contractors for specific contracts their own clients have given them.

Over time some might then decide to go out on their own. Presumably you get more of a cut this way, but also would be responsible for finding work for yourself.

Graham

awec wrote: »

I imagine most people get into it initially by going through those IT outsourcing companies who will hire contractors for specific contracts their own clients have given them.

Most of the large outsourcing companies would prefer permanent employees for the majority of positions. They will make a larger margin from permanent staff and can often redeploy internally as needed.

OP, there's a misconception that all contractors are high-flying consultant types. The truth is there's contractors at pretty much every level.

Companies will use contractors for a multitude of reasons not just needing highly experienced/skilled staff, e.g.

Short-term projects
Headcount freeze
Specific skill-set required
Maternity/illness cover
Inability to recruit permanent staff to fill a role

It's easy enough to see what type of contracts are on offer, take a look at any of the recruitment web sites and you'll find contracts requirements from desktop support to fortune 500 project managers.

One of the downsides to contracting early in your career is you're likely to miss out slightly on career progression and training. That's not an insurmountable issue as long as you realise you'll need to develop your own career rather than waiting for career development to be spoon-fed to you.

awec

Graham wrote: »

Most of the large outsourcing companies would prefer permanent employees for the majority of positions. They will make a larger margin from permanent staff and can often redeploy internally as needed.

OP, there's a misconception that all contractors are high-flying consultant types. The truth is there's contractors at pretty much every level.

Companies will use contractors for a multitude of reasons not just needing highly experienced/skilled staff, e.g.

Short-term projects
Headcount freeze
Specific skill-set required
Maternity/illness cover
Inability to recruit permanent staff to fill a role

It's easy enough to see what type of contracts are on offer, take a look at any of the recruitment web sites and you'll find contracts requirements from desktop support to fortune 500 project managers.

One of the downsides to contracting early in your career is you're likely to miss out slightly on career progression and training. That's not an insurmountable issue as long as you realise you'll need to develop your own career rather than waiting for career development to be spoon-fed to you.

Yea but you'd be doing contract-type work for them. You'd be going to other companies as a contractor and it would give you a bit of insight into what it's like to be a contract employee.

No?

Graham

awec wrote: »

Yea but you'd be doing contract-type work for them. You'd be going to other companies as a contractor and it would give you a bit of insight into what it's like to be a contract employee.

No?

If you're working for one of the larger managed service providers it's more likely you'll be posted to a customer site and forgotten about until one of the local bigwigs from the head office visits for a corporate "ra ra, go team, you're our greatest asset" session.

If you're lucky you might get to move from site-to-site or project-to-project.

As far as the customers staff are concerned, you're an employee of their managed service provider so the dynamic is quite different to that of a contractor and the company they're contracted to.

The only real way to try contracting is to actually do it. You occasionally get a bit of attitude from permanent staff with a grudge and you'll occassionally find a bit more is expected of you particularly in terms of 'hitting the ground running'.

More often than not you'll be treated like everyone else on the team and you'll just get on with the job. Interviews will become second nature, you'll learn to avoid the politics, you'll keep promising yourself a really good long holiday as soon as this contracts over and if you're smart you'll keep re-investing in your training/professional education.

msq

Graham wrote: »

The only real way to try contracting is to actually do it. You occasionally get a bit of attitude from permanent staff with a grudge and you'll occassionally find a bit more is expected of you particularly in terms of 'hitting the ground running'.

More often than not you'll be treated like everyone else on the team and you'll just get on with the job. Interviews will become second nature, you'll learn to avoid the politics, you'll keep promising yourself a really good long holiday as soon as this contracts over and if you're smart you'll keep re-investing in your training/professional education.

Being contractor myself for a number of years, all I can add to this is: spot on, sir

John_Mc

Graham wrote: »

If you're working for one of the larger managed service providers it's more likely you'll be posted to a customer site and forgotten about until one of the local bigwigs from the head office visits for a corporate "ra ra, go team, you're our greatest asset" session.

If you're lucky you might get to move from site-to-site or project-to-project.

As far as the customers staff are concerned, you're an employee of their managed service provider so the dynamic is quite different to that of a contractor and the company they're contracted to.

The only real way to try contracting is to actually do it. You occasionally get a bit of attitude from permanent staff with a grudge and you'll occassionally find a bit more is expected of you particularly in terms of 'hitting the ground running'.

More often than not you'll be treated like everyone else on the team and you'll just get on with the job. Interviews will become second nature, you'll learn to avoid the politics, you'll keep promising yourself a really good long holiday as soon as this contracts over and if you're smart you'll keep re-investing in your training/professional education.

Agree with all of that as someone contracting for 3 years now

mirrorwall14

This seems to be the most recent contracting thread. Could anyone say if you were taking on a one month contract would that scupper you for social welfare benefits afterwards? As in do you become a sole trader and lose all entitlement to benefits even though you would have the PRSI contributions in the relevant year

Graham

mirrorwall14 wrote: »

This seems to be the most recent contracting thread. Could anyone say if you were taking on a one month contract would that scupper you for social welfare benefits afterwards? As in do you become a sole trader and lose all entitlement to benefits even though you would have the PRSI contributions in the relevant year

Ask the agency if they will pay you on a PAYE basis (like a temp rather than a contractor).

14ned

Rua1 wrote: »

I'm considering a move to contracting from a permanent role. I'm based in Wicklow, but work in Dublin. I'm a SQL server/C sharp developer.

I have a one year old, am I crazy to be considering this?

Nobody else seems to have mentioned this, but you don't get maternity as a contractor. If there is anything other than zero chance of another baby in the next three years, you'd be mad to leave your existing permanent role.

Note also that you can't get pregnant during a long term contract. So if you sign for twelve months, you must serve out that twelve months, otherwise you're in breach.

What happens if either myself or the nipper is sick and my husband is unable to take the day to look after him?

Some clients are good about this. Most are not. They expect contractors to not come with the hassle of permanent employees. In any case, you won't get paid for any days off. Some clients will insist you use weekends to make up any weekdays missed. You have after all signed a contract, it's rigid from a legal perspective.

Is it OK to leave at regular times e.g. 5pm?

This part is generally better than being permanent. You are contracted for a fixed duration, so you work not a minute past your contracted amount. Obviously don't be a total arse about it, if there is some genuine deadline then you might work a little extra. But you always insist on being paid pro rata for any overtime.

How do people manage their affairs here - e.g. do you go the umbrella company route? Any recommendations?

If your husband wasn't otherwise working, the limited company route could hire him as a Director which can be useful for taxation.

But as he is working, an umbrella or going PAYE is much easier.

What about holidays planned mid contract?

As a general rule you don't take any time off at all during a contract. You take your holidays between contracts, ideally in off season when it's cheap and uncrowded.

Also ignore any notions that you'll earn more despite what others have posted. They're quoting gross income before all the expenses your employer pays for you. Once you've paid PRSI, pension, training and accounted for not earning between contracts or when sick, it's about 10% more. At least that's been the case for me in eight years of contracting.

There are lots of other good reasons for contracting, but in Ireland improved income is not one of them. Our tax system doesn't have loopholes that the British and US tax systems do, plus we cannot retain earnings in a close company in order to even out annual income, you are forced to either pay it out or else put it into the pension. It's most unfortunate when you get a bad year like this year for me, I've been out of contract since January and Jobseekers does not pay out unless you wind up your limited company. We are running quite low on cash, yet I cannot tap a penny of that pension.

Niall

srsly78

mirrorwall14 wrote: »

This seems to be the most recent contracting thread. Could anyone say if you were taking on a one month contract would that scupper you for social welfare benefits afterwards? As in do you become a sole trader and lose all entitlement to benefits even though you would have the PRSI contributions in the relevant year

You should ask this on the state benefits forum, but my understanding is that if you have paid the necessary contributions in the relevant year you will then get the benefit. These benefits run out after only 9 months tho, and you won't be able to claim JSA unless you stop being self-employed (wind up company or cease trading).

14ned

srsly78 wrote: »

You should ask this on the state benefits forum, but my understanding is that if you have paid the necessary contributions in the relevant year you will then get the benefit. These benefits run out after only 9 months tho, and you won't be able to claim JSA unless you stop being self-employed (wind up company or cease trading).

Actually it depends on the stamps you have accumulated.

If you pay class A stamps, you get up to 9 months JSB.

If you pay class S stamps, you may get JSA after a means test and you have proven you have wound up your company with no chance of further business. Note that Welfare will take the view that as a highly skilled computer programmer, if you're not getting employed quickly, you can't obviously be taking the first job offered to you. They don't deny you JSA, they just string you out for many, many months of no income to discourage you unofficially.

If you have mixed class A and class S stamps, then it gets a bit more complex, but basically your class A stamps "expire" according to a set formula and your length of JSB drops accordingly.

Maternity benefit pays to both types of stamp, but you need continuous stamps for set periods of time before having the child, all of which is detailed on the welfare website.

Niall

Graham

Wouldn't it be much easier for the OP mirrorwall14 to avoid 'self-employment' altogether by either being paid by the agency/employer on a PAYE basis, or by using an umbrella company to do the same.

If the OP is finding contract work through an agency, they're unlikely to accept a self-employed basis anyway.

srsly78

Graham wrote: »

Wouldn't it be much easier for the OP mirrorwall14 to avoid 'self-employment' altogether by either being paid by the agency/employer on a PAYE basis, or by using an umbrella company to do the same.

If the OP is finding contract work through an agency, they're unlikely to accept a self-employed basis anyway.

Easier sure, but you end up paying punitive rate of tax then. The umbrella company will usually subtract the employers 10.5% prsi contribution from wages.

None of this really matters tho, stamps only last 9 months! So work out what 9 months of benefits are worth, decide if this is worth risking to be contractor. Calculation will be different depending on marital status and number of kids etc.

The whole system is a joke. If you are a responsible self-employed person and actually try to save for a rainy day this may get held against you in the means-test. Savings work against you, but invest in property and that doesn't get counted...

Graham

srsly78 wrote: »

Easier sure, but you end up paying punitive rate of tax then. The umbrella company will usually subtract the employers 10.5% prsi contribution from wages.

I'd be surprised if any other approach worked out more cost effective for a one month contract and it would make employment-status/future social welfare entitlements much more straightforward

Different story if the poster decides contracting suits them long term.

14ned

Graham wrote: »

Wouldn't it be much easier for the OP mirrorwall14 to avoid 'self-employment' altogether by either being paid by the agency/employer on a PAYE basis, or by using an umbrella company to do the same.

As far as I am aware, there is nothing stopping you choosing to pay class A stamps even as a Company Director. Revenue and Welfare certainly don't mind.

However the total payable in 9 months of JSB relative to 10.75% of your income is likely not worth it unless your Director's income is low.

Niall

14ned

srsly78 wrote: »

The whole system is a joke. If you are a responsible self-employed person and actually try to save for a rainy day this may get held against you in the means-test. Savings work against you, but invest in property and that doesn't get counted...

I can't disagree. The single biggest problem with the Irish tax system is the inability to roll forwards or backwards bumper years into lean ones. It's one of only two tax systems in the OECD that forces you to pay out all of a year's income in that tax year. It's murder for cash flow planning.

That in turn forces you to keep lots more liquid cash on hand instead of investing it, and that in turn punishes you in any JSA means test even assuming you spend the money winding up your company.

FG have made many bleating noises about improving things for the self employed over the years, but nothing ever changes apart from improving the tax credits slightly. What I personally really actually want is to be able to pay insurance at some percentage of my income into the welfare pot, and then get back a percentage of my annual income when out of work.

This whole business of paying in 10.75% and getting back 180 a week or whatever it is now, for no more than 9 months makes zero sense as an insurance scheme. The Continental Europeans pay out unemployment insurance relative to your income proceeding unemployment. Makes a ton of sense.

Niall

mirrorwall14

Thanks everyone. We will probably use see an umbrella given the shortness of the contract. Class A stamps were paid in the year in question too

Cona

Question here in relation to contracting...I have the option of contracting direct to the company rather than through an agency, which I understand is more beneficial to both sides.

My question is, do I still need an umbrella company or ltd if I am contracting direct or is there some way that the company takes the tax direct before it pays me?
Bit confused on this....

John_Mc

Cona wrote: »

Question here in relation to contracting...I have the option of contracting direct to the company rather than through an agency, which I understand is more beneficial to both sides.

My question is, do I still need an umbrella company or ltd if I am contracting direct or is there some way that the company takes the tax direct before it pays me?
Bit confused on this....

No there isn't. You're setting up a company to provide the services to the client, and you are a director of that company. So you're responsible for collecting VAT on your invoices and paying that to Revenue as well as paying the income tax yourself.

It's not hard though once you've been told how the system works and you can use an online accounting platform to do all the work for you. I have no affiliation here but I use Bullet HQ as it's reasonably priced and does everything for me (generating the VAT3 and P30's for me so I just need to uploaded them etc).

14ned

Cona wrote: »

Question here in relation to contracting...I have the option of contracting direct to the company rather than through an agency, which I understand is more beneficial to both sides.

My question is, do I still need an umbrella company or ltd if I am contracting direct or is there some way that the company takes the tax direct before it pays me?
Bit confused on this....

Generally speaking Revenue don't care so long as proper PAYE is paid for your income by somebody. That can be you, your limited company, your umbrella company, or even the client.

Not using an umbrella nor limited company means you're a sole trader, just like say a plumber. With all the same risks and reduction of permitted expenses that brings.

If you do go sole trader, make sure you buy a ton load of PI insurance, else law suits will take your house and everything you own.

Niall