Contracting

pobber1 · 05-03-2018 04:49PM

Hi all,
I'm considering moving from a permanent role into a contracting role. In terms of timing, will companies consider a contractor who may not be able to start for 3-4 weeks (i.e. notice period)? I would have thought most of them would like someone who can start straight away.

John_Mc · 05-03-2018 05:02PM

pobber1 wrote: »

Hi all,
I'm considering moving from a permanent role into a contracting role. In terms of timing, will companies consider a contractor who may not be able to start for 3-4 weeks (i.e. notice period)? I would have thought most of them would like someone who can start straight away.

Depends on the need. They'll wait for the right developer if they have to. Contractors don't like being out of work and will be interviewing in the months before their current contracts ends just like perm. developers.

pobber1 · 05-03-2018 05:06PM

John_Mc wrote: »

Depends on the need. They'll wait for the right developer if they have to. Contractors don't like being out of work and will be interviewing in the months before their current contracts ends just like perm. developers.

I know this is a very open question but what kind of rates are available for full stack .Net devs with 10 years experience? I see rates from 350 to 450, is that representative?

John_Mc · 05-03-2018 05:10PM

pobber1 wrote: »

I know this is a very open question but what kind of rates are available for full stack .Net devs with 10 years experience? I see rates from 350 to 450, is that representative?

350 is on the low side. In Dublin you could get 500 a day, maybe more.

I'm pretty much the same profile as you and getting an average daily rate in Dublin down the country which I'm very happy with but the contracting roles outside of Dublin are rare enough.

Check this salary guide out. There are many more out there but no way I'm giving recruiters my details - getting enough cold calls as it is!

A good rule of thumb to translate daily rate into salary is to use 220 working days a year. This allows you for holidays and sick days.

Then deduct cost for accountancy and all that.

14ned · 05-03-2018 05:21PM

John_Mc wrote: »

Depends on the need. They'll wait for the right developer if they have to. Contractors don't like being out of work and will be interviewing in the months before their current contracts ends just like perm. developers.

I've not been hired for a contract yet by a multinational in less than eight weeks. It takes that long for the colossus to move working at maximum speed. Everybody will say "two weeks" or "next week", then it gets pushed back, then somebody somewhere didn't send some email and so on. Eight weeks is end to end, so from when the recruiter first communicates with you up to start date.

Startups can move far quicker. Two weeks from from communication is easily doable.

Niall

John_Mc · 05-03-2018 05:24PM

14ned wrote: »

I've not been hired for a contract yet by a multinational in less than eight weeks. It takes that long for the colossus to move working at maximum speed. Everybody will say "two weeks" or "next week", then it gets pushed back, then somebody somewhere didn't send some email and so on. Eight weeks is end to end, so from when the recruiter first communicates with you up to start date.

Startups can move far quicker. Two weeks from from communication is easily doable.

Niall

Yeah the bigger the company the longer it will take. Especially on the big buck contracts like yours

I've been lucky so far and haven't had a day out of work since starting in Oct 2012

14ned · 05-03-2018 05:26PM

John_Mc wrote: »

350 is on the low side. In Dublin you could get 500 a day, maybe more.

Not sure about that. I'm in his ball park for day rate, and I used to earn far more. The open roles freeze and -20% day rates which C++ experienced in Ireland since 2017 may be spreading to other parts of tech contracting. I was talking to a web dev there last week and he says that the pot appears to be going off the boil for new contracts, as it were. Not unrelatedly, second hand car dealerships have seen a large rise in inventory recently. People are not buying second hand cars like they were. Whether that's more new car sales, or people are holding back cash for rainy days, I don't know yet.

Still, a contract paying -20% is better than no income at all. Grab those contracts while they're around!

Niall

pobber1 · 05-03-2018 05:39PM

John_Mc wrote: »

350 is on the low side. In Dublin you could get 500 a day, maybe more.

I'm pretty much the same profile as you and getting an average daily rate in Dublin down the country which I'm very happy with but the contracting roles outside of Dublin are rare enough.

Wow, I really didn't 500 would be possible. Would that be for a team lead role?

pobber1 · 05-03-2018 05:40PM

14ned wrote: »

I've not been hired for a contract yet by a multinational in less than eight weeks. It takes that long for the colossus to move working at maximum speed. Everybody will say "two weeks" or "next week", then it gets pushed back, then somebody somewhere didn't send some email and so on. Eight weeks is end to end, so from when the recruiter first communicates with you up to start date.

Startups can move far quicker. Two weeks from from communication is easily doable.

Niall

That's good to know, I was under the impression I'd need to start within days of getting past the interview.

John_Mc · 05-03-2018 05:42PM

pobber1 wrote: »

Wow, I really didn't 500 would be possible. Would that be for a team lead role?

No but you'd have to be senior and have good experience. Previous experience as a tech lead would obviously allow you to look for more money.

Companies don't hire their tech leads as contractors though. They hire them to code for specific time limited projects

14ned · 05-03-2018 06:08PM

John_Mc wrote: »

No but you'd have to be senior and have good experience. Previous experience as a tech lead would obviously allow you to look for more money.

Depends on the role, though. You might be widely recognised as the best and most famous engineer in Ireland, but none of that matters if the role is "help clear the JIRA backlog". They'll of course hire the best they can get, and the day rate is usually a reasonable rate for the contract's requirements.

John_Mc wrote: »

Companies don't hire their tech leads as contractors though. They hire them to code for specific time limited projects

I agree about the time limit. Some companies do hire specific contractors to lead out a limited duration project which is expected to be educational for the permie staff. Those tend to pay very well, because it's effectively training, even though the project is usually thrown away eventually because the permie's can't cope with it after the contractor departs. I'd suspect those sorts of contract are non-existent in Ireland, there isn't the culture for it here. But I have had such contracts for French, German, UK and US companies in the past.

Niall

awec · 06-03-2018 01:25AM

pobber1 wrote: »

Wow, I really didn't 500 would be possible. Would that be for a team lead role?

Remember you have to pay your tax, PRSI etc from that. You get no paid holidays, no perks like paid health insurance etc.

A lot of people look at contracting rates and compare it directly with their daily salary and think they could get a far better deal. But when all the figures are crunched you may not be that better off, and contracting comes with a whole different set of stresses.

pobber1 · 06-03-2018 09:19AM

awec wrote: »

Remember you have to pay your tax, PRSI etc from that. You get no paid holidays, no perks like paid health insurance etc.

A lot of people look at contracting rates and compare it directly with their daily salary and think they could get a far better deal. But when all the figures are crunched you may not be that better off, and contracting comes with a whole different set of stresses.

What percentage increase over permanent salary plus perks would make taking a contract worth the extra stress? I'm thinking 20-30%.

Can anyone recommend a good contracting recruitment agency?

14ned · 06-03-2018 11:24AM

pobber1 wrote: »

What percentage increase over permanent salary plus perks would make taking a contract worth the extra stress? I'm thinking 20-30%.

You don't usually get to choose, you take what the market is willing to pay you. It usually comes out at about a 10% risk premium over permanent on average for a 12 month contract. But that masks a lot of per-contract variation, some contracts will be below permanent equivalent, others above. Permanent salaries are much more sticky than contract day rates.

pobber1 wrote: »

Can anyone recommend a good contracting recruitment agency?

Not how it works in Ireland. The agencies are employed by those with contracts to offer to find them candidates. Usually badly fitting candidates, because most recruiters at the agencies don't know much about tech, they are often arts graduates who are working the job only temporarily as a stopgap. So they tick boxes without understanding much, and you'll need to learn how to help them tick their boxes to get past them and onto technically aware people. The Irish contracting market is what it is.

In London, and in the US, for really top tier talent it works like if you're a movie star. You pay a percentage of all your earnings, from any source, to your agent, usually 15-20%. Your agent then helps go hustle for you. I am unaware of any such thing in Ireland, to date at least. Many startups have tried, found the market isn't deep enough here, and converted into traditional employer-driven agencies.

Speaking personally, I think there is a gap in the market for 100% remote placement agents. So they'd place you anywhere in the world working remotely. We here in Ireland are happy to work for considerably less than the going rate in the US or in London, but without the quality issues of other parts of the world. But I can see it would take a long time to get that kind of business established and profitable.

Niall

pobber1 · 06-03-2018 11:48AM

14ned wrote: »

You don't usually get to choose, you take what the market is willing to pay you. It usually comes out at about a 10% risk premium over permanent on average for a 12 month contract. But that masks a lot of per-contract variation, some contracts will be below permanent equivalent, others above. Permanent salaries are much more sticky than contract day rates.

I suppose that percentage will vary from person to person, I'd find it difficult to take on the extra stress of contracting for 10%.

14ned · 06-03-2018 12:13PM

pobber1 wrote: »

I suppose that percentage will vary from person to person, I'd find it difficult to take on the extra stress of contracting for 10%.

As I often repeat on here, choose contracting for the lifestyle, not the income. Unlike in the UK or other European countries, there aren't the tax gains here as there are elsewhere, and most expenses are not deductible. Once you do the sums, there isn't much income gain here, unless you can work from home at least three days a week to ensure that your "place of work" as according to Revenue is not at the client's site.

Now, if you can move your "place of work" to your home, it's a whole different ball game. Then it becomes very lucrative to go into contracting. I was doing that up until last year, and I was phenomenally wealthy. Here onsite in Dublin with €15k of extra overheads which cannot be expensed, it's not worth it.

Niall

pobber1 · 06-03-2018 12:26PM

14ned wrote: »

As I often repeat on here, choose contracting for the lifestyle, not the income. Unlike in the UK or other European countries, there aren't the tax gains here as there are elsewhere, and most expenses are not deductible. Once you do the sums, there isn't much income gain here, unless you can work from home at least three days a week to ensure that your "place of work" as according to Revenue is not at the client's site.

Now, if you can move your "place of work" to your home, it's a whole different ball game. Then it becomes very lucrative to go into contracting. I was doing that up until last year, and I was phenomenally wealthy. Here onsite in Dublin with €15k of extra overheads which cannot be expensed, it's not worth it.

Niall

Interesting. I presume moving your "place of work" to your home has an impact on your home insurance?

14ned · 06-03-2018 12:44PM

pobber1 wrote: »

Interesting. I presume moving your "place of work" to your home has an impact on your home insurance?

Only if customers ever visit your premises. Which as a 100% remote worker, they would not.

The gains are being able to offset up to 25% of all your home costs against pre-tax income. Plus no commuting costs, plus being able to live in rural Ireland where €500/month will rent you a three bedroom semi with ample garden.

Niall

pobber1 · 08-03-2018 03:06PM

14ned wrote: »

Only if customers ever visit your premises. Which as a 100% remote worker, they would not.

The gains are being able to offset up to 25% of all your home costs against pre-tax income. Plus no commuting costs, plus being able to live in rural Ireland where €500/month will rent you a three bedroom semi with ample garden.

Niall

Thanks for all the information.

I presume setting up a limited company is the most tax efficient? What level of professional identity insurance is advised?

John_Mc · 08-03-2018 04:25PM

pobber1 wrote: »

Thanks for all the information.

I presume setting up a limited company is the most tax efficient? What level of professional identity insurance is advised?

Private Limited is better if you're in it for the medium-long term. It's been made a lot easier with recent changes to company law.

I have a private LTD but don't have professional indemnity insurance. I did at one point but that was only because I needed to for a government agency contract.

14ned · 09-03-2018 10:12PM

pobber1 wrote: »

I presume setting up a limited company is the most tax efficient?

It is probably the most cost efficient for most engineers yes. But no more tax efficient than Umbrella Director.

pobber1 wrote: »

What level of professional identity insurance is advised?

Oh, zero. You only take out insurance if a contract requires it. So long as you've been careful to ensure all work done is by your company, limited liability ensures that anybody suing you can only take the company's assets. And as in Ireland the close company surcharge makes it tax pointless to retain assets in your company, almost every close company professional services company in Ireland will have virtually no assets.

That can be a nasty surprise to foreign clients, but that's not your problem. Equally, it does make cash flow management far more important here than in other countries. Without good planning, a feast year tends to incur a hefty tax bill, whilst famine years means you don't utilise all your 20% income limit. And that's a pain, and that's why you employ a good accountant.

Niall

AnswerIs42 · 24-07-2018 09:42PM

Hi folks,

I'm considering taking the plunge into the contracting role and just wanted to check if I am missing something. I'm a .net full stack developer with > 10 years experience.

My current salary is €75k in a permenant role. There are no extras (pension, healthcare...etc).

If I landed a contract with a day rate of €450 then in theory I could earn 220 * 450 = €99k a year factoring in holidays/sick leave.

That's ~12k net different to me. Is there anything else I should be factoring in before taking the plunge?

Thanks for any pointers.

Graham · 24-07-2018 10:00PM

Not worth it for a 12k difference to be honest.

One lean year would wipe out any financial advantage.

John_Mc · 24-07-2018 10:00PM

AnswerIs42 wrote: »

Hi folks,

I'm considering taking the plunge into the contracting role and just wanted to check if I am missing something. I'm a .net full stack developer with > 10 years experience.

My current salary is €75k in a permenant role. There are no extras (pension, healthcare...etc).

If I landed a contract with a day rate of €450 then in theory I could earn 220 * 450 = €99k a year factoring in holidays/sick leave.

That's ~12k net different to me. Is there anything else I should be factoring in before taking the plunge?

Thanks for any pointers.

If you're in Dublin and are full stack with in demand tech (Angular, React etc) then you could get more than 450 a day. I have roughly the same profile as you and was on 475 without negotiating too hard and that was 18 months ago.

Your maths are correct but there's the cost of running the business. If you're private limited then you need to do accounts every year and this costs about €1200 plus VAT.

If you go under an umbrella company then that will cost you about €100 a month.

I started contracting in 2012 and read then that if you plan on doing it for more than a year then go with your own private limited company. You have far more control over things and there's loads of information out there telling you what's what with contracting. A good accountant will get you up and running too.

I use Bullet HQ (no affiliation other than being a happy customer) and it simplifies everything. Automatically generates your VAT and Income Tax forms so you just need to upload them to Revenue. Things are changing with ROS in January 2019 though and I'm not sure how they'll evolve to cater for it.

Going back to the maths, there are other advantages which are hard to quantify. You can put your mobile phone bill and internet through your company as legitimate costs so you save on the VAT and you're paying it out of revenue before income tax. It makes a difference to your net income.

E.g If your mobile phone bill is €30 now then you need to earn about €60 gross as a PAYE employee to be able to pay that. When you put it through the company, it's before you pay income tax on it so it's only €30, but €5.60 of that is VAT so it's refundable.

There's also the small benefit scheme where you can reward yourself with a €500 voucher once a year. You'd have to pay yourself over €1000 in gross income to avail of that if the scheme did not exist.

Then there's the ability to get yourself a good computer and mobile phone through the company as these are required by you to operate. It's a nice perk to have and completely legitimate.

I work with other contractors who are under umbrella companies and even being able to buy a computer or phone is a headache as they grill you on why you need it.

I have not been a day out of work since starting in October 2012 and cannot see the demand for experience developers reducing in the short-medium term, except for the impact of a hard brexit. Full timers will be affected by that too although they will get redundancy.

AnswerIs42 · 24-07-2018 10:30PM

Thanks for the replies folks.

Graham wrote: »

Not worth it for a 12k difference to be honest.

One lean year would wipe out any financial advantage.

Fair point...I could fall back into a permanent role though if it really doesn't work out. I think I'd like to take the chance if for no other reason, just to find out for sure.

John_Mc wrote: »

If you're in Dublin and are full stack with in demand tech (Angular, React etc) then you could get more than 450 a day. I have roughly the same profile as you and was on 475 without negotiating too hard and that was 18 months ago.

Your maths are correct but there's the cost of running the business. If you're private limited then you need to do accounts every year and this costs about €1200 plus VAT.

If you go under an umbrella company then that will cost you about €100 a month.

I started contracting in 2012 and read then that if you plan on doing it for more than a year then go with your own private limited company. You have far more control over things and there's loads of information out there telling you what's what with contracting. A good accountant will get you up and running too.

I use Bullet HQ (no affiliation other than being a happy customer) and it simplifies everything. Automatically generates your VAT and Income Tax forms so you just need to upload them to Revenue. Things are changing with ROS in January 2019 though and I'm not sure how they'll evolve to cater for it.

Going back to the maths, there are other advantages which are hard to quantify. You can put your mobile phone bill and internet through your company as legitimate costs so you save on the VAT and you're paying it out of revenue before income tax. It makes a difference to your net income.

E.g If your mobile phone bill is €30 now then you need to earn about €60 gross as a PAYE employee to be able to pay that. When you put it through the company, it's before you pay income tax on it so it's only €30, but €5.60 of that is VAT so it's refundable.

There's also the small benefit scheme where you can reward yourself with a €500 voucher once a year. You'd have to pay yourself over €1000 in gross income to avail of that if the scheme did not exist.

Then there's the ability to get yourself a good computer and mobile phone through the company as these are required by you to operate. It's a nice perk to have and completely legitimate.

I work with other contractors who are under umbrella companies and even being able to buy a computer or phone is a headache as they grill you on why you need it.

I have not been a day out of work since starting in October 2012 and cannot see the demand for experience developers reducing in the short-medium term, except for the impact of a hard brexit. Full timers will be affected by that too although they will get redundancy.

I don't have client side framework (just raw javascript and jquery) in my locker but I can take the time to learn it. Under the assumption that I could get 475 then the maths changes to ~14.5k better off. Factoring in your points about phone, hardware...maybe transport costs?? I could stretch the net difference to maybe ~15.5k. I have an accountant in the family who could do that side of things for free with a private limited company so that would be sorted.

Just two question:
1. Do you buy your own subscriptions to visual studio and other tools?
2. Are you expected to wear a shirt and tie everyday? that could be a deal breaker for me

John_Mc · 24-07-2018 10:38PM

AnswerIs42 wrote: »

Thanks for the replies folks.

I don't have client side framework (just raw javascript and jquery) in my locker but I can take the time to learn it. Under the assumption that I could get 475 then the maths changes to ~14.5k better off. Factoring in your points about phone, hardware...maybe transport costs?? I could stretch the net difference to maybe ~15.5k. I have an accountant in the family who could do that side of things for free with a private limited company so that would be sorted.

Just two question:
1. Do you buy your own subscriptions to visual studio and other tools?
2. Are you expected to wear a shirt and tie everyday? that could be a deal breaker for me

Definitely no harm in learning new JS frameworks, even if you don't go contracting. jQuery is fairly stale these days. I'd recommend Angular 4/5, Typescript, or React with Redux.

You cannot claim mileage or transport expenses from home to your normal place of work - be careful of that. You can still avail of the tax saver transport scheme I think though.

1) No you don't use your equipment at work. At least I haven't anywhere I've worked (5 or 6 places at this stage)
2) Depends on the employer. I think it's rare to have to dress smart casual unless your client is a consultancy or bank. That's a question you ask in interview.

Speaking of interviews - they're a lot easier because it's all about what you bring on a technical level. There's no politics in the office either and no performance management either. Things are a lot more straight forward.

By moving around you learn a lot more too. What works well and what doesn't - and this makes you a stronger developer .

AnswerIs42 · 25-07-2018 08:11AM

John_Mc wrote: »

Definitely no harm in learning new JS frameworks, even if you don't go contracting. jQuery is fairly stale these days. I'd recommend Angular 4/5, Typescript, or React with Redux.

You cannot claim mileage or transport expenses from home to your normal place of work - be careful of that. You can still avail of the tax saver transport scheme I think though.

1) No you don't use your equipment at work. At least I haven't anywhere I've worked (5 or 6 places at this stage)
2) Depends on the employer. I think it's rare to have to dress smart casual unless your client is a consultancy or bank. That's a question you ask in interview.

Speaking of interviews - they're a lot easier because it's all about what you bring on a technical level. There's no politics in the office either and no performance management either. Things are a lot more straight forward.

By moving around you learn a lot more too. What works well and what doesn't - and this makes you a stronger developer .

Thanks very much for taking the time to answer my questions, much appreciated.

14ned · 25-07-2018 10:59AM

John_Mc wrote: »

You cannot claim mileage or transport expenses from home to your normal place of work - be careful of that. You can still avail of the tax saver transport scheme I think though.

Correct. Due to the current contract onsite in Dublin, I'm on the Taxsaver scheme. I would advise people to register long in advance, and expect many problems during the first month as it is not competently operated. Once you're on though, apart from when the one or two people who run it both go on vacation/sickness, it runs fairly smoothly.

John_Mc wrote: »

1) No you don't use your equipment at work. At least I haven't anywhere I've worked (5 or 6 places at this stage)

Depends on your client. Smaller firms tend to be more likely to want you to supply your own equipment. Multinationals almost always want you to use their corporate managed equipment, though there can be occasional exceptions e.g. for a dev board for some specific technology. Sometimes clients want you to buy software, and they'll reimburse you. Sometimes they'll supply it outright. It varies.

Just be careful of contract wording. My current contract initially required me to supply all the equipment and software used at my own expense, with detailed specifics with regard to exactly what software was to be installed, and configured, complete with total liability on me for anything whatsoever which went wrong with them due to me having my equipment onsite including data loss, viruses etc even if they weren't caused by me. I refused to sign that, and got the clause dropped. They have since tried to force a contract addendum making me liable for all GDPR violations. I have refused to sign that as well, as what are they paying me for it? Nothing. So they get nothing not originally agreed.

Relatedly, best to never take out your equipment onsite, certainly never ever connect your equipment to anything belonging to the client, even electricity.

John_Mc wrote: »

2) Depends on the employer. I think it's rare to have to dress smart casual unless your client is a consultancy or bank. That's a question you ask in interview.

Definitely depends on the individual team or department, let alone client. For example on this floor the sales folks are all in fancy dress clothes. We here engineers wear shorts, flip flops and t-shirts with holes and some of us don't wash (not me, it's unprofessional).

By moving around you learn a lot more too. What works well and what doesn't - and this makes you a stronger developer .

Something newbies to contracting don't realise is that contractors are often brought in to do the work the permie's won't do. So, expect lots of tedious drudge work, and nothing career building.

And I reiterate my above advice earlier in the thread: don't choose contracting for the extra income, because there is none once accounting for downtime and insecurity. Choose it for the lifestyle, and for no other reason.

Niall

JackieChan · 27-07-2018 07:08PM

I work with other contractors who are under umbrella companies and even being able to buy a computer or phone is a headache as they grill you on why you need it.

Different companies have different approaches here. When I used an umbrella company I knew some people that wanted to expense a mobile phone and they were asked by the accountancy firm to provide an email from their manager confirming that they needed this for their current job. Whereas the accountancy firm I used had no problem with me expensing it.

I used an umbrella company for some years as it was simple and met my needs but then later I wanted to have more control over my cash flow,pension and purchasing of a vehicle.

I would recommend anyone dipping their toes in to contracting for the first time to go umbrella,you can always use a different structure later. If you find contracting doesn't suit then you can simply get signed off as a director of the company and move on. Doing this as a ltd company is more complicated.

Also the initial setup for a limited company can take a bit of time to set up (company creation and bank accounts) and can easily take a few weeks to be in place depending on the bank you use!

Contracting

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