Advice On Contracting Required

dtobin

Well-known Member
Hi,

I've been working in IT for several years now, the last 4 or 5 as a Software Performance tester.

I've thought many times about the idea of going contracting but have never really looked into it or gone beyond the initial pondering stage.

Recently though, I've started to think I might give it a go. I'm going to look at the idea in more detail over the next few days but was just after a few bits of advice from people with experience.

Initial questions off the top of my head:

1) I'm 41 - too old?
2) I have a wife, 3 kids and a (small) mortgage - too risky?
3) The admin side of contracting - too complicated?

I'm sure I'll come up with further questions as I look into it more but those are my initial ramblings :)

Any help or advice much appreciated,

Cheers
 

nheather

Distinguished Member
Not a contractor but a permie that has taken on many contractors in my career.

So I'll start with my view of contractor

1) too old - not at all. If you have the skills then I've seen no evidence of ageism in contracting - you are more likely to experience it as a problem in the permie sector

2) depends on your skills - with the right ones there is plenty of work around. The two observations I will make are

(a) you might have to travel where the work is - true of any job - but with contracting it can happen more frequently
(b) in my line of work, in the past contractors could be with the same customer for ten years or more. But employment position has changed that a lot - my employer will not keep a contractor on for more than two years now because after that HMRC requires them to be treated as permies

3) from what I have seen it is not that difficult. Good advice to get an accountant - the fees will be more than offset by tax arrangements they identify for you. Some contractors choose to go with (at least to start with) an umbrella company - so that you effectively work through them which makes the administration much easier. Though many choose not to, or move away once they have become more confident.

Cheers,

Nigel
 

imightbewrong

Distinguished Member
1 - No
3 - No
2 - depends on a lot of things. Savings level being a big one. Could you go six months out of work? A year?

What is your goal of 'going contracting'?
 

dtobin

Well-known Member
Thanks both, some really helpful stuff in there.

Regarding savings - I could currently probably go a short while without work buy I could definitely put more money aside if I wanted to build a bigger buffer. At the moment I'm definitely more of a 'spend it while you have it' type.

Reasons for doing it would probably be 2-fold. Firstly, simply to have tried it rather than always just thinking about it. Secondly, I like the idea of getting new experiences rather than staying in the same role for ever. I've been with my recent employer for around 2.5 years and that's my library for a while. Contracting feels like it could fit with this philosophy.

Cheers
 

PSM1

Distinguished Member
I would have thought age may even be a benefit with contracting since when you are looking for a contractor you are looking to buy in experience/knowledge on a particular subject. So you want to have confidence the person will come in and get on with the work straight away. To me age would be an asset since, in theory, they should have the ability to do this over someone just out of school.
 

RBZ5416

Distinguished Member
With regards to age, pretty much all contract positions will be via an agency. Chances are that the "recruitment consultant" will be young, have zero knowledge of the role beyond a job spec & will only be concerned with running a word search on your CV against the buzz words in the job spec. IME at 40+ you will be considered as old by these types, so my advice would be to simply leave age off the CV.

Admin isn't tricky at all but you do need to be disciplined to do it regularly. Something to bear in mind is that as of this tax year, public sector companies are forbidden* from employing contractors through their own limited company. Also as of this year the Flat Rate VAT scheme was effectively closed to service companies.

The first question I'd be asking myself in your circumstances is how easy will it be to secure another permanent role if it doesn't work out?

*
They're not actually forbidden, they're just obliged to tax you as PAYE, rendering it pointless.
 
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JUS

Well-known Member
I am considering doing the same too. The contractors I know have never had a day without work. One has been doing it for 5 years and only used an agency for the first 6 month contact. Since then he's just used his contacts and because he is good people phone him to ask if he's available. He'll only take a position if he likes the sound of the assignment.

Him and I are just outside London though. Not sure how Leeds is for numbers of jobs etc.

It's worth starting a spreadsheet and working through Pension payments, private healthcare, paid holidays, sick and anything else you get in employment now that you want to keep. Initially for me it looked a no brainer but after plugging in the figures it wasn't worth it
 

imightbewrong

Distinguished Member
Typically a contractor will multiply their day rate by about 220 to get the annual revenue (assuming continuous or near continuous engagement) - this takes into account 'paid holiday'. Direct financial benefits like pension and healthcare are easy to take into account in a sheet. Sick pay is harder since it's more like insurance. You may never get sick in which case it didn't change anything, or on the other hand if you get struck down with some bad thing for a couple of weeks, that could be 2/3/4+£K lost, or holiday sacrificed etc. Sick Pay IMO is the one Big Thing that permies have over contractors. Well, that and a modicum more job security i.e. notice periods, redundancy pay etc.
 

smokedog

Well-known Member
As a contractor you're only paid for the days you work.

Before considering going contractor you need to know the demand for contracting roles in your area and are you willing to travel for work. I work with some contractors whom live over 5 hours away. They commute in on Monday, stay in a hotel for the week and go home Friday evening.

I've been contracting for over 6 years. And I can't lie, I still stress a little about where my next role will come from. If your wife is in full time employment that will take away some of that stress.
 
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KyleS1

Distinguished Member
I've thought about doing the same for ages but after some bad decisions am very risk adverse. I know people that have been doing for decades that have never been out of work but do be prepared to travel.
Once my kids are older, I'll reconsider it but it can be very profitable. I've not had a sick day in years....
 

dtobin

Well-known Member
Thanks all.

Definitely a lot to think about. I go in holiday in a week so maybe a week of intense research is in order.

One thing that concerns me is that the place I currently work is currently trying to get as many contractors off their books. Don't know if this is specific to the company or reflective of a wider pattern,

Cheers
 

nheather

Distinguished Member
I'm not a contractor and won't become one unless I am offered early retirement after 55. This is what would attract me about contracting

1 - not the money. With my experience I could probably command a very big income, possibly twice what I am on now. But I wouldn't look at doing that. Instead I would look at doing the more enjoyable, less senior, less responsible stuff. From what I see of the contractors that work under me, I could match my current income (including holidays and sickness) but doing a less senior role.

2 - the hours. As a permie in a senior role I am caught by that 'you work the hours to get the job done' culture which in reality means, I work 50 hours, I get paid for 37 hours and the customer gets charged for 50 hours. As a contractor, if they want you to work more hours then they pay you for them - which means that they are less inclined to ask or expect

3 - work the hours you choose - to a degree. Some people think that contractors can just pitch up and leave whenever they want. They wouldn't last long where I work. However, it is quite common for them to arrange to work 3 or 4 days per week

Cheers,

Nigel
 

nheather

Distinguished Member
Not necessarily. More usual in my experience to be paid a daily rate.
Yes I've heard that - not seen it where I work though.

I have spoken to a colleague that was asked to move from an hourly rate to a day rate and he said that he increased his charge to cover the likely extra hours. I imagine it will depend on the sector and how much in demand you are though.

I know I am charged out at a day rate but that is as a permie working in consulting. I do know that I get charged out for a lot, about 5x what I get paid - which shows the scope for contractors to get paid much more but still be an attractive proposition.

Cheers,

Nigel
 
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