
Becoming a contractor programmer in the UK - timooo
https://github.com/tadast/switching-to-contracting-uk/tree/formationsfactory
======
peteretep

        > You should have savings to cover at least 4 months of
        > your usual expenses. You will spend some money
        > establishing a company. It may take several weeks to
        > find your first contract.
    

If you wanted to be extra safe, sure. I made the switch when I was heavily in
debt, and it helped me get out of debt, so YMMV.

    
    
        > A service like www.formationsfactory.co.uk will make the
        > incorporation process easy.
    

Actually it's super easy online using the UK government sites now. I set up a
company (again) about ~14 months ago, and it took about an hour of filling in
.gov.uk forms online. I would recommend just doing it yourself.

Setting up a bank account is pretty easy too, and I'm not sure why you'd use a
third party for it. 15 minutes of filling out HSBC forms did it for me.

    
    
        > Finding your first client might be hard.
    

Sure. Most permanent jobs have a 4 week notice period, and you can find
contractor roles happy for you to start in 4 weeks. Line one up before you
quit, and there's no 2-3 week mad rushing around trying to find a contract.

If you're just getting in to it, start with a recruiter. They'll eat in to
your contract rate, for sure, but they'll also have a far better visibility of
the market than you, they'll get better feedback from clients than you, and
they'll help chase your invoices and so on. I worked as a contractor for a
long time and never had a bad experience with a recruiter, where the OP seems
to have had a dreadful time...

    
    
        > rates
    

Go look on jobsite. For Central London, a developer should be asking for
£300-£600/pd depending on seniority and what they're doing.

    
    
        > IR35
    

In addition to IR35, they're about to massively change how dividend tax works.
You might be better off looking at an umbrella company like Giant, who'll save
you a lot of accounting hassles...

~~~
dspillett
_> Most permanent jobs have a 4 week notice period_

Really? In experienced level dev jobs? Most of the people I know are on two
months notice. Three months, which is what I'm tied to, doesn't seem uncommon
for senior devs/DBAs/similar.

~~~
tom-lord
It's also worth noting that (at least in the UK) such notice periods are not
legally binding.

You can only be forced to give a notice period up to your payroll pay
frequency. So for example, if you get paid monthly then you cannot be sued for
failing to give > 1 month's notice!

... But of course, most people will still honour their company's "3 month
notice" (or whatever) period out of good faith, as it's generally a good idea
not to burn bridges.

~~~
choult
Are you sure about that? There is a statutory notice period of one or two
weeks depending on how long your employment has been, but this appears to be
trumped by contractual agreements:

[https://www.gov.uk/handing-in-your-notice-resigning-
leaving-...](https://www.gov.uk/handing-in-your-notice-resigning-leaving-job)

~~~
dspillett
The statuary period sets the _minimum_ that an employee and an employer must
give. Unless otherwise agreed this is the only value to care about. A longer
notice period can be arranged via contract. A shorter period can not be agreed
(well it can, anything can be agreed really, but it will not be legally
enforceable).

IIRC the statutory rules are as follows:

* After one month of employment the minimum period is one week

* After two year's of employment the minimum period becomes two weeks

* Each year after the first two one further week is added, up to a maximum of twelve (so because of how long I've been here the three months dictated by my current contract is pretty much aligned with the statutory minimum notice period).

While there is some room for ignoring a contract with unfair terms, unless the
notice requirements set out in what you have signed are rather egregious you
will be expected to honour them unless you successfully negotiate otherwise at
the time. People can and sometimes do ignore this though because the costs and
time involved in taking you to court for breach of contract are high enough
that it just isn't worthwhile to most employers, but this is a risky stance to
take as you could create a reputation for yourself that travels around your
industry fairly quickly and may stick around for some time (and, of course,
such action is morally wrong: if you signed a reasonable contract in good
faith you should stick to it just as you would expect the other party to). If
your contract (that part or all of it) can be declared void because it is not
enforceable (you can't sign away the statutory minimum) this becomes moot. It
can also become a moot point due to some other significant breach by either
party then (well by the letter of the law it doesn't, but "you could take me
to court but you don't really want the whole truth being a matter of public
record do you?" can be a powerful argument in dissuading the other party from
taking action).

------
acaloiar
As others have noted, the 4 months of living expenses requirement can be quite
excessive. I've seen similar advice in the past and can't help but recall my
personal anecdote of starting a company with barely enough money for one month
of expenses. What is far more vital to one's success as a solo contractor is
not having savings, but having guaranteed future revenue generation – clients
with signed contracts.

As the author notes, the legal business entity and business infrastructure
should be set up in advance. This enables one to acquire clients and do
business before putting in a two-week notice at your full time job. I no
longer operate my company, but had I abided by the 4 month of living expenses
rule I would have never gotten off the ground. Within 4 months I was earning
slightly more than double my previous salary. Don't shackle yourself to rigid
startup rules. If you have clients and believe in what you're offering, go do
it.

~~~
ownagefool
Generally a client can end your contract pretty much at any time without
recourse. If you're client doesn't have mutability of obligation clause, that
allows this irregardless of notice period, you probably fall under ir35.

So this advice is based on that, but obviously if you're good and marketable,
you'll probably be OK. I myself really became a contractor after a
relationship breakup when I was in about over £3000 O/D, a mortgage to pay and
about £4300 credit limit.

Discussed this with agent, they agreed to pay me the day they were paid and I
drove 400 miles for a contract which wasn't actually signed by the client yet.
Luckily, they were happy to see me on the Monday, and I got paid at about
£4200 into that limit.

This was 2 years ago. Now I probably earn 5+ times my highest perm salary, so
in my case the gamble was super worth it, but if you're not somewhat
charismatic and decent at your job with a marketable skill, it could go the
other way.

~~~
acaloiar
Agreed.

To shed some more light on my strategy:

* I planned to exit the company months in advance.

* Signed two clients

* I was a director of a small development team. I architected much of the company's critical infrastructure (most importantly, credit card/payment processing) and knew that I could leverage my knowledge to negotiate an advisory contract.

* Put in my notice

* Signed ex employer as my third client with _weekly_ payment and a two month minimum. They obviously could have broken the minimum agreement, but kept me on until I severed the contract several months later. Weekly payment was key.

A little strategy can go a long way, but obviously it could have turned out
much differently for me. And as noted, this is purely anecdotal. While four
months buffer is generally wise, it is not de facto necessary.

------
hanoz
Contrary to the advice, you do not need an accountant, especially if you are
able to ignore another part of the advice and not register for VAT (if your
turnover is below the registration threshold of £82,000) which simplifies the
accounting greatly. Your duties are then mainly as follows:

Use HMRC PAYE Tools to report each salary payment you make, and pay any
National Insurance if applicable (which it won't be if you keep you salary
below £671 a month).

Use the same tool to report any expense payments each May (form P11D).

Use Companies House WebFiling to submit your annual return (a short submission
confirming some details about your company's directors and shareholdings etc.)
each company year end.

Use HRMC's Online services to submit your corporation tax and accounts nine
months after each year end. I pay £45 each year for collection of Excel
templates from
[http://www.diyaccounting.co.uk/](http://www.diyaccounting.co.uk/) to record
my accounts which produces a mockup of the HMRC web form with the fields
filled in.

Pay yourself a dividend one or twice a year and find a Word template to print
out a record of the payment and the board meeting you had to decide on it.

Finally, use HMRC Online Self Assessment to submit your personal tax return
each January, which you may already be doing anyway.

Looking at all this now it seems like a lot, but it's not as bad it sounds. I
suppose you've got to have something of an interest in learning how a business
is run to justify it. On the other hand you can save your company a tidy sum,
plus as a company director you're legally responsible for the accuracy of the
various submissions anyway, whether an accountant does it all for you or not,
so you may as well have a sound understanding of it all I say. Also, I don't
know whether this is the really the case or not but I've a theory that the
more you run your operation like a proper business the less likely you're
going to come a cropper of an IR45 disguised employment judgement, which could
be severely financially damaging.

Running your own operation like this will put you in a better position for
trying out any side projects I believe, and of course it will all stand you in
good stead when you finally hit on the world changing idea you've been waiting
for and your one man band blossoms into a large corporation (although do then
get some accountants - but at least you'll have some idea what they're up to).

~~~
DrJokepu
Even VAT is fairly straightforward if you sign up for the VAT Flat Rate Scheme
(assuming you're eligible). You'd probably need to pay for something like
FreeAgent to help you with your VAT filings, but amount of money the Flat Rate
Scheme would save you would easily pay for the cost of the bookkeeping
application.

~~~
christoph
+1 for Freeagent. We've been using it for 6 years now and still love it!

------
CharlesFinley
The old discussion is now closed.

You should be aware that there is no obligation for limited companies to have
a business bank account. However, it is usually a good idea to have one.

Furthermore, you don't need to be a UK resident to open a business bank
account but most banks will not deal with you due to higher costs and fraud
concerns.

P.S. your company does not require a UK-based bank account. You can open a
business bank account in your country in the name of your LTD company in the
UK. You will need to have your company documents (Certificate of Incorporation
and Memorandum & Articles of Association) apostilled.

~~~
batou
Very true.

Also the advice about marketing yourself is crap. Recruiters are the #1 way of
landing contracts. They're finders and you're paying a finders fee for that
service. They have the big guys with oodles of cash to get hold of.

If you can't get a gig through a recruiter then you either don't have skills
that are in demand or don't come across as someone who they'd want to sell.

If you don't go through the recruiters, you end up being left with the cheap
arse companies that won't pay up anyway. If you're sneaky about it, you and
the recruiter can get the client to pay the finder's fee.

Once you're in the system, build up a network of contacts and then move
through that rather than using the recruiters. I'm doing that at the moment
and ended up taking a perm position that was better paid than the contract
rates were (without all the hassle of IR35, rolling a Ltd etc)

~~~
jacquesm
> If you don't go through the recruiters, you end up being left with the cheap
> arse companies that won't pay up anyway.

I've never used a recruiter, the companies I work for paid pretty good and I
had _one_ unpaid bill in a couple of decades.

Building your own network and getting rid of recruiters as your main source of
income is very important to new contract programmers.

For one they take a cut and for another they will sell those parties where
they can take the largest cut first.

I'm not saying they don't have a function but recruiters goals and the
recruited goals are not 100% aligned and you should be very much aware of that
when using one.

One way to side-step recruiters is to build up (large) number of contacts with
people in the industry who may get to know someone that needs your particular
skillset.

The more peculiar your skills the harder it will be for recruiters to place
you and so more of the acquisition part will have to be done by yourself.

Think of using recruiters as 'outsourcing acquisition', it has all the upsides
_and_ the downsides associated with all other forms of outsourcing.

Another danger with outsourcing your acquisition to recruiters is that you are
handing the keys to one of the most important parts of your business to
another party, who can then either cut you off at will, replace you and retain
their contact with the company you were placed in and so on.

The sales department (which you've essentially outsourced) is a _very_
important (if not the most important) element in any company, even a small
one.

You may be able to make your life a little easier by not doing that work,
especially if you're an introvert but in the longer term you're setting
yourself up in a very dangerous position.

So, use recruiters if you have to but be wary and make sure you have
alternative channels to being hired under your own control. Never let a single
recruiter get you all of your jobs or even a majority of your jobs.

~~~
batou
You're right on all the points there.

I did find that you can play recruiters off against each other quite easily to
negotiate a higher rate. Also when you sign, you sign with the company not the
recruiter and have a solid contract in place. Never work for sharecropper
recruiters like some of the bigger ones.

If they want to get rid of you after 2 weeks, make sure there's an exit fee.
That is usually 100% for me if under 6 months of contract left. I did 2 weeks
at a company on a 3 monther at £550 a day and completed the work but was paid
for the 3 months.

The particular sector I worked in was finance and that is still heavily
recruiter driven unfortunately.

------
jackgavigan
The previous discussion -
[https://news.ycombinator.com/item?id=9726182](https://news.ycombinator.com/item?id=9726182)
\- should be read alongside this page. It had a number of glaring errors,
including some very bad advice about tax.

------
codeshaman
Great article, very thoughtful.

But my biggest question is _where_ do you find a client ?

Is there a website (like a jobs website) for contract work, besides elance and
the like ? Yeah, I can google it, but it's usually just a waste of time.

Is there any serious place where an experienced developer can meet serious
clients ? I mean clients willing to pay for quality work so I can make a
living similar to a corporate job ?

~~~
iyra72
As a very young programmer looking to make some money along his studies in the
UK, I want to know where I can find clients, or even start a portfolio that's
more than a few open source projects on GitHub.

~~~
ceeK
I posted an offer to HN to build their app for £100. Monetary value is
obviously very little, but it's a token gesture that technically gives you
freelance experience.

It was great to build my portfolio up; I'd recommend it if possible. It's much
easier to land gigs with a freelance portfolio.

[https://news.ycombinator.com/item?id=6382405](https://news.ycombinator.com/item?id=6382405)

------
junto
Previous discussion:
[https://news.ycombinator.com/item?id=9726182](https://news.ycombinator.com/item?id=9726182)

------
jacquesm
I wrote a whole series of pages on this subject condensing the last 30 years
or so:

[http://jacquesmattheij.com/be-consultant/](http://jacquesmattheij.com/be-
consultant/)

The idea was to one day bind this all together and make it a book.

~~~
peteretep
Contracting in a UK sense is really very different from consulting or
freelancing. It's essentially just a 9-5 short-term job, usually on-site, with
more money and some extra accountancy perks.

~~~
jacquesm
I see more things in common than differences between those and I know people
in the UK that use contract work to supplement their income when their
consulting/freelancing gigs are not plentiful enough.

------
andy_ppp
One important thing to note is that your accountant gets a kickback from
setting up a bank account. You should instead aim to search for the best bank
account you can find with the best deal and the faster payments service; my
bank account with Cater Allen still does not support this for example.

I'd also highly highly recommend freeagent which is so good it makes you
wonder what your accountant does. It has been right where my accountant has
often been wrong!! Here's a referral link:

[http://fre.ag/34atijdc](http://fre.ag/34atijdc)

~~~
tome
Freeagent looks interesting. What's their customer support like? My accountant
is about 90 GBP per month but I get extremely prompt responses from them on
technical issues so I'm inclined to think they're worth it.

~~~
andy_ppp
Freeagent have always responded pretty immediately but it's best to get an
accountant [1] that supports Freeagent and you are then effectively paying for
support. They use Get Satisfaction which is community and vendor run support
[2].

It makes the accountants life a lot easier too (they get a slightly restricted
login).

[1] [http://www.freeagent.com/find-an-
accountant](http://www.freeagent.com/find-an-accountant)

[2]
[http://community.freeagent.com/freeagent](http://community.freeagent.com/freeagent)

------
hippich
(my background is freelancing on sites like odesk.com and elance.com)

Could someone explain what kind of contracting work is talked about here? With
examples of products, type of work, technologies, etc?

How much of it applicable to US?

------
macavity23
Excellent article. I was a contractor in the UK for ten years and this hits
all the most important points. Thanks for posting.

Once you have a 6m+ contract under your belt, look at recruiters again. As
distasteful as they are (and they are), 90%+ of the most valuable contracts go
through them. I would love for these parasitic fucks to be disintermediated,
but if that was going to happen it would have happened by now, so live with
it.

Your problem with recruiters is that you are having 'friendly conversations'
with them. This identifies you as a mark whom the recruiter can place into a
£400/day contact and pay you £200. This happens ALL THE TIME and is the bread
and butter of many recruiters.

The thing to remember about recruiters is that they have no clue about the
industry they're recruiting for. If they did, they would be working in it, not
recruiting for it. So, the only real clue they have of how good you are is how
good you SAY you are.

So do not be friendly to recruiters - treat them was what they are - odious
middlemen who need you. As you say, not signing anything with them is good.
Another good strategy is to contemptuously dismiss the first contract a
recruiter mentions. "This small-time crap? Sorry, I though you guys were top-
drawer."

Recruitment is HELLISHLY competitive and the churn is savage. Recruiters are
sharks, and they think like sharks. But they NEED you. They will absolutely
fight over you if they think you are worth fighting over.

Don't bother until you have a contract under your belt. But once you have,
start treating recruiters badly and see what happens. :)

------
colinramsay
This is the easy bit. Finding quality, well paid work, that's the hard bit. It
renders all the rest of it a bit irrelevant.

~~~
peteretep
My experience (and that of many coworkers I've had) - unless you've really
pissed in the pool, there is an unending supply of good contracts in London.

~~~
squinn2
Anyone know what the market's like for embedded s/w development these days? ~
15 years ago (ouch) recall we were using a lot of contractors for protracted
periods & had to keep them sweet for fear they might just skip off to another
job.

Didn't make the transition then. Always wondered ..

~~~
pyb
Embedded contracting in the UK is dead atm. I found that in the field, most
contract vacancies from agents are fake. As for the few hw startups, they're
mostly unfunded.

------
logiclabs
Despite me not generally being a fan of agencies, they do have there
advantages. So long as they're reputable, one big advantage which not many
people take into account is that a good one is giving you free invoice
factoring and debt collection. This means you would normally get paid on-time
even if the client hasn't paid the invoice yet. This is a pretty major thing
for those starting out, particularly if you are touting for small clients, who
may run into cash flow issues, or very large clients who mostly take forever
to pay invoices.

Chasing clients for money is, particularly when starting out, something that
you feel hesitant to do in case you adversely affect your relationship with
the client, as you don't think you have much leverage and are risking a good
contract. It's a confidence thing though, these days I'd have no problem
putting my foot down and walking away from a non-paying customer's contract.

Of course, all you're really doing is moving the risk of non-payment on to the
agency but, so far having worked with about 8 agencies, I've not had any
trouble being paid on-time in 12 years. Working directly I've run into non-
payment issues several times with non-payment periods upto almost a year
(though I'd long moved on to another contract). But then I've got a friend
who's been ripped-off by a recruitment agency, having folded with a couple of
months pay due. So you do still need to chase them too and ensure you maintain
an adequate pot of savings for breaks between contracts and covering non-
payment issues.

Having been in the position of working directly for clients and being owed
large amounts of money for long periods of time, I'd recommend finding a
reputable (sic) recruitment agent until you are up and running for a good few
months or even a couple of years. That all said, you do have to put up with
the barrage of appalling sales pitches for unsuitable positions and a lack of
technical knowledge while dealing with most of them.

------
borplk
Is there an Australian version of this somewhere?

I wish people would replicate this for as many countries as possible.

~~~
JacobAldridge
The IR35 related laws in the UK make independent contracting much easier and
therefore more common there than in Australia. As I understand it, many UK
contractors would be considered employees under Australian law.

Having run my business in Australia and then the UK, I asked the founder of
Crunch in the UK (Accounting support for contractors) if he planned to expand
to Australia because I loved their service. While open to it at some point,
iirc he said there just wasn't the volume of potential clients down under to
justify the legislation and recruitment investment.

------
gedrap
Pretty good and brief summary about UK specific details, thanks for sharing :)

------
ravibhatt
Adding my two cents. I have been a contractor for almost 3 years now. My
personal opinion:

\- Contracting pays a lot more than a perm role.

\- You do not deal with politics, which is a major plus for me.

\- You do not hear about you not getting your promised y% bonus because
company did not do x% business.

\- You are not worried about 'changing the world', the way you would in a
startup.

\- working 4-6 years your asses off at a startup may be equivalent to working
as a contractor for that time. That is a big may be, your skills, confidence,
market everything plays a big role.

\- Always get a good accountant, go for ltd company, enroll your wife and PAY
YOUR TAXES!

\- I started when i had about a month's savings, and it worked out well.

\- Day rates depend on your skill set. 350 is the minimum i guess for any
role, max is your imagination! 800? 1000? but getting 500-550 should be the
target at least.

\- Getting a contract is tricky: use linkedin, recruiters, friends and
whatever else. All are necessary. I would not worry too much about a recruiter
getting a cut as long as i get what i had asked for.

\- Get a contract before quitting your perm role. Mostly companies looking for
a contractor wait for 2 weeks, if you are good and your skills are in demand
they would wait for 3-4 weeks.

\- Always plan your vacation at times when everyone else is on holiday.
December/January and April are good times.

\- HMRC website is good enough to register a company, 15 pounds and 20-30
mins.

\- Getting 450 a day is always better than siting idle waiting for that
550-600 a day contract.

\- There is lot of competition, be prepared for that.

\- Prepared for some level of stress (specially when you are out of work), it
is still worth it.

\- Do not worry too much about your utilization in a contract, it is the
client's worry. You are paid for your skills and not your time. Do put
reasonable time, but that is not the criteria you were hired with.

\- 'Doing/Completing my time' is a BS. I have had several contracts and none
of the clients ever had problems with my timings. And i am particularly bad at
working normal hours. Sometimes i get at work at 10 and leave at 5. At times i
work whole nights.

\- Recruiters are lairs, don't give too much info. Ask for a job spec and day
rate before giving any info. I would help you, after you get me a contract!

\- Send your CV to all who asks for it. Keeps you in the market.

\- You will not necessarily get a higher day rate if you went directly with a
client. Your day rate depends on your skills and negotiating skills only. If
you do not ask for a good day rate, chances are, you wont get it.

\- Sometimes, leave it on Luck. We can be the smartest asses on the planet,
but at times need luck.

Hope this helps.

~~~
brc
Good list. I would also add:

\- don't trust agents \- don't trust agents One more thing: \- don't trust
agents

If you find a half-honest one work with them as much as you can. They'll still
try and screw you over but they might decide to be straight once in a while.

I don't blame them in a way - the competition is fierce and matching client
and contractor for happy outcomes is hard. But too many of them are willing to
try and renegotiate your rate down after an offer is made - 'they like you,
but not at your original rate' \- 99/100 this is a ruse to keep some pounds in
their pocket. Learn to be firm with agents.

Find out who makes the decisions on hiring and who has budget within a company
and get to know them personally. They're the ones signing your pay.

I contracted for nearly 10 years in a variety of places. It's a great life but
you do have to keep an eye on your career as your skill set might start to get
old, and it's hard to move onto the next thing because you don't get the
chance to practice it. But I have friends who have been doing it for 20 years
now, and they have made a great life out of it.

~~~
robmcm
I always used agents over 3.5 years and never had any problems.

They are sales people though, and obviously there are bad ones. However they
are providing a service to you, (and their client), often contractors that go
direct are on a worse rate, get paid a lot less frequently (3 months after
each month, vs weekly in some cases) and have to deal with tedious internal HR
processes.

Some times after you get used to the industry you have enough contacts to go
direct, but initially an agent can really help you out.

~~~
brc
Yes, use them by all means - it's very difficult to get started unless you do.
But don't trust them. Don't take their word for anything.

------
yetanotheracc
What are the benefits of incorporating an Ltd vs being a sole trader?

~~~
peteretep
There are significant tax savings, and theoretically limited liability. The
significant tax savings will change next tax year with changes in dividend
taxes and NIC contributions. No-one is really sure of the actual impact at
this point.

~~~
nikon
7.5% on your dividends. About 3k a year for a 100k earner... Nothing to go
permie about.

~~~
peteretep
I had thought the jury was still out on this - I do hope it ends up being only
that amount though.

~~~
logiclabs
The rates for dividend payments are set but because of the triple changes of
the budget - dividends, employment allowance and travel/subsistence expenses,
it could affect some contractors a lot worse than others. Though it's mostly
those who rack up large commuting/accommodation expenses chasing high paid
work in London while not living anywhere near there. The travel/subsistence
rules haven't been set yet but it's likely HMRC will crack down on them quite
hard.

------
jwmoz
I moved from web dev perm jobs in the west mids, down to London and started
contracting around 6 years ago. It's singlehandedly the best decision I ever
made, tripling my salary. And bar a few of months after I went to Asia for a
year (paid for by contracting), I've never had much trouble landing a new
contract.

You can easily earn over 100k if you're any good in your field.

I was thinking about writing a post about the ins and outs of the London
contract market.

------
yetanotheracc
Compared to full-time positions of equivalent scope, what skill level and
experience is needed to work as a contractor? How do the working conditions
differ?

~~~
brc
In my experience, sometimes they wanted more skill and experience for a
permanent role than they did for a contractor. I worked as a contractor and
had to fill headcount, and the process was different for a contractor and a
permanent. Contractors are much simpler to get rid of if they don't turn out,
so hiring decisions were made faster. Permanent people being hired had to be
of a higher standard.

This doesn't mean that you can get away with being a junior in a senior role,
but it might mean there is more of a focus on technical skills rather than
university qualifications, that type of thing.

There are some crap contractors floating about the system and some crap
permanent employees. And vice versa.

The working conditions are almost identical, except that in a downturn the
contractors will be first out the door. They also get to avoid 'company
building' meetings and crap like that.

------
xedarius
There are legal firms in the city who will review your contract for IR35
compliance. If you don't know what you're looking for I highly recommend using
them. Do not be afraid of amending a contract and pushing back on the client.

Being IR35 compliant is one of the biggest benefits of being a contractor(at
least that was true before they changed the dividends rule), so it's important
to get this right.

------
mavdi
"Am I ready?"

Are you a programmer? Yes? You are ready.

Seriously in the current market you don't need to be a very confident
programmer to be contractor in the UK. Quit your stressful jobs and get into
contracting NOW. Money is 3x better. Hours are better, employers are more
flexible with contractors believe it or not. And when shit hits fans, just
bail and go find another contract.

~~~
mtberatwork
Easier said than done and a bit short-sighted. I would argue that over the
long run, the stress of having to track down and find new projects while
maintaining a steady stream of income produces much higher stress levels than
a 9-5 job. Some people can deal with that, others not so much. You will also
have periods where you are flush with cash and periods where you may go months
on end without income. Again, some people can handle this, others not so much.
Are your hours really better when you factor in all of the business
administration and marketing of yourself that you will need to do? Probably
not. So, are you really ready? That's a much deeper question and not so easily
answered.

------
ExpiredLink
>> _You should have savings to cover at least 4 months of your usual
expenses._

12, better 24 months for peace of mind.

>> _It may take several weeks to find your first contract._

More likely, several months. It depends on the match between your skills and
market demand.

In general, most companies will not commission you directly. There's always a
company between you and your end customer.

------
FilterSweep
Apologies for the ignorance.....As a barbaric American, Don't you still have
to pay taxes if you are a US citizen unless you renounce it? Or does
incorporation create a shelter (much like most US companies are doing)? Some
relatives of mine took contracts in Canada and ended up having to pay triple
taxes (two in Canada, one in USA)

~~~
Maultasche
Yes, that's true. Americans can be taxed for income earned outside the
country.

I'm not an expert on this subject, but I don't think that income earned by an
incorporation would be taxed if it's incorporated outside the United States.
However, the incorporation would have to pay its employee, and that employee's
income would be subject to taxation if the employee is a US citizen.

It's not quite as bad as it sounds though. The first $93000 of income earned
abroad is not subject to taxation. Many countries (such as Canada and Germany)
have reciprocal income tax treaties with the United States that keep citizens
from being double-taxed. A US citizen in Germany, for example, wouldn't have
to pay any US income tax on income earned in Germany as long as that income
was subjected to German income taxes.

Other income such as stock dividends and capital gains is another matter. I'm
not entirely certain if that is double taxed or not.

The IRS has a web page listing income tax treaties with various countries:
[http://www.irs.gov/Businesses/International-
Businesses/Unite...](http://www.irs.gov/Businesses/International-
Businesses/United-States-Income-Tax-Treaties---A-to-Z)

------
nikon
I think regardless of the tax benefits discussed in this thread, even with an
equal playing field you will earn significantly more than your permie peers.

You can get 50k if you're lucky in London, but you can earn 500 a day as a
contractor.

500 * 230 conservative work days per year = 115,000 NET

~~~
eterm
230 work days aren't "conservative", that's 4.5 days/week. Given the legal
minimum of 28 days holiday per year for permanent employees (28 includes bank
holidays, often you'll find vacation quoted as 20 days which doesn't include
the bank holidays), that's close to 100% "found work" rate.

~~~
scalesolved
Ten weeks holiday and still earning over 100k contracting a year at £500 a
day. Obviously not everyone has a contract all the time but from my friends
that do contract they almost always are working (and they are outside the
market hungry center that is London)

~~~
jakub_g
Speaking about holidays, what's the employers' attitude towards days off say
on a 3 or 6 months contract? Can you take a week or two off during a 3 month
contract or you are generally expected to work the full contract time?

~~~
gaius
You can take as much holiday as you want, between contracts. I know a few who
regularly head off for 1-3 months at a time, between working.

------
hudo
What's the situation in Dublin? From what i can see, just bunch of recruiters
hiring for a few companies; any info which one is approachable directly? Im in
.net

------
jheriko
wasn't this here only a few days ago already?

fwiw i've jumped into this sort of work before without any savings or backup
plans... it was much more 'exciting'. XD

------
steaminghacker
Good info. Does anyone have info or experience in seting up your ltd company
overseas together with an overseas bank account.

------
infinite8s
Anybody have similar advice for the US?

------
Damerell
Can anybody rate the Headhunter family? They are aggressive and expensive. GB
does'nt really suit as far as big companies are concerned because IBM
experience is required which is lacking in GB Portfolios. Good luck to the
Indians - I think they have got it right excluding German language.

------
enjoy-your-stay
Don't forget to setup a pension and pay into it regularly.

~~~
medwezys
This is a good advice. Any links/advice where to start looking?

------
warrenmiller
Crunch are aces.

~~~
cjrp
I've found their webapp to be pretty good, but trying to get actual financial
advice was a struggle since you have to go through your account manager rather
than talk directly to a real accountant.

~~~
ownagefool
I use Maslins who provide freeagent. They respond emails within the hour
usually.

------
blueblueblue
What does everyone do with the cash in their ltd company? My acct advises
leaving the cash in the company but HMRC seem arsey about investing directly
rather than moving it into an ISA which obviously then incurs an income tax
hit.

~~~
astannard
Generally you would start a Business Account, Barclays are good. You then pay
yourself from your company but at a much lower rate than your company gets
paid say an annual salary of £10,000. This will cause money to build up in
your company account which you pay to yourself as dividends which are more tax
efficient to get your money out. This is why most contractor use an accountant
to manage the payroll etc

