Take home pay from 300/day?
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    Default Take home pay from 300/day?

    Hi there,

    I am preparing for jumping into the cold water, meaning going from permanent to contracting.

    I've had an interview and I've got a good feeling that I will be able to get the contract, which pays 300/day. I currently have no experience with contracting, but I am planning to set up my LTD company, once I get the contract.

    I will be mainly working on the client site on a new web development project.

    How much take home pay can I expect?

    How much after the insurances and 500/month pension contribution is taken out?

    I am trying to figure out whether it's worth taken the contract compared to my 40K permanent job I have currently.

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    Quote Originally Posted by Braba View Post
    Hi there,

    I am preparing for jumping into the cold water, meaning going from permanent to contracting.

    I've had an interview and I've got a good feeling that I will be able to get the contract, which pays 300/day. I currently have no experience with contracting, but I am planning to set up my LTD company, once I get the contract.

    I will be mainly working on the client site on a new web development project.

    How much take home pay can I expect?

    How much after the insurances and 500/month pension contribution is taken out?

    I am trying to figure out whether it's worth taken the contract compared to my 40K permanent job I have currently.
    About 4k/month

    Try playing with this: Financial Profile Calculator - Contractors

    And speak to an accountant (most will talk you through these sorts of numbers for free in a hope to get you to sign up to them)

    Good luck

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    Prof Cunning @ Oxford Uni

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    OK, so you need to factor in the cost of accountants, PI & PL insurance, healthcare, holidays, etc.

    How many days holiday do you take a year?
    Sick days?
    How long is this contract for that you have been offered?
    Do you have private healthcare in your current job?

    If you take no time off and don't have breaks between contracts, then 300 per day is 300 per day. Take 2 weeks off for holiday, that's 3,000 lost income. Don't work bank holidays? That's another 2,400 out of your annual finances.

    Part of contracting is not about the equivalent daily/weekly/monthly salary, but can you afford to live and at the same time put some cash away into a war chest - a pot of money that you can call on between contracts
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    Prof Cunning @ Oxford Uni

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    Quote Originally Posted by pr1 View Post
    About 4k/month
    That's before taking out the pension, accountancy costs, insurance, and is assuming no time off.
    Strong and Stable Moderation

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    pr1
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    Quote Originally Posted by WTFH View Post
    That's before taking out the pension, accountancy costs, insurance, and is assuming no time off.
    It's 3805 after taking out 6000/y pension, 1200/y accountancy fees and 44 weeks or 220 days worked in the year, aka 40 days off inc bank holidays, sickness, holiday and out of contract time


    which is about 4k/month

    (i was answering the question that was asked rather than answering the question I thought they should have asked)

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    You have a lot of reading to do. You should have a LTD company in place before signing the document. It has to be signed by you as a director on behalf of the company. Not you as singlular person. It doesn't take long to set a company up and many accountants should be able to help you. Getting an accountant on as soon as you know you've got the gig will help as well.

    Have a look at all the guides to the right if you haven't.

    Forget what you take home from 300. You are going to be brasic for the next three months. Every spare penny you don't need should be kept in the company as your warchest. This is money behind you for when you can't get your second, third and whatever gig down the line. You are on the clock to get the second one with no money coming in so it can be a little stressful. This warchest is what will see you through.

    You should be paying yourself the minimum to life and squirrelling the money away. Once you have a good 3 to 6 months living expenses in the company THEN you can think about withdrawing from there on in.

    Oh.. and you can't compare permie to contract rate. There are so many factors you just cannot do it. For a start one is per year, the other is per day and a short term gig. You need to be thinking longer term as others have suggested. Factor on working 10 months of the year not a full 12 months to add a factor of safety and so on.
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    I'm saying nothing... but look at my posts from the last day or two on this subject.
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    Quote Originally Posted by malvolio View Post
    I'm saying nothing... but look at my posts from the last day or two on this subject.
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    Quote Originally Posted by malvolio View Post
    I'm saying nothing... but look at my posts from the last day or two on this subject.
    I do wish others would show the same self control
    What happens in General, stays in General.
    You know what they say about assumptions!

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    Quote Originally Posted by WTFH View Post
    OK, so you need to factor in the cost of accountants, PI & PL insurance, healthcare, holidays, etc.

    How many days holiday do you take a year?
    Sick days?
    How long is this contract for that you have been offered?
    Do you have private healthcare in your current job?

    If you take no time off and don't have breaks between contracts, then 300 per day is 300 per day. Take 2 weeks off for holiday, that's 3,000 lost income. Don't work bank holidays? That's another 2,400 out of your annual finances.

    Part of contracting is not about the equivalent daily/weekly/monthly salary, but can you afford to live and at the same time put some cash away into a war chest - a pot of money that you can call on between contracts
    Break between contracts is the biggest and hardest to manage risk. If you are always in contract, you might expect to work 220 days / year, more if you really want to. But each new contract, you can expect somewhere between 10 to 40 lost working days, and that can easily escalate to 6 to 12 month gaps with bad luck / market conditions for your skillset.
    Where there's muck there's brass.

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