Hard to find contracts?

[malvolio]

Well, as I said in my previous post, I know it depends on a number on things such as if you have a limited company, inside/outside IR35 and a few other things.
But people who are contractors already should know how much they end up with after tax and other things and that would be really useful to share so that people (like myself) who wants to be contractors can make a more calculated decision.

Money is (whatever you say) one of the major things that obviously attracts people to become a contractor. If you couldn't get more money being a contractor compared to a perm job then nobody would want to take that risk? There are obviously other things that also are attractive to be a contractor but for most people I would say that the money side of things is the most attractive part.

Oh joy, another know-nothing newbie who's too clever to listen to what they're being told.

OK, so let's start with a reality check. Most contractors are on roughly the same take home as most permies, all things considered. Yes we get more gross, but we don't work 365 days a year and have to pay for everything, including sick pay and pensions, that probably haven't even crossed your mind. I make a comfortable living on what looks like serious day rates to most, but I could double that in an equivalent permie managerial role. So why don't I?

If you want psycho babble, money is a comfort factor, not a motivator. Oddly enough, most contracts understand that very clearly while most permies don't; we merely see the rate as a measure of success and competence. If you're going freelance to make pots of cash, then (a) you won't and (b) you're setting yourself up for a fall.

Read our collective lips - WE DON'T DO IT FOR THE MONEY

[Fred Bloggs]

I don't do it for pots of money right now. It's probably not so important to the younger guys (I'm now 53) but the biggest thing about contracting for me is the ability to put as much as I can afford directly into my SIPP from the Ltd Co. I live on about what I'd get as a top drawer permie process engineer and I put the rest of the turnover into the SIPP. I'm on a really good day rate right now so about 75% of my turnover will go into the SIPP this year. Last year on a lower rate about 30% of turnover went into it. You just cannot do this as a permie guy since you'd have nothing left over to live off. I suppose what I'm doing is deferring my income and my taxes till later.

[ITContractorUK]

I hear you, and I don't want to be a smart arse
I fully understand that I am a newbie and that I don't understand all the sides of being a contractor so please en-light me!

What am I missing here?

Example Budget 1 - Contract job worth £400 per day where you work 10 month per year
Net Income per month £5700
Pension 400
Hardware/Software 200
Accountant 150
Save 1000 (for sick days, unforeseen expenses)
Left per month: £3950

Example Budget 2 - Contract job worth £1000 per day where you work 10 month per year (I have actually seen a few contract jobs for £1000/day but obviously hard to get)
Net Income per month £13750
Pension 400
Hardware/Software 200
Accountant 150
Save 1000 (for sick days, unforeseen expenses)
Left per month: £12000

[Fred Bloggs]

Now account for- VAT, Corporation Tax, Employers and Employees National Insurance, Income Tax, PII/PLI insurance, war chest top up, holidays money, life insurance, private medical insurance, (very probably) significant away from home living costs............

[eek]

You really need to see an accountant but you forgot about tax and even if you simply look at corporation tax that is going to knock down you income.

For me contracting is not about money but control of your own destiny. Sat where I am at the moment I feel rather sorry for the people around me, they have out of date skills and I'm not going to be in the same boat.

[ITContractorUK]

Thanks Fred Bloggs, this is the type of information I need to know.

To break down your added entries:

VAT - already included in the calculator I used
Corporation Tax - already included in the calculator I used
Employers and Employees National Insurance - already included in the calculator I used
Income Tax - already included in the calculator I used
holidays money - I calculated my net income 10 months out 12 months so will have 2 months paid without having to work
private medical insurance - have one today but not sure I want one
significant away from home living costs - will still commute in to the same places as today where I work
war chest top up - included in the £1000 I would save per month

Pension 400
Hardware/Software 200
Accountant 150
Save 1000 (for sick days, unforeseen expenses)
Life insurance 50
PII/PLI insurance 50

[northernladuk]

Example Budget 2 - Contract job worth £1000 per day where you work 10 month per year (I have actually seen a few contract jobs for £1000/day but obviously hard to get)
Net Income per month £13750
Pension 400
Hardware/Software 200
Accountant 150
Save 1000 (for sick days, unforeseen expenses)
Left per month: £12000

I refuse to bother giving anymore advice to someone is calculating income on £1000 per day. Get real and people might resepect you a little more and not give you hard time. This is a forum for contractors, not day dreamers and greedy newbies.

Want some serious help? Start asking some serious questions,.

Start calculating on 250-300 a day and for 6 months a year working. Take the worst case and if you can stand it your ok. Believe me, these situations might look bad but we have all faced them at one point are another. Head out of arse and engage brain please.

[malvolio]

Thanks Fred Bloggs, this is the type of information I need to know.

To break down your added entries:

VAT - already included in the calculator I used
Corporation Tax - already included in the calculator I used
Employers and Employees National Insurance - already included in the calculator I used
Income Tax - already included in the calculator I used
holidays money - I calculated my net income 10 months out 12 months so will have 2 months paid without having to work
private medical insurance - have one today but not sure I want one
significant away from home living costs - will still commute in to the same places as today where I work
war chest top up - included in the £1000 I would save per month

Pension 400
Hardware/Software 200
Accountant 150
Save 1000 (for sick days, unforeseen expenses)
Life insurance 50
PII/PLI insurance 50

Right, so you know everything there is to know. Why are you still asking questions then? For example, why is VAT included in your calculations? It's not your money... (and FWIW I know the answer, I'm just wondering if you do)

Average take home on £400 a day (not that you're likely to get £400 a day as a newbie coder, more likely £300) is near as damnit the same as a permie on £40k pa. Those are the kind of numbers to focus on.

[ITContractorUK]

The only reason I did the £1000/day budget was to show that there must be people out there who have a lot of experience/contacts who is making good money.
I didn't obviously expect to start on that level or even close! As malvolio says, I will probably start on about £300/day.

But I still need to know how much it cost to run the business right? That's why I started to list some of the things I had thought about but also was looking for other peoples input.
The reason why VAT was already included was that the calculator already take things like that in to account when calculating the net profit.

Average take home on £400 a day (not that you're likely to get £400 a day as a newbie coder, more likely £300) is near as damnit the same as a permie on £40k pa. Those are the kind of numbers to focus on.

So £400/day = 40k permie anual job. Does that include only working 6/12 month?

[malvolio]

The reason why VAT was already included was that the calculator already take things like that in to account
when calculating the net profit.

Point proven. VAT is not part of your turnover and has no effect on profit. Try again.

The (day rate / 1000) rule assumes full employement or it wouldn't be comparable and allows for all the overheads of contracting. In reality you are looking at monthly take home, not annual; that rule gives you a fairly good idea of what that is likely to be.

(and by the way, I am on occasion a £1000 a day man. Don't hold your breath...)