Employing under a Limited company.

[Vdubster187]

Hi all,

I do apologise if this is very much common sense in the world of contracting, I have only been doing it 3 months.

I am currently an IT Contractor working full time using an umbrella company. However, I do have a Limited company set up for, in time I wish to run my own company.

I am getting job offers from (EXAMPLE COMPANY) I either cant get to the site or am to busy working. I would like to use some of the other engineers I have networked with to attend these sites.

Ideally I would like them to come under myself, rather than just handing over good engineers to (EC)

So my plan is to have 5 guys available to work for me, when I get a job from (EC) I would like to send one of these guys.

How would I go about payment for this?

Would I have to invoice (EC) using my limited company, then have the contractor invoice me?

Is there any legal requirements as these guys would in affect be working for me, on a one off contract set up.

I hope this is understandable and makes some sense.

Thank you very much for taking your time to read this.

Vdubster

[northernladuk]

It does and it is something I bet nearly every contractor wanted to do when we started. I know I did. Seems like money for old rope getting guys in and taking a cut or starting a small consultancy etc but in 99.9 times out of a 100 it just isn't feasible unless you take the jump and do it properly.

There are a host of issues you need to address...

Firstly. All you will be doing is working as another middle man in the chain so will normally be Client->Agent->You->working. You need to be able to find a guy that is happy to be in a chain this long, that won't just go to the agent direct and an agent that is willing to wait while your source someone. Normally they won't want to know and go find a guy who will go direct with them.

If there is no agent involved you have to hope the client will put up with the added complexity of you sitting between them and the guy you put in. If he wanted to do this he would have taken an agency on.

You will be responsible for this person and all communication etc between the client and him. The client is hardly going to be pleased if you can't go in and discuss issues with him because you are commited to your current client.

Will these 5 guys sit around waiting until you get a gig for them? I very much doubt it.

Yes you would invoice the client and they would invoice you. You would have to arrange all their contracts inc payment times etc You can get templates for this.

It's a great idea but the practicalities often make it impossible to pull off.

[northernladuk]

Edit : Forgot to mention the Umbrella issues. LTD accounting is not straight forward and even people that have been contracting for years don't understand them and get them wrong. To add the complexity of sub contractors is going to be a very steep learning curve.

Edit 2: Be very careful about your terminology. You will be subcontracting, not employing. Big difference.

[BolshieBastard]

It does and it is something I bet nearly every contractor wanted to do when we started. I know I did. Seems like money for old rope getting guys in and taking a cut or starting a small consultancy etc but in 99.9 times out of a 100 it just isn't feasible unless you take the jump and do it properly.

There are a host of issues you need to address...

Firstly. All you will be doing is working as another middle man in the chain so will normally be Client->Agent->You->working. You need to be able to find a guy that is happy to be in a chain this long, that won't just go to the agent direct and an agent that is willing to wait while your source someone. Normally they won't want to know and go find a guy who will go direct with them.

If there is no agent involved you have to hope the client will put up with the added complexity of you sitting between them and the guy you put in. If he wanted to do this he would have taken an agency on.

You will be responsible for this person and all communication etc between the client and him. The client is hardly going to be pleased if you can't go in and discuss issues with him because you are commited to your current client.

Will these 5 guys sit around waiting until you get a gig for them? I very much doubt it.

Yes you would invoice the client and they would invoice you. You would have to arrange all their contracts inc payment times etc You can get templates for this.

It's a great idea but the practicalities often make it impossible to pull off.

Excellent advice yet again!

One other thing to consider going down the sub contracting route I've always wondered about is, insurance. I'd wager you'd need some hefy insurance to protect yourself from both the client and each sub contractor.

[Wanderer]

So my plan is to have 5 guys available to work for me, when I get a job from (EC) I would like to send one of these guys.

Would I have to invoice (EC) using my limited company, then have the contractor invoice me?

Yes, that's the way to do it. The big issue here is if (EC) don't pay on time then you have a problem paying your sub contractors. You could put a clause in the contract to say you don't pay (EC) pay you in order to protect your business against this happening.

Is there any legal requirements as these guys would in affect be working for me, on a one off contract set up.

Yes, lots of legal requirements. You want to be careful that you don't end up acting as an employment business because this will result in a load of regulations for you to comply with.

The way you would structure it would be to have them working for your company on a business to business basis. Don't make them employees of your company or let them work as self employed or you will end up with some massive headaches to deal with.

The PCG have template contracts that you can adapt, if you aren't a member it's worth joining them.

[NotAllThere]

...If there is no agent involved you have to hope the client will put up with the added complexity of you sitting between them and the guy you put in.
...

There is no added complexity on this point. Clients don't care who the bill goes to. If you put two guys on site, it's in fact simpler for the client - just one supplier instead of two.

[northernladuk]

There is no added complexity on this point. Clients don't care who the bill goes to. If you put two guys on site, it's in fact simpler for the client - just one supplier instead of two.

This is true I guess. We would need to know more about how you are contracted to your client though. If you are not direct there maybe problems getting on the clients PSL.

[Vdubster187]

It does and it is something I bet nearly every contractor wanted to do when we started. I know I did. Seems like money for old rope getting guys in and taking a cut or starting a small consultancy etc but in 99.9 times out of a 100 it just isn't feasible unless you take the jump and do it properly.

There are a host of issues you need to address...

Firstly. All you will be doing is working as another middle man in the chain so will normally be Client->Agent->You->working. You need to be able to find a guy that is happy to be in a chain this long, that won't just go to the agent direct and an agent that is willing to wait while your source someone. Normally they won't want to know and go find a guy who will go direct with them.

If there is no agent involved you have to hope the client will put up with the added complexity of you sitting between them and the guy you put in. If he wanted to do this he would have taken an agency on.

You will be responsible for this person and all communication etc between the client and him. The client is hardly going to be pleased if you can't go in and discuss issues with him because you are commited to your current client.

Will these 5 guys sit around waiting until you get a gig for them? I very much doubt it.

Yes you would invoice the client and they would invoice you. You would have to arrange all their contracts inc payment times etc You can get templates for this.

It's a great idea but the practicalities often make it impossible to pull off.

Northernladuk,

Thank you so much for taking the time to explain as much as you have, this has helped me immensely. I really appreciate it, thanks

[Vdubster187]

Thanks to all

Hi all,

I would just like to say thanks to you all for mucking in and giving me some great advice, hopefully soon I will be able to do the same. Thanks again

[northernladuk]

Northernladuk,

Thank you so much for taking the time to explain as much as you have, this has helped me immensely. I really appreciate it, thanks

Just a caveat, I am explaining the practicalities to look out for. If you can get over those and make it stick then go for it. It won't work in most cases but would say look at the option and make the decision for yourself. Don't just write it off on my advice. Just bear these points in mind as you try make it work.