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Getting started as a contractor

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    #11
    jor-el - the only variable factor when choosing an umbrella is how much they charge. FPS charge 15 pounds a week, I doubt you'll find it cheaper anywhere else.

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      #12
      Originally posted by jor-el
      Hello all,

      I am a few weeks from my very first contract. Initially it's a 6 months one after which I'll see if I like this better than a permanent position.

      I think I'll go with an umbrella company to start with as I don't want to open a ltd company just for a few months.

      I have a few newbie questions so please bear with me

      Firstly, the umbrella company - I'm aware of the services they provide but besides the level of service, do they make different calculations on the net, take-home salary? i.e. is it possible to have a few hundred pounds difference between several companies with the same contract?

      Which one would you recommend? My finalists are: OrangeGenie, Contarcor Umbrella and Parasol. any preference?

      Also, I'm not expected to claim any expenses as I will be living 15 minutes walk from my office so no traveling or b&b but what is this Subsistence expense? Can anyone claim that? what is the rate of this?

      Finally, what % of my contract should I expect as a take home as monthly salary? (assume £400 daily rate).

      Thanks for your answers and patience.

      Jor El
      Have you ordered your Porsche yet?

      Comment


        #13
        Originally posted by jor-el
        When I first offered this contract I was told I will be taking home something between 75%-80% of my contract. Well...this is certainly not the case now that I'm actually talking to umbrellas companies.

        I'm quite confused with the IR35 concept. Why am I considered in if I use an umbrella company? If I use my own ltd will be in or out?

        I guess for me, because I'm not likely to have expenses, the tax will be the worst possible i.e. in IR35 and no expenses. Any way to avoid this?

        As for choosing an umbrella company - Parasol gave me the best take-home rate but I guess they use different parameters in their calculation because as I understand it - I should be getting net paid the same with every company minus their fees. is it right?
        Jeez, may the good Lord save us from amateurs...

        Doing all the right things using your own company and keeping under the 40% tax band you should get around 75% net income. That is the higher point, above that you'll be doing something really clever that isn't really clever.

        Use any umbrella and you not only have to fund all the same outgoings and pay PAYE, ERNICs and EENICs but you also have to pay them a fee to give you your own money back. How much you pay them is up to you and the market.

        Inside IR35 you pay full taxes on 95% of your gross (simplisticly). Inside IR35 with an umbrella you pay full taxes on 95% of your gross less their fees.

        See where we're coming from yet?

        If somewhere aroung £1000 a year to be a contractor is important to you, either you're not earning enough or you need a reality check. There is no free money any more.
        Blog? What blog...?

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          #14
          Originally posted by malvolio
          Jeez, may the good Lord save us from amateurs...

          Doing all the right things using your own company and keeping under the 40% tax band you should get around 75% net income. That is the higher point, above that you'll be doing something really clever that isn't really clever.

          Use any umbrella and you not only have to fund all the same outgoings and pay PAYE, ERNICs and EENICs but you also have to pay them a fee to give you your own money back. How much you pay them is up to you and the market.

          Inside IR35 you pay full taxes on 95% of your gross (simplisticly). Inside IR35 with an umbrella you pay full taxes on 95% of your gross less their fees.

          See where we're coming from yet?

          If somewhere aroung £1000 a year to be a contractor is important to you, either you're not earning enough or you need a reality check. There is no free money any more.
          Well...I am new at this so I'm not ashamed to be called an amateur. I reckon you won't be able to call me that in a few months but for now - you're right.

          I see where you're coming from. I'm on a good wage now as a permie (48.5k) and even when I calculate the permie benefits and the new budget - my take home is still higher as a contractor.
          I'm going to try this out for a year or so and then decide on the way forward (ltd, umbrella, permie).

          Btw, anyone has any views on TreasureGuard? If I do decide to start my own ltd, I'm considering to go through them...
          Last edited by jor-el; 20 April 2007, 13:07.

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            #15
            Do you vibrate under the influence of a magnetic field? Well then you are an armature.

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              #16
              Originally posted by realityhack
              Do you vibrate under the influence of a magnetic field? Well then you are an armature.
              lol. good spot

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                #17
                Plus Darren and SJD, of course. Although I would be remiss if I didn't point you at PCG's new One-Stop service...

                Also, be aware it's not necessarily a suck-it-and-see scenario. Many permies will not take ex-contractors, especially in non-technical roles, and you might find the extra income a bit addicitive. Be very clear about why you are going contracting, it is not a game, it is a serious decision.

                And yes, amateur, I make no apologies. You want to be a contractor, you learn to stand by yourself. Every thing you have asked is all over these boards and covered in detail in the first-timer guides. Learn to do your own research then come back in a few years (not months) and tell me how it works.
                Blog? What blog...?

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