Reply to: What is the realistic income?

[LondonManc]

In my experience, clients give you the notice stipulated in your contract. Renewal can come months before, the day before, after or not at all.

There's also the contractor version of the dating game - giving client a nudge if you want an extension or avoiding all mention if you want to get out

[PerfectStorm]

In my experience, clients give you the notice stipulated in your contract. Renewal can come months before, the day before, after or not at all.

[LondonManc]

Thanks. What's the usual notice period for contracts finishing? My biggest fear is being out of work!

There is no such thing as usual

I've had everything from six weeks to ten minutes from the end of the contract to receive a renewal; I've known contractors have to go offsite for two weeks before their renewals came through.

Similarly you have no real notice period; you cannot bill for work you haven't done and a client can get you offsite immediately. It's a risk and reward business that is as much about the variety of work as the actual rewards potentially on offer.

[Hobosapien]

Yep, you can only worry about the now, the future will happen whatever you do.

I had a break from contracting and after skinting myself on a crappy plan b (surprising how quick you can burn through a warchest when no income whatsoever) I got back into contracting and lived off a credit card until the first invoice was paid.

Also used the credit card to buy a reliable commuting car to get to the client site when the TVR broke down for the umpteenth time. At least my credit rating is now superb, so credit is worth using if sensible about it.

[BR14]

You've got a 6 month gig. It's a starting point. Yes, you could potentially get canned at any moment (that's the nature of contracting). Even a year's contract could potentially give you a bit of a buffer.

Carpe Diem is the nature of contracting,
and take your chances

[TheCyclingProgrammer]

Only worried as this will be my first venture in contracting and have no warchest

You've got a 6 month gig. It's a starting point. Yes, you could potentially get canned at any moment (that's the nature of contracting). Even a year's contract could potentially give you a bit of a buffer.

[TheCyclingProgrammer]

I'm replying without reading the thread so sorry if this has been repeated.

Assuming you get a solid 48 weeks out of the year, you could turn over £96k a year. Take off £8400 for a basic salary (assuming you have no other income for the tax year). Expenses depend on your travel/accomodation/subsistence costs. If you were working from home, your annual expenses might be as little as a £1-2k for accountancy fees, insurances, the odd bit of equipment. If you're full-time on site then you could easily spend £5k or so on annual travel expenses and subsistence (maybe more).

Let's be pessimistic and assume annual expenses of £10k a year (most of which will be either paid by YourCo directly or reimbursed to you tax free subject to the 24 month rule). With your salary that reduces your gross profit to £78k. Just short of £15k in corporation tax to pay leaves you with £63k profit. You could take about £37k of that in dividends up to the higher tax rate and pay about £2.4k in income tax on those dividends.

This gives you a total take-home of £43k net with £26k of retained profits sitting comfortably in the business account (your warchest). Assuming you don't need to pay yourself anymore, you could have a healthy £52k warchest after two years and an average net monthly income of just over £3.5k. That kind of warchest would be enough to sustain you for a year or so on the bench. IMO it's the bare minimum you should be keeping in the warchest.

The above is all very simplified and doesn't account for any other existing sources of income and obviously the expenses figures are just ballparks. They could be completely wrong. You might be inside IR35. You might need to buy a load of equipment in your first year, or change your remuneration plan to account for other income (particularly if you've just left a full time job). In short you definitely need an accountant.

[1manshow]

Really, is there any difference to those complaining being stuck on the bench, to the grumpy old graduates complaining they havne't found work a year on still living with their parents? Both are realities, but how much do you think they reflect your own circumstances.

Too much fearmongering imo. When you see absolutely god awful people still contracting on even 4 figure day rates, you have to wonder what some people on this forum are doing wrong.

[HugeWhale]

There's loads of contracts out there and they're very winnable. Most just need an attitude adjustment to secure the gig.

Those that complain about being on the bench for so long are often prima donna's who consider it far beneath them to have to take a reduced day rate from time to time, or have to take a gig in a small unknown organisation.

There's a world outside IT! What you do is on the crest of a wave, but you can't extrapolate that to everyone else and assume that their industry is as buoyant.

In some industries there is a rate for the job and that's it. Cutting rates just doesn't work. For example, no-one would hire a patent lawyer because he's £100 a day cheaper than every other patent lawyer.

[malvolio]

Indeed. Being a good contractor is about winning this work, not doing the stuff on site. Any chump can do that, even the clients permies. That said if you aren't a perfect skills match for the gig any amount of good attitude isn't going to cut it,


To be sure but not everyone. You could argue some of the others are under skilled or generalists and others that can only work in a 5 mile radius from home so have only scraps to pick from. There is a lot more than just the above to consider when trying to suss out why people can't get work.

Or you could argue that some people are high-grade skilled strategic resources that need to be bloody good when they hit the ground but aren't in demand in the same way as bob-a-job coders who are always needed (for example...). OTOH such people tend to charge rather more than enough to cover the downtime comfortably.

Always seems odd to me that many people on here bang on about choosing when, where and for whom to work and "I don't do it for the money" and feel people on the bench are clearly doing it wrong, then spend their life worrying they may have a week off unpaid. Life's too short...

[northernladuk]

There's loads of contracts out there and they're very winnable. Most just need an attitude adjustment to secure the gig.

Indeed. Being a good contractor is about winning this work, not doing the stuff on site. Any chump can do that, even the clients permies. That said if you aren't a perfect skills match for the gig any amount of good attitude isn't going to cut it,

Those that complain about being on the bench for so long are often prima donna's who consider it far beneath them to have to take a reduced day rate from time to time, or have to take a gig in a small unknown organisation.

To be sure but not everyone. You could argue some of the others are under skilled or generalists and others that can only work in a 5 mile radius from home so have only scraps to pick from. There is a lot more than just the above to consider when trying to suss out why people can't get work.

[billybiro]

Can people go 6 months without finding a contract in IT? Maybe market is over heated right now as recruiters call me constantly with contracting jobs.

Aye, - right.

Easily. Have a look at a thread title State of the Market. Plenty of people on there with a couple of months bench time. Just becasue an agent calls you after doing a basic keyword search on your CV it doesn't mean you'll get the gig. Plenty of much more experience contractors on the bench ahead of you.

There's loads of contracts out there and they're very winnable. Most just need an attitude adjustment to secure the gig.

Those that complain about being on the bench for so long are often prima donna's who consider it far beneath them to have to take a reduced day rate from time to time, or have to take a gig in a small unknown organisation.

[man]

Regarding 'take home'*, a lot of contractor accountants will be able to provide an illustration for free - i.e. pre-engagement.

£400/day over 26 weeks (i.e. half a year) = £52,000 gross (excluding VAT). Assuming you don't get a rate cut or termination, potentially at no notice - and before taking into account any tax, expenses, other overheads etc. Or even worse, I've seen a recent thread on here where someone was terminated through no fault of their own before they even turned up on site.

I suppose it depends on what the consequences are of the above, only you know that and can decide if you wish to take a calculated risk on it - in business to business contracting you don't have employee rights and protections against sharp business practises from your client (or agent) - so eyes wide open and at least read everything you can on the subject before committing to it.

* = Oversimplification, but you get the idea.

[MattZani]

Only worried as this will be my first venture in contracting and have no warchest

There's another thread about warchest.

Seems like there's a good amount of people who jumped into contracting with almost no warchest at all.

Also worth saying that most of these people started contracting many years ago, when the market was very different from now.

At the end it all comes down to your risk aversion rate and how confident you are about your skills.

[uk contractor]

Investment bank? Might be worth factoring in the standard 10% rate cut take it or leave kind of thing that could happen at any time during your contract.

....and or the 6 months might turn out to be 6 months or less only as sometime down the line the original project gets either cancelled or finishes early due to the funds drying up! Its rare for inv banks projects to run several years nowadays most get cancelled early.