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Previously on "Perm employee looking to transition into the contracting world"

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  • jmo21
    replied
    Whenever someone asks me for some advice for going into contracting, the first thing I tell them is to be very careful when looking at the shiny large headline day rate on the advert, multiplying it by whatever number of days they think they can work per year, and comparing that to their current salary. You won't be the first person to think that.

    This list by NLUK is bang on.

    I always mention mortgages too. Harder to get in your first few years contracting, so if a house move, remortgage, or first house purchase is on the horizon, keep that in mind. Many lenders need multiple years accounts to look at, you are more likely to need a contractor-wise mortgage broker, and the range of mortgages/lenders will likely be smaller, with possibly not as good rates available to you. This was certainly true last time I need to get a mortgage ~7 years ago. May have got better, may have got worse!

    Originally posted by northernladuk View Post
    You've said this numerous times now but you, as most perms do, are missing some key info.
    • You are likely to be out of work a few weeks a year. It's possible you could be out for months. No income at all. You will only get paid twice as much if you manage to get 12 months billing.
    • You get paid for holidays as a perm as well as all the benefits. I am sure you are looking at the bottom line cash which most usually do and forget the benefits. Pension, holidays, sick etc.
    • You cannot live month to month and spunk all the money as it comes in. When you finish the gig you'll have no income. You need to build a warchest of savings to cover the months you'll be out. You need to do this from day one as you could be out next day, week, month. The first three months in a gig you should be the poorest you've ever been. Every spare penny you can spare must go in to the war chest until you have 6+ months of the money you need to live. And being paid personally you've got to be very regimented in your savings. I've seen grown men literally crying when they got binned on a 'safe' long gig and didn't have any savings behind them. We've also a number of examples on here that some people saw the warchest as a savings pot when they needed it and spent it on house improvements and in one case got canned very shortly afterwards.
    • Linked to the above, another saying is 'The second gig is hardest to get'. Easy to sit there being paid looking for roles and taking them as you see fit. Once you are in you don't have that safety blanket. You'll have zero income until you find your second role and you are still up against very experience contracts so have a disadvantage. If you don't have the confidence or savings to dovetail the second, third and so on gig, its going to be difficult.
    You can't just keep looking at the bottom line and say 'I get paid twice as much as perm'. It's simply not true.

    Leave a comment:


  • Lance
    replied
    Originally posted by northernladuk View Post

    It was a rhetorical question
    that needs no response?
    Like this post?

    Leave a comment:


  • northernladuk
    replied
    Originally posted by Lance View Post

    2nd response.
    It was a rhetorical question

    Leave a comment:


  • Lance
    replied
    Originally posted by northernladuk View Post

    Has someone pointed the First timers guides to the right. There is far too much to walk you through every single question.
    2nd response.

    Leave a comment:


  • northernladuk
    replied
    Originally posted by JackD View Post
    I’ve just been looking further into inside/outside IR35 roles - if the role is inside IR35 my understanding is the contract would be consultancy firm <> umbrella company - then a standard employment between umbrella <> myself - no need for any company/insurances etc and I can review the employment contract similarly as I would with a normal contract?

    If outside IR35, then the contract would be between my limited company & the company who needs a contractor.

    I’m assuming these contracts are fairly straightforward, however, I have no legal experience- do contractors tend to pay for legal advice for each contract? If so, is this just for outside roles or is this required for inside roles too?

    thanks again all for answering my questions, especially northernladuk!
    Has someone pointed the First timers guides to the right. There is far too much to walk you through every single question.

    Also, as you can imagine, every first timers question has been asked on here a lot. If you have any general 'How do I' questions read the first timers and other links on the right and then do a search. Go to google and type in '<keywords> Site:forums.contractoruk.com' and do some research. It's all there asked many times over.

    Don't make us go through every step of the way on here.

    Leave a comment:


  • ensignia
    replied
    If you're Inside then you'll be employed by an Umbrella company (99% of the time) who have insurances in place and the contract will be a standard one which you probably won't need to have reviewed unless you're particularly risk averse.

    So it'll be Client > Agency > Umbrella Co > You.

    If you're Outside your Ltd Co will be paid directly into a business account by the agency (unless you're direct) and can opt to have your contract reviewed to make sure it's IR35 friendly. You'll have to get your own insurances in place for Outside roles as your Ltd Company will be the entity responsible for delivering output.

    Client > Agency > Your Ltd Co.

    It's pretty straightforward: Inside = expensive temp, Outside = independent consultant, even though the actual differences in your working practices will be roughly equivalent regardless of the type of "contractor" you are.

    Leave a comment:


  • JackD
    replied
    I’ve just been looking further into inside/outside IR35 roles - if the role is inside IR35 my understanding is the contract would be consultancy firm &lt;&gt; umbrella company - then a standard employment between umbrella &lt;&gt; myself - no need for any company/insurances etc and I can review the employment contract similarly as I would with a normal contract?

    If outside IR35, then the contract would be between my limited company &amp; the company who needs a contractor.

    I’m assuming these contracts are fairly straightforward, however, I have no legal experience- do contractors tend to pay for legal advice for each contract? If so, is this just for outside roles or is this required for inside roles too?

    thanks again all for answering my questions, especially northernladuk!

    Leave a comment:


  • hobnob
    replied
    Originally posted by JackD View Post
    thanks, I appreciate that, tbh I am going into it assuming I’d be working say 11 months of the year. There seems to be a lot of roles out there and real demand for people to fill gaps in cyber at the moment.

    I know anything can happen and get let go on short notice, it sounds like the contracting world is fast paced though, so your next role is only ~2 weeks away from interview to being in position?
    It might help to count in days rather than months. Partly because you can multiply up your daily rate, but also because there are some days when you won't be paid (e.g. bank holidays). I think that 200 chargeable days per year is realistic for budgeting purposes, although it will vary.

    Assuming that you're right about a 2 week gap between contracts, suppose that each contract is only 3 months. That's going to be at least 6 weeks of bench time per year, so it already breaks your 11 month goal. Also bear in mind that some people get furloughed over Christmas/New Year, e.g. because the offices are closed or because they have a change freeze in place, so the client can reduce costs but it's (probably) not practical for you to work anywhere else during those days.

    Leave a comment:


  • northernladuk
    replied
    Originally posted by JackD View Post

    thanks, I appreciate that, tbh I am going into it assuming I’d be working say 11 months of the year. There seems to be a lot of roles out there and real demand for people to fill gaps in cyber at the moment.

    I know anything can happen and get let go on short notice, it sounds like the contracting world is fast paced though, so your next role is only ~2 weeks away from interview to being in position?

    Rough maths - I’d need to be working almost 7 months of the year to break even (6 would be more than I currently make, but add an extra month on to make up for the leave / pension etc). I could be being wildly optimistic, but I doubt I’d be out of a role for half the year? Is that common in contracting, even for those who are actively looking?

    What field / roles are you in?
    As long as you've considered it and can cover the worst.

    Leave a comment:


  • northernladuk
    replied
    Originally posted by malvolio View Post

    True - but I'm the original GOG* around here, so I have standards to maintain....



    * Grumpy Old Git - which is what it says on my T-shirt...
    And you wear it with aplomb sir.

    Leave a comment:


  • JackD
    replied
    Originally posted by northernladuk View Post

    A little saying in the contractor world is 'You are only as good as your last gig'. Agents will often just scan the last role and make a decision based on that. They don't read in to your CV to paint a bigger picture. If you take a lesser role just to get in there is a strong change you'll be pigeon holed as that. Be very careful taking lesser gigs because it could easily have a knock on effect.


    You've said this numerous times now but you, as most perms do, are missing some key info.
    • You are likely to be out of work a few weeks a year. It's possible you could be out for months. No income at all. You will only get paid twice as much if you manage to get 12 months billing.
    • You get paid for holidays as a perm as well as all the benefits. I am sure you are looking at the bottom line cash which most usually do and forget the benefits. Pension, holidays, sick etc.
    • You cannot live month to month and spunk all the money as it comes in. When you finish the gig you'll have no income. You need to build a warchest of savings to cover the months you'll be out. You need to do this from day one as you could be out next day, week, month. The first three months in a gig you should be the poorest you've ever been. Every spare penny you can spare must go in to the war chest until you have 6+ months of the money you need to live. And being paid personally you've got to be very regimented in your savings. I've seen grown men literally crying when they got binned on a 'safe' long gig and didn't have any savings behind them. We've also a number of examples on here that some people saw the warchest as a savings pot when they needed it and spent it on house improvements and in one case got canned very shortly afterwards.
    • Linked to the above, another saying is 'The second gig is hardest to get'. Easy to sit there being paid looking for roles and taking them as you see fit. Once you are in you don't have that safety blanket. You'll have zero income until you find your second role and you are still up against very experience contracts so have a disadvantage. If you don't have the confidence or savings to dovetail the second, third and so on gig, its going to be difficult.
    You can't just keep looking at the bottom line and say 'I get paid twice as much as perm'. It's simply not true.
    thanks, I appreciate that, tbh I am going into it assuming I’d be working say 11 months of the year. There seems to be a lot of roles out there and real demand for people to fill gaps in cyber at the moment.

    I know anything can happen and get let go on short notice, it sounds like the contracting world is fast paced though, so your next role is only ~2 weeks away from interview to being in position?

    Rough maths - I’d need to be working almost 7 months of the year to break even (6 would be more than I currently make, but add an extra month on to make up for the leave / pension etc). I could be being wildly optimistic, but I doubt I’d be out of a role for half the year? Is that common in contracting, even for those who are actively looking?

    What field / roles are you in?

    Leave a comment:


  • malvolio
    replied
    Originally posted by northernladuk View Post

    Huh? Why? We never disagree really. Just give two different perspectives which generally are both valid. You are a senior bod and I'm just a bum on seat contractor (apparently) so will have two different views on most general topics.
    True - but I'm the original GOG* around here, so I have standards to maintain....



    * Grumpy Old Git - which is what it says on my T-shirt...

    Leave a comment:


  • northernladuk
    replied
    Originally posted by malvolio View Post
    Hate to agree with NLUK on something,
    Huh? Why? We never disagree really. Just give two different perspectives which generally are both valid. You are a senior bod and I'm just a bum on seat contractor (apparently) so will have two different views on most general topics.

    Leave a comment:


  • malvolio
    replied
    Hate to agree with NLUK on something, but yes, the bottom line is it's totally non comparable between perm and contract. Your perm role carries a lot of hidden costs that you never see, adding roughly 100% to your gross salary. Plus now you get paid 52 weeks a year whereas over a 25 year contracting career I averaged 8 months a year - or 32 weeks - getting paid for working. You may be lucky and get a 12 month gig, but it would be foolish to budget on that happening. Even if it does, take a holiday, go sick, don't work bank holidays and two weeks forced break over Christmas and you're already down on your comfortable permie income. Then add on pension provision and the fact you're paying taxes and levies you've never thought of before and it all adds up.

    There's a reason the rough rule of thumb is (salary/1000 = hourly rate) that you may see quoted; that gives very roughly the same net pay in your pocket for comparison.

    I'm not saying don't do it, just be very aware that income is not guaranteed, and you may be away from home for long periods. Make sure the family knows that.

    Leave a comment:


  • JHamp82
    replied
    Originally posted by JackD View Post
    Hi All,

    Appreciate any help and advice you can provide - I work in Information/Cyber Security and have always had permanent roles so far. I’ve always been curious about contracting and obviously the day rates are extremely appealing! I’m planning on uprooting to London in the near future, so this is a perfect time for me to take the leap.

    I’m inundated with recruiters sending me roles on LinkedIn - but these are all perm roles as that’s the field I’m currently in, I don’t have much of a network in the contracting world, so my first question is, where’s best to find contracts? I specialise in Incident Response and Security Operations. Please can people recommend sites or recruiters they know of.

    Secondly, I’m slightly naive on the IR35 inside/outside, but I think I have a good basic grasp now. In terms of setting up my own ltd company for outside - what’s required? What should I be prepared for?

    Also, any other nuggets of wisdom you can share with me would be much appreciated!

    Thanks all
    In addition to looking at the first timers guide, i'd suggest speaking to an accountant to get tax advise. Visit below sticky topic for recommended accountants.

    https://forums.contractoruk.com/acco...-requests.html

    Leave a comment:

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