Reply to: One man band to consultancy firm?

[andyg]

Orangutan

I'n our experience most end customers have their preferred supplier list (PSL) and so won't deal with a small company like ours, but that's one of the first things we try to find out when we arrive on-site (via an agency) to start the gig. If they'll deal directly with us then the agency doesn't need to know and there is no clause so no legalities. We receive a PO from the end-customer mate starts to work (having signed a contract between his ltd and the group if he's a new mate).

If we then find a reqt and can recommend someone the usual reply from the end customer is 'oh, he needs to go through one of the agencies on the PSL'. 'No problem', we say 'he can work through the same agency as me'. End customer receives our mate's CV with our logo on it. He then wants to setup an interview so we advise our agency that we have a lead and do they want it or should we take it to someone else on the PSL, at that point we remind the agency why we wanted the clause taking out and that they may need to reduce their rate because we are in the loop now. Agency says they want the deal, so if all goes well, the agency sends our group ltd company a contract with wording that the 'Supplier' is our mate's ltd company. The group gets the dosh, we take a skim off the top, the mate invoices the group.

In the case that the agency we're with isn't on the end-customer's PSL (we now know our agency are going back-to-back) we then contact an agency on the PSL and offer them the deal. This is good for us as we don't have to pay our agency.

[Orangutan]

My head is starting to hurt.

So, does the "Introduced mate" go through the agency to the group ltd through the agency again to the client ?

or just from their ltd to the group ltd through the agent to the client ?

[andyg]

Never caught us out because we always tell the agency to remove it otherwise we won't sign. To date we've not had a single agency refuse. We also tell the agency that we'll bring the work via them if they are on the end-customer's PSL. Also, you then get to find out whether they are going back-to-back with another agency.

[TheFaQQer]

Forgot to add, most of our 'new business' comes from being on site and saying 'I know/recommend someone who can fulfill that role'. It's then a question of owning that contract and paying the new 'mate'.

I've noticed a couple of agency contracts which says something like "You will not, without our written consent, during the Contract Period introduce any other person to the Client with a view to that person being employed by or providing services for the benefit of the Client, other than through our agency."

Something to be careful about with the "I know a mate..." approach.

[andyg]

Forgot to add, most of our 'new business' comes from being on site and saying 'I know/recommend someone who can fulfill that role'. It's then a question of owning that contract and paying the new 'mate'.

[andyg]

One method is to have all 'mates' working through their own ltd companies. The 'main company' is the one that contacts the agencies, etc. and owns the contracts and the money flows from the end-customer to the main company. The main company now has a number of clients and so is deemed outside of IR35. The mates bill the main company and to keep IR35 at bay also bills for other contracts. The mates ltd company now shows the it has a number of clients. WRT dividends from the main company to the mates is really depenant on how the main company has been setup, i.e. with equal shares to everybody or giving shares when one of the mates performs. Savvy?

[TheFaQQer]

True, but I never stated that we are all equal share holders.

Hmmmm - so how does that work?

Bob owns 50% of the shares and doesn't do any work. Andy owns 10% and works lots, and wants a dividend. How do you stop Bob taking the money for doing nothing??

I did consider something like this with some friends, but the problem we saw was how to get the business to grow - if we're out billing, how do you have the chance to get more people involved, advertise etc. etc.? In the end, we couldn't see how this would be any different from turning up on site and saying "Oh, I've got a mate who knows XYZ, what about getting him in..."

[andyg]

True, but I never stated that we are all equal share holders.

[Ardesco]

You can't pick and choose who to pay divi's out to though they have to be paid out according to your shareholding.....

[andyg]

Exactly. Fortunately we've all worked together/known each other for a long time and the arrangement works well. If one party is not working he/she doesn't get paid a divi. If one part is on a higher rate he/she gets paid more.

[ChimpMaster]

Have you thought about getting together with a group of contractors to set up a consultancy company offering a variety of skills? You can all work from your own ltd but just divi up how the money is paid out. I did this a while ago and things are going well (fingers crossed). We work with a number of agencies and tell them how we work, they pay the ltd company and we send in invoices when we get work.

How do you determine how much to pay in dividends to each other? Do you directly apportion the contract income each one earns to calculate the dividend due? i.e. if one of you doesn't work for x months, they get paid nothing for that period?

[andyg]

Have you thought about getting together with a group of contractors to set up a consultancy company offering a variety of skills? You can all work from your own ltd but just divi up how the money is paid out. I did this a while ago and things are going well (fingers crossed). We work with a number of agencies and tell them how we work, they pay the ltd company and we send in invoices when we get work.

[oraclesmith]

I meant general
Wait, the horrors are coming back... guts are churning

But are you on a train ? If not, you'll have to hold it up ....or the voices will start again.

[Spacecadet]

You mean you paid to get on to this forum ? You must be mad !

Oh yeah, you are...

I meant general
Wait, the horrors are coming back... guts are churning

[oraclesmith]

Yes... My care assistant advised to me to avoid the free forum.
So far so good

You mean you paid to get on to this forum ? You must be mad !

Oh yeah, you are...