Reply to: US of A Contracting

[synoniv]

I worked as a contractor for one single client for nearly 2 years during 2004-06. I was in the Bay area due to a unique skill that I gained during my research period (by the way my expertise is embedded systems and security)
Firstly, there is no IR35 equivalent in the US, so you are free to administer and run your contract whichever way you like (the Bush govt is running atleast 8 years behind compared to their UK counter part in treasury reforms by inducing 'scare' on individuals for sqeezing money).
Visa restrictions for work do apply, but while in US you can be either self-employed, or own your own S-corp (UK Ltd company or LLP) or use a 'consulting' company (similar to our UK umbrella ).
For self-employment, the only downside is, you can declare your income only upto a limit (I think the gross allowed was around $85K per year but the tax was only 12 or 13% if I remember)

Most of the contractors which I came to know later were self-employed on the short term and the long terms had S-corps to enjoy the tax/NI/expense benefits just like how we do in the UK. There is something called Delaware corp or d-corps, which works even better for tax purposes, but never bothered to check the nitty-gritty out.

In my case, since I needed H1 sponsorship to work ,the consulting company themselves sponsored and arranged the paper works via US embassy in London (it was pretty straightforward but the processing took nearly 5 months !).
US bank accounts(checking & savings) was easy to open via my consulting company, and so was getting the social security number and driving licence. Once everthing was setup, salary was coming directly to my checking account via the consulting company without any admin/invoicing delay.

My hourly rate was agreed with the client directly and I negotiated a 8% flat margin with my consulting or H1 sponsoring company for first year and 10% for the remaing term of employment with some paid expenses (only bare minimum and no other benefits like 401K plans, health/life insurance etc ). This was agreed prior to filing my H1 papers.

I had to do my IRS (online – just like HMRC SA) and I did not not have to declare my savings taken here to HMRC in 07FY when I came back because there is double taxation agreement between UK and US.
After the Fed taxes, I could pocket roughly around 63% which is kind of similar to what one would net as a full term employee on a permy role here in the UK.
Oh, Needless to say I am one among the few losers on this side of the Atlantic not benefitting the rally against the dollar; hard earned income still sitting in an US savings account. :-)

Hope this helps.
SV

[mick.sap]

That's very useful to know, thanks.

Two questions:

1) Could you continue to trade through your UK Ltd?
2) Is it possible to get a work permit for the purpose of contracting in NYC?

P

Peter

My understanding is that you might be able to apply using a L1 Visa.

Tricks to this are:

1) You need to have worked for the company in question for a year at least.
2) The company needs to establish a subsidiary in the US.
3) The company needs to continue to operate in the UK.

Also note that this Visa doesn't lead to a Greencard (ie perm resident).

I also think its limited in the amount of time.

Without knowing your setup I suspect that most contractors might fail on #3 above. ie you leave and the business stops.

Good news is that there is no quota on this type. Only other option is if you are an Aussie - See the E-3 Visa.

As for trading thru the UK company I don't think its of any benefit. Would probably just result in higher accounting bills due to complexity around the tax situation.

Also the US business may not want to have to deal with a UK company when there are plently of locals around.

Still waiting for the Immigrant Visa to be processed on my side so will be around UK side for a bit longer.

[Fred Bloggs]

Thanks, I am going to research a bit more into this.

Very wise IMO.

[Devlin]

When I researched this topic myself last year I found that rates were the same in Dollars that I get in Pounds here. So effectively the rate was only about 50% of what I get in the UK. I got the impression that workers on contracts were regarded as "not good enough top land a permanent job" unlike in the UK where it is recognised that some contractors are outstanding professionals in their field and paid as such. Naturally, YMMV.

This is what I'm seeing here. Also if you do manage to get over here and sort visas etc. expect gruelling day-long interviews for perm roles at any of the decent companies and if you're a developer expect to be able to write a recursion or linked list examples on a white board!

[Peter Loew]

Thanks, I am going to research a bit more into this.

[Fred Bloggs]

When I researched this topic myself last year I found that rates were the same in Dollars that I get in Pounds here. So effectively the rate was only about 50% of what I get in the UK. I got the impression that workers on contracts were regarded as "not good enough top land a permanent job" unlike in the UK where it is recognised that some contractors are outstanding professionals in their field and paid as such. Naturally, YMMV.

[ddilling]

That's very useful to know, thanks.

Two questions:

1) Could you continue to trade through your UK Ltd?
2) Is it possible to get a work permit for the purpose of contracting in NYC?

P

1) Not an expert in this area - but I would think not. I believe your income from the Ltd would still be taxed here and you would definitely be liable for tax in the US while a resident.

2) Probably the biggest hurdle for most - unlikely a company would sponsor you for this in this day and age. I suppose it is possible, particularly for hard to find skills, but I would think they'd be more likely to hand out visas to the Indians who are much cheaper than you are. (Others may have a different view, I am a US citizen myself so don't have this problem.)

[Peter Loew]

See www.dice.com

Best way is "Corp 2 Corp", you want an "S" type corporation to be able to pay yourself dividends that are not subject to social security (NI) tax. Same basic them as Limited Company here.

Contracts tend to pay less but are usually much longer term than here - several years is not uncommon, although the initial term might be less than that.

In general, I find that the cost of living and taxes are so much lower there than here, even with the reduced rates your take home pay can be pretty competitive.

That's very useful to know, thanks.

Two questions:

1) Could you continue to trade through your UK Ltd?
2) Is it possible to get a work permit for the purpose of contracting in NYC?

P

[ddilling]

Don't they have some crazy tax system, where by once you sign up, you have to continue doing returns for worldwide income forever, even if you leave?

only citizens & residents - so yes, citizens have to file tax returns even if non-resident.

[max]

Hi

Planning on moving to the US of A towards the end of this year once the current gig stops renewing me for awhile.

Anyone got any good sites like this - or any detail on how it all works..

I've googled around a bit but can't really find too much on the tax situation (ie do you go incorporated/ltd or not). Health Insurance looks to be a nightmare. Most of the tax stuff seems to be about creative (in the art sense) types or blokes who want to turn their garage wood carving business into a large multi-national corporation.

Anyone done it ? Whats the tricks ?

I'm currently a ltd coy, SAP Architect, Oracle Financials Architect, BPR Accountant Type.

Any good job sites out there - monster seems to be all permies....

Unless of course contract doesn't exist over there...

Thanks

Mick

Don't they have some crazy tax system, where by once you sign up, you have to continue doing returns for worldwide income forever, even if you leave?

[ddilling]

Hi

Planning on moving to the US of A towards the end of this year once the current gig stops renewing me for awhile.

Anyone got any good sites like this - or any detail on how it all works..

I've googled around a bit but can't really find too much on the tax situation (ie do you go incorporated/ltd or not). Health Insurance looks to be a nightmare. Most of the tax stuff seems to be about creative (in the art sense) types or blokes who want to turn their garage wood carving business into a large multi-national corporation.

Anyone done it ? Whats the tricks ?

I'm currently a ltd coy, SAP Architect, Oracle Financials Architect, BPR Accountant Type.

Any good job sites out there - monster seems to be all permies....

Unless of course contract doesn't exist over there...

Thanks

Mick

See www.dice.com

Best way is "Corp 2 Corp", you want an "S" type corporation to be able to pay yourself dividends that are not subject to social security (NI) tax. Same basic them as Limited Company here.

Contracts tend to pay less but are usually much longer term than here - several years is not uncommon, although the initial term might be less than that.

In general, I find that the cost of living and taxes are so much lower there than here, even with the reduced rates your take home pay can be pretty competitive.

[Devlin]

If you do decide to go contracting, you have to call yourself a consultant. Yeuch. Rates were around $140/hr last time I was there, and I couldn't find anything similar as a "Full-time".

When was that? Even in NYC and the Bay Area currently you'd be lucky to get over $90/hr unless you have some really niche skill set.

[hugebrain]

I have relocated to the USA. Contracting isn't worth it, you can get the same as permie except you also get benefits such as health insurance that are vital here.

If you do decide to go contracting, you have to call yourself a consultant. Yeuch. Rates were around $140/hr last time I was there, and I couldn't find anything similar as a "Full-time".

[Devlin]

I have relocated to the USA. Contracting isn't worth it, you can get the same as permie except you also get benefits such as health insurance that are vital here.

Oh yeah, it ain't called Permanent here either - it's "Full-time"

I have 25 days leave but which also includes sick leave.

[mick.sap]

ball and chain is a USC. Just waiting for the US embassy to process all the bloody forms. Right painful experience. I will have an immigrant visa (hopefully).

It does all look at little downmarket. I was hoping to take a bit of time off and get around a bit over there - concern is that with taking permie work it will look bad it I skip out after six months. If you take the permie they give you 2 weeks holiday although I should be able to negotiate that.

Current mob are US based I might see if I can swing a contract with them over there.

I did find the country guides on this site - but they don't give you a whole lot.

Thx