Reply to: ParasolIT take-home estimation

[lilfreckles]

[Or go for PCG One-Stop (your own company) or PCG QU (umbrella option) and get honest answers, against which you can make informed comparisons.]

Hello!!!!!! If you go to the PCG website it says that their quality umbrella they recommend is Parasol. So why are you slagging them off??????

[jor-el]

You might also find some clients will insist you work through an agent even if you found the work by yourself.

Indeed. I worked as a permie in a consultancy and we did have some contractors forced to go via an agency. For you it means a lot less cash as the client will pay the consultancy who will take their (big) cut, then will pay your agency who will take their cut. Then they will pay your umbrella who will take their cut, then it'll go through the whole tax man huge cut and then you'll get your share.

My advice - use consultancies only if you want to break into a certain market or need some cash urgently. They are just another leech in the very long line of leeches living of your work.

[VectraMan]

I have been offered a contract directly from a consultancy who are working for a telecomms company. Now the question is, do I still need to go through an agency? or can I go directly through an umbrella company such as Parasol? I don't understand why an agency should take a % of my income if they didn't even find me the contract! Apart from finding work for contractors what other services do they offer for the % they deduct?

You can go direct.

However, one advantage to agents is that they will pay sooner. Typically if you go direct you'd work a month, invoice for that month, and receive the money 30 days later (and payment terms can be longer). Most agents will pay up within a week of invoice, and if you arrange to be paid weekly then you don't have to wait long until the money starts coming in. That's a less of an issue when your business has been going for a while, but it does mean the agent is taking the bulk of the financial risk instead of you.

And in theory they'll act on your behalf if you have any dispute with the client, and will do their best to negotiate the best rate for you. In reality, agents cause more problems than clients, and if they negotiate a better rate they may not tell you about it and keep more for themselves.

You might also find some clients will insist you work through an agent even if you found the work by yourself.

[ar786]

Hi, another newbie here:

My situation is as follows:

I have been offered a contract directly from a consultancy who are working for a telecomms company. Now the question is, do I still need to go through an agency? or can I go directly through an umbrella company such as Parasol? I don't understand why an agency should take a % of my income if they didn't even find me the contract! Apart from finding work for contractors what other services do they offer for the % they deduct?

[wendigo100]

Good advice from malvolio.

Some people seem to have a problem with running a Ltd Co, but it really is easy. You find a local accountant to help set you up and do your annual returns, but everything else only takes an average of half an hour a month, less most months.

[Board Game Geek]

learned that Parasol had a dodgy upgrade to their systems a few months ago. Those of you who use them - is it all clear now?

Yes, business as normal.

[malvolio]

It's a catch-22 really - most people on here will help if you asked focused or non-obvious questions, but as a newcomer you won't necessarily which they are! The other rule of contracting is that you stand alone, so asking for other people to answer things where the answer is already well known and published tends to get short sharp replies.

Your plan of attack now is (a) read the guides, browse these boards and learn how the market works, (b) forget all your concepts of work, you are not an employee of anyone you are a service provider, (c) look carefully at the PCG (www.pcg.org.uk) and join them - perhaps their new One-Stop will help and (d) have fun.

Hand holding is not an option, if you need it you're in the wrong job. Expereinced advice and guidance is always there if you ask! Enjoy...

[jor-el]

Ok, a decsion has been made (kind of...)

I'll start with Parasol for a few months and take it from there.
Btw, from reading past posts I learned that Parasol had a dodgy upgrade to their systems a few months ago. Those of you who use them - is it all clear now?

I'm just trying to see how well I fit the contracting world before I start my own ltd. From the very little time I spent here, I learned that:
A. Go LTD
B. If not use a decent umbrella and Parasol seem to be OK from the feedback I read here.
C. Go LTD

So..I will go LTD after a couple of months of carefully checking out the waters. What can I say, I like to play it safe. Permie jobs will always be there...

OK, so...if anyone has anything against this decision may you speak now or forever hold your peace

Anyone care to hold my hand? malvolio?

[Alf W]

.. or do the hour a week in the client's time anyway!

That 'hour' (it's not as much as that) is worth hundreds of pounds a month in your pocket.

To answer your original question you can probably bank on 60-70% of your billings reaching your pocket with Parasol depending on how much Sched E you claim and whether you use their pension scheme. Parasol are a good bet when you are starting out because they are efficient and they don't tempt you into making outrageously jumped up expenses claims like some of the others.

[VectraMan]

Crikey, for those on £300+ a day, I really can't undestand why you t055 around doing Ltd, when for a fraction of that you can pay someone else to do it for you....

I did my first 4-month contract with Parasol, and thought they were very good. But all things considered I'd rather have had the extra couple of thousand pounds I'd have now if I'd had a Ltd. from the start.

Assuming you stay outside IR35, the amount you gain in take home pay is not inconsiderable. That hour a week earns me far more than any other hour I bill my client for. And I don't believe it is an hour a week, as what I do every week now is much the same as what I did with Parasol. Maybe an hour a month is more accurate, and by quick calculation, that hour makes me 20x more than what I charge the client for an hour. Work an hour less for the client, and you'd have the same amount of time to waste on WoW and be much better off for it.

[EternalOptimist]

I obviously came across parasol.

Why is it obvious ?

[malvolio]

Precisely - the point was to make you sure you understand what you're doing...

[jor-el]

Welcome to the real world (again). You are dealing with a salesman not an accountant, hence the misleading answer. If you want a straight comparison, assume the £159 expenses - is that daily, annualy, every other Thursday, or what??? - are earned income taxed at the normal rate for both PAYE and NICs (and it's too late at night for me to go dig out the numbers) and take that amount away from their bottom line.

As you say, you ain't going to get expenses, for quite valid reasons, so you have two answers:

Inside IR35 take 95% of your billable gross ignoring VAT and umbrella/accountants fees and pension contributions. That is your gross salary and you can compare it directly to your permie one. Except of course you need to make some allowances for health insurance, sickness insurance, critical illness cover, holidays, downtime and a few other things like PI/ELI/PLI you never even see as a permie.

Outside IR35, take your billable gross, and assume you get to keep around 65% of it if you cross the higher level tax threshold.

In both scenarios ignore VAT. Ignore salemen trying to sign you up to a range of schemes using false estimates. Caveat emptor. Simple, innit...

Or take your predicted houry rate and multiply by 1000 to get a rough comparison to the equivalent permie annual salary

Or go for PCG One-Stop (your own company) or PCG QU (umbrella option) and get honest answers, against which you can make informed comparisons.

Or take the advice already given; for both you and the other dozen or so recent newbies, we're not trying to score points or prove how clever we are, we're trying to show you it's not black and white.

And yes, you are a minnow in shark-infested waters. This is not a game.

Again , I appreciate your straight forward answer and the fact you try to explain the seriousness of the going-contract decision. But at the end of the day we're all adults here who take full responsibility for their actions and just want to make a buck. as many bucks as we can for as little hassle as we can.

In my case, I was quite happy with my permie salary but I was offered this job first as permie but they only could pay me £35 (i'm on £48.5 now) so they said come as a contractor and get £400 p/d. I like the job and more so, I like the fact that even with the most conservative calculation, I still take home some £1700 more than my current permie salary. I even looked back and counted the sickness and holiday I took in the last 4 years as a permie and it's not much. I don't care for pension as I'm not going to grow old in this country. I'm here to make as much money as I can and bugger off home.

So I understand everything you're saying but say you were about to take you 1st contract ever, wouldn't you like to play it safe for a few months just to feel up the water? even if it does cost you some 15% a month. Peace of mind is a valuable thing, especially in shark-infested waters.

Oh, and good morning ya all...

[malvolio]

Fair enough. I never said it was a necessity, and obviously everyone can make their own decisions on where their priorities lie - that' s half the point of going contracting anyway. But my form filling consists of four VAT100s and four payslips year, 8 cheques, three signatures and the kind of record keeping I would do anyway, taking no more than 20 minutes a month, so it's hardly a major hardship. And for that trivial effort I get 15% more takehome...

You loses your money and you takes your choice perhaps?

[Board Game Geek]

Welcome to the real world (again). You are dealing with a salesman not an accountant, hence the misleading answer. If you want a straight comparison, assume the £159 expenses

I switched off at this point....I'm with Parasol myself and they sort out all my PAYE.

When I get home, I want to play WOW, not ar5e around with tax forms and all that b0ll0x.

Sure, I realise that I could save money by going Ltd.

I also realise that I could save money by doing my own laundry and cleaning.

I value my personal time as more valuable, so I pay an Ironing Service and a Cleaning Service to do the hassle for me.

That's why I pay Parasol to sort out the hassle. You may say "But Geek, surely an hour a week is all it takes to get on top of your paperwork."

However, in that hour, I can log on to World of Warcraft, make some recipes, chat with the guildies, and start an instance.

Crikey, for those on £300+ a day, I really can't undestand why you t055 around doing Ltd, when for a fraction of that you can pay someone else to do it for you....