Software developer contractor

[PaulStat]

I think the thing that has stopped me from looking into contracting further is having enough savings to take the first step. Think I read somewhere that it was recommended to have a years salary before taking the 'risk'?

 

[jonneymendoza]

I think the thing that has stopped me from looking into contracting further is having enough savings to take the first step. Think I read somewhere that it was recommended to have a years salary before taking the 'risk'?

depends but in my industry u only need a months salary to start this up as i ahve said, theya re soo many perm and contract roles out there i get calls form agency daily.

 

[Bear]

I think the thing that has stopped me from looking into contracting further is having enough savings to take the first step. Think I read somewhere that it was recommended to have a years salary before taking the 'risk'?

If that was the case then hardly anyone would be a contractor. How many people actually have a years salary saved up as a permie?

 

[agent_paul]

depends but in my industry u only need a months salary to start this up as i ahve said, theya re soo many perm and contract roles out there i get calls form agency daily.

just out of interest, what type of jobs?

Back 3 years ago before my current role, I'd get calls daily from agencies about "roles" they want to put me through but in the end they were always fishing for companies I recently had interviews for.

 

[Slumberbox]

depends but in my industry u only need a months salary to start this up as i ahve said, theya re soo many perm and contract roles out there i get calls form agency daily.

What type of background/qualifications do you need to become a good candidate for the agencies? Any reputable courses I could study part time/evening to become suitable over 1-3 years?

 

[Haircut]

oh, and do not use Crunch

Why do you say this?
I have a couple of contractor friends using Crunch and they seem pretty happy with them.
I've been thinking of changing my accountant recently after mine gave me some bad tax advice and have been looking it Crunch based on what my mates have said.

 

[Ev0]

What type of background/qualifications do you need to become a good candidate for the agencies? Any reputable courses I could study part time/evening to become suitable over 1-3 years?

Contract work is largely, but not entirely, based on experience.

Being brought in as a contractor you're expected to already be well versed in what you need to do and just get on with it.

I'd say to be attractive to an agency for a contract role you have to have proven experience and skills in the area that they are looking to fill for a particular role.

Courses can help but ideally you need real industry experience.

Of course that's just generalising and there will be exceptions to the above.

Having industry certifications in areas relevant to the positions you wish to go for along with the experience will help, having the certs and no proven experience not so much.

So I guess the question is what sort of roles do you want to be going for?

 

[bluesouljah]

I think the thing that has stopped me from looking into contracting further is having enough savings to take the first step. Think I read somewhere that it was recommended to have a years salary before taking the 'risk'?

Depends how risk averse you are. I went in with 10k debt and no savings. Can't say I have that debt anymore. Also, people tend to look at contracting as more money, it isn't just that, there's a lot more to it. Plus, don't worry about contract lengths, i.e. three months or six months. The rule of thumb is that the contract is only as long as the notice period, if you don't deliver, you're out. So, make sure you have the skillset for the role.

 

[Amleto]

An umbrella company is generally run by an accounting firm so you are technically employed by them. As such, the client pays your agency, who then pays your accounting firm who takes all the necessary tax off and give you the rest.

Under this method, it is not possible to be captured by IR35. IR35 only comes into play when you pay yourself via dividends via a ltd company and you have financial control of that company. With an umbrella company you don't have that control as you are an employee of the accounting firm.

Yes, but surely the umbrella company has to pay all the NI and normal PAYE tax amounts? I thought an umbrella company would somehow be able to give you some tax breaks. Is this not the case?

 

[Bear]

Also, people tend to look at contracting as more money, it isn't just that, there's a lot more to it.

That is a very good point. Some contracts can take you far away from home, 400ish miles for me and you have to factor in whether it would effect your family or relationship.

Also if you are career minded then you aren't really going anywhere up that career ladder.

 

[Ev0]

That is a very good point. Some contracts can take you far away from home, 400ish miles for me and you have to factor in whether it would effect your family or relationship.

That's the main reason I don't do it, I have and like a role that while involves 1 or 2 nights away a week I'm home the rest of the time.

I've done the whole living away during the week (albeit that was actually for a not so well paid perm role) and not really for me at this point in time.

 

[Bear]

Yes, but surely the umbrella company has to pay all the NI and normal PAYE tax amounts? I thought an umbrella company would somehow be able to give you some tax breaks. Is this not the case?

The only breaks you will get is being able to claim expenses to offset against tax and that's it, and yes under an umbrella company all your taxes are paid, including employers NI. The amount you lose on tax is disgusting.

That's why anyone seriously considering contracting for any length of time normally goes Ltd company.

 

[Mr^B]

oh, and do not use Crunch

Any reason why? It would probably be quite helpful.

I've heard nothing but good things about them, and when I was considering going contracting they were extremely helpful.

 

[Amleto]

Yes, but surely the umbrella company has to pay all the NI and normal PAYE tax amounts? I thought an umbrella company would somehow be able to give you some tax breaks. Is this not the case?

to reply to myself...

umbrella company does not give tax benefits. UC only provide convenience and enable contractors to easily take non-IR35 safe positions.


edit: as bear already said!

 

[Bear]

That's the main reason I don't do it, I have and like a role that while involves 1 or 2 nights away a week I'm home the rest of the time.

I've done the whole living away during the week (albeit that was actually for a not so well paid perm role) and not really for me at this point in time.

I can imagine that anyone that has children, contracting would be very tough going.

Luckily for me, my wife is very senior in her job and so works long hours, so when I was working near home, I would only see her for barely 3 hours a day during the working week. Now I work away from Monday to Thursday so it hasn't made much of a difference to our relationship and it works put well for us and I get a 3 day weekend every week.

 

[jonneymendoza]

just out of interest, what type of jobs?

Back 3 years ago before my current role, I'd get calls daily from agencies about "roles" they want to put me through but in the end they were always fishing for companies I recently had interviews for.

Software developing jobs

What type of background/qualifications do you need to become a good candidate for the agencies? Any reputable courses I could study part time/evening to become suitable over 1-3 years?

In my domain, experience and i have nearly 6 years and people who have recommended me to do contract work are people who i use to work under as them being my line managers.

That is a very good point. Some contracts can take you far away from home, 400ish miles for me and you have to factor in whether it would effect your family or relationship.

Also if you are career minded then you aren't really going anywhere up that career ladder.

this i do not understand. if a contract role takes u 400miles out, so does a perm role of the same job.

SOmeone said that contract is not good career wise? i disagree. it is fantastic for your career! why?

because you get to learn and gain more experience then a perm job doing the same old stuff for years not progressing.

Also, if u love programming, u really do not want to move up the career chain becoming a PM or something as many developers do not like writing documentations and reading emails every day.

 

[Mr^B]

u can be sick for half a year and still earn more then a perm

It still needs to be catered for. What about if you are long-term sick? It's the kind of thing you will probably never need to call on, but it costs so little to get some form of critical illness cover that it's stupid not to.

i dont believe in pensions. i will manifest my own way of dealing with this in the future.

That's fine, but having a company provided pension is important in terms of being tax efficient, it's just another way of keeping that taxable income low and letting the company pay for things. For instance, I put in £100 (tax free) a month to my pension, the company puts in over £500. It's a strange individual who wouldn't take advantage of something like that, and it's a large benefit for permanent employees.

I am a versatile programmer, prepared to learn the next best thing. if Android dies tomorrow and windows 8 becomes the next big thing i will simply hit the books and start reading and start developing and learning and before u know it, back to earning 400-500 a day developing this time for windows 8, rinse repeat. only way my line of work will be affected is if the software industry collapses all together! Then i will just learn a new trade lol.

The money in contracting doesn't really come from cutting edge tech. It's more to do with existing and perhaps even obsolete tech. and perhaps some specialised specific vendor (small vendor, not Oracle - for example) knowledge which makes all the difference.

And you *have* to take time and money aside in order to keep up to date enough to be able to hit the ground running.

Don't get me wrong, I'm not poohing the idea, I'm just making you aware of the additional costs and aspects of contracting that are often overlooked. The majority of my day-to-day work is done with contracted software developers - so all this comes directly from conversations I've had with them when I ask them what's so good about contracting (as I had been considering it myself for a while until a few years ago...)

 

[jonneymendoza]

I can imagine that anyone that has children, contracting would be very tough going.
.

Depends on the role and location. if your type of expertise has lots of jobs around that are within an hours travel, its a none issue.

you get payed double or triple and have a family life as well.

i know another guy at work who just turned perm actually whilst being as a contractor for like 4-5 years.


His married with kids and guess what, he owns two properties, rents one out and is looking to buy another property.

When u can potentially save 20-30k per year no TAX, u can easily invest in that in many ways and live a good nice life for you and your family if u play your cards right and do well as a contractor.

Contract roles depends on a lot of things but if everything ticks the boxes such as job availabilty, your skillsets at present, location and going rate, then why not?

 

[jonneymendoza]

It still needs to be catered for. What about if you are long-term sick? It's the kind of thing you will probably never need to call on, but it costs so little to get some form of critical illness cover that it's stupid not to.



That's fine, but having a company provided pension is important in terms of being tax efficient, it's just another way of keeping that taxable income low and letting the company pay for things. For instance, I put in £100 (tax free) a month to my pension, the company puts in over £500. It's a strange individual who wouldn't take advantage of something like that, and it's a large benefit for permanent employees.



The money in contracting doesn't really come from cutting edge tech. It's more to do with existing and perhaps even obsolete tech. and perhaps some specialised specific vendor (small vendor, not Oracle - for example) knowledge which makes all the difference.

And you *have* to take time and money aside in order to keep up to date enough to be able to hit the ground running.

Don't get me wrong, I'm not poohing the idea, I'm just making you aware of the additional costs and aspects of contracting that are often overlooked. The majority of my day-to-day work is done with contracted software developers - so all this comes directly from conversations I've had with them when I ask them what's so good about contracting (as I had been considering it myself for a while until a few years ago...)

Yes indeed but the key thing about a contractor is to be able to learn stuff. to not sit your your backside doing same thing but actually look and read stuff u do not know about.

i understand your points. i am not saying contracting is perfect. it aint. it has its downsizes but u have got to ask yourself if its worth it. weigh in the pros and cons like i have for months and months and make a decision

I did not all of a sudden decided "hey, lets do contracting" i have been thinking about it for the past year

 

[Mr^B]

Yes indeed but the key thing about a contractor is to be able to learn stuff. to not sit your your backside doing same thing but actually look and read stuff u do not know about.

i understand your points. i am not saying contracting is perfect. it aint. it has its downsizes but u have got to ask yourself if its worth it. weigh in the pros and cons like i have for months and months and make a decision

I did not all of a sudden decided "hey, lets do contracting" i have been thinking about it for the past year

**edit** ...and permanent software developers aren't able to learn new stuff? In my experience, the new/interesting development work is given to the permanent developers for first refusal, maybe with a single *new* contractor/consultant to assist for a short term, whilst the existing support and maintenance work is given to contractors/juniors to backfil. With the added bonus for the permanent developers that they get their training paid for by the company. Just because you're permanent doesn't mean you stagnate, nor does it mean you are stuck in the same role for years and years. Some do, of course, but that's their preference - there's always options...and I will always give the more interesting or cutting edge work to a permanent developer before a contractor.

You asked for tips, so I'm giving you tips.

*shrugs*

Cheap critical illness cover is worth thinking about, as is setting up some form of pension to assist with tax efficiency. Putting aside a defined budget for training and planning your skill-set is important too. None of these were mentioned by you, so I thought I'd mention them.



On another point - if anything, having children, etc. contracting makes MORE sense - as you are contracted to work certain hours - unlike most permanent roles, where you are supposed (contractually) to be flexible with your working hours.

I certainly work longer hours than the contract developers.