Working on Contract     

 
 

Meet Connie Contractor!!

Connie Contractor loves the freedom of working freelance.

Connie has several years of IT technical experience and really can't be bothered to climb the 'career ladder' or pursue a job in management.

Contracting allows her to earn good money doing the job that she really enjoys while providing the opportunity to 'pick and choose' where and when she works.

 

Here to Stay

  Working Contract, Contracting, Freelance or Self-Employed  


The concept of contract working is very well-established in the IT field.

Some years ago, working freelance was considered 'less-than-respectable' but most computer people now spend some part of their career contracting.

Contractors can be found at all levels of the IT industry, from help-desk support to senior management.

 

 

Basic difference

The basic difference between contract and permanent jobs is that contractors are generally paid only for the hours that they work with no provision for holidays, sickness or other 'fringe' benefits such as pensions and insurance.

In compensation, contractors tend to earn higher hourly rates and can often benefit from paid overtime which is not traditionally available to 'white-collar' permanent staff. 

The tax regime is also more favourable though it has become less so in recent years.

 

     
  Working Environment

In most cases, contractors attend the client site during normal working hours and report to an assigned Client Manager.

As with permanent jobs, holidays and other days off should be arranged with the employer and unavoidable absence should be notified as soon as possible.

Although there are some 'consultant' types in the market who can direct their own workload, most contractors are not free to come and go as they please.

 

 

Connie Contractor

 

Connie Contractor Says:

Working on a contract basis doesn't mean that you can come and go as you please.

If you need a day off - be sure to clear it with the client.

 

 
  Job Content

Flexibility is the key to successful contracting and there is unlikely to be a rigid job description or established working practices.

There is probably a tendency to give the more-interesting work to permanent staff but most contractors learn to 'take the rough with the smooth'.

When the client says "Jump", the only question is generally "How high?".

 

 

Henry Hirenfire

Henry Hirenfire says:

I use contractors to carry out specific tasks without getting involved in the 'issues' of permanent employment.

If they do well and fit in, I hang on to them - If not.....

 
Career Development

As a contractor, there is no employer to provide a structured career development although it is often possible to gain new experience by being 'in the right place at the right time'.

In reality, most permanent employees don't benefit from very much training or planned personal development which is why so many of them leave to earn more money as contractors.

 

Security

Contracts tend to start-off on a 'short-term' basis of perhaps a few weeks with one week's notice.

Depending on satisfactory performance, large clients generally extend in 3-to-6 month chunks while increasing notice to maybe 4 weeks.

Although permanent jobs are perceived as being more long-term and secure,  contracts often run-on for several years on the same site.

Of course, with contracting there are no guarantees.

 

Connie Contractor

Connie Contractor says:

On a lot of big sites, most of the contractors have been there longer than the permanent staff.

Two or three years is not unusual.

 

The Role of the Agency

The bulk of IT contract work is available through agencies who market the contractors, negotiate the contracts and provide prompt payment on a weekly or monthly basis.

There are contractors working directly for clients although employers prefer to use short-term external resources 'at arms length' for the very reason that they do not wish to become embroiled in 'personnel' issues.  

 

Payment Arrangements

Most 'agency worker' IT contractors have their own Company with the only legal alternative being payment under PAYE.

We tend to encourage new contractors to operate their own company though  'umbrella company' organisations, which offer the benefits of Limited Company working without the administration, have become increasingly popular in recent years.   

Contractors working directly for clients fall outside the scope of the Inland Revenue 'agency worker' rules and can theoretically be 'self-employed'.

In most cases, the contractor maintains a weekly or monthly timesheet which is signed by a client representative and submitted to the agency for payment within a few days.

There is still scope for reduction of tax liability through the use of a Company although Tax cannot realistically be avoided altogether.

Day-to-day book-keeping shouldn't be too  difficult or time-consuming and we tend to recommend that most IT contractors do it themselves.

However, it is well-worth spending a few hundred pounds on the services of a good accountant for competent financial advice and year-end accounts

 

Connie Contractor

 

Connie Contractor says:

A good accountant is a valuable asset - but you do need one who understands your business.

How do you find a good one? - Try asking other contractors.

 

LINKS
 
Alpha Corporate Services provide on-line company formation and domain-name registration or you can call them for a "manual" service at no extra cost.

Alpha are also very experienced in handling the accounting requirements of IT contractors and offer a fixed-price service with quarterly billing.

They can also organise company bank accounts, if required.


  JSA Group are probably the biggest UK organisation specialising in 'umbrella'  and general accountancy service for contractors - Our experience of working with them is very positive.
 
  Freestyle Accounting are a firm of Chartered Certified Accountants offering an all-inclusive accountancy services for contractors who want to operate through their own limited company.

Their website has lots of articles and other free resources including their Guide to contracting through a Limited Company and 'Contractor Guide to IR35'.


 
  Parasol IT offer an number of 'umbrella' company solutions - We have used them without any problems.
 
  Charterhouse Group International is a leading provider of remuneration solutions to the global staffing industry - They are new to us though their presentation seems very professional.
 

Shout 99 were originally a campaigning organisation set up to fight the IR35 tax legislation Their regular email newsletter is a useful way of keeping in touch with contracting issues.


  IT Contractor provides news and a forum on contract issues.
 
 

Eurofile also provide a telephone and on-site PC support service aimed at small businesses and individuals - Details on: www.eurofilesupport.co.uk


 
 


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