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As a contractor of many years standing (I started contracting when the internet appeared in 1994) I started reading the article hoping it was correct and finish

As a contractor of many years standing (I started contracting when the internet appeared in 1994) I started reading the article hoping it was correct and finished it with my fingers covering my eyes in fear. Sadly I don't have time to correct many of the misconceptions and total inaccuracies it contains. Its a shame really as good articles are hard to find and I'm sure many americans would find the differences between the UK and US markets very interesting... However if you really want to be a contractor https://www.ipse.co.uk/advice/articles/starting-out https://www.ipse.co.uk/advice/articles/starting-out has a lot of advice on starting out. http://www.contractoruk.com/first_timers/ http://www.contractoruk.com/first_timers/ also has a lot of advice although as a new starter I would avoid the general part of their forum... And there is a reason why people use limited companies. You can work as a self employed person but many clients stop when HMRC come knocking while agencies have been legally barred from employing people as self employed since the 1970s...

throwaway12357 11y ago
If you happen to get back to this thread and do have the time then please post it. I would appreciate it very much since I'll be taking that route. Thanks.
amouat 11y ago
It would be a lot more useful if said what these misconceptions and inaccuracies were. It seemed generally accurate to me. I think you should either back up this comment or delete it; otherwise it's unfair to the author. (I don't mind to sound snarky here; the rest of your comment is genuinely helpful).
- ig1 11y ago
  You should absolutely not have your business bank with the same bank you use personally. If your business account ever gets frozen (for litigation, tax investigation, etc.) many banks will also freeze any personal accounts you hold with them. IMO many of the services he recommends also suck. I've used Crunch before and wouldn't recommend it and Barclays Business banking has a terrible reputation. £50 cashback isn't a good basis on which to chose a bank account. Get a proper accountant that specialises in contractors (Nixon Williams and SJD have decent reputations). It also doesn't address withdrawing money out of the company (taxes, NI, pension, etc) which is a fairly important part of being a contractor.
  - d_t_w 11y ago
    I used Nixon Williams for about five years, they were very good.
- monkeyprojects 11y ago
  Where to begin Am I ready - The biggest bit is actually having the confidence to do it and a CV good that will get you past both the gatekeeper (the agent) and the client checking CVs... That means you should have real experience across both multiple employers and multiple market sectors (retail, consultancy, banking for instance) before thinking about it. Timing - Never understood this one. Projects have different life cycles so require analysts before project managers before developers before testers. Outside of the week between Christmas and New Year there are always some companies looking to start projects or requiring another contractor to fix a problem. In fact the only time I've found it difficult to get work is in April which supposedly is a boom period due to new financial years... Bureaucracy - The easiest way to find contracts is through agencies. To do that you need either a limited company or to use an umbrella. You don't however need to create this before you get a contract as you can get a company created in about 4 hours.. Getting an accountant You need one but don't need 1 until you get that first contract. Crunch has a lovely interface and is a good site but frankly I don't think they would be that great if things went wrong as they haven't got many qualified accountants. Look at IPSE or Freeagent for many other possible options.. Registering for VAT On the flat rate scheme you don't keep 5.5% but rather .2 *.145 or 2.6% as the 14.5 is taken from the income including VAT.. Expenses You don't need to do anything until you have a contract (as I've continually said setting up a company can be done in 4 hours). You may need to wait before you get paid (although some agencies still pay weekly) but if that is the case you keep the expenses to a minimum, keep a record of them and take the money from the company as soon as it receives that money. Finding your first client The first client isn't the hardest. The second one is. Especially when your first client was a short term 3 month contract and they didn't renew you because the work was done. With 1 3 month contract under your belt you then start looking for a contract as your money starts running out. That is when things are difficult. And I'm out of time but just before I go Mailing lists and communities This is my real problem with this article. He doesn't seem to want to be a contractor. He wants to be a freelancer working for multiple companies on various projects. Perfectly acceptable but thats the world of code bunnies doing work for start-ups and advertising agencies rather than contracting in a consultancy firm or government department.
  - amouat 11y ago
10dpd 11y ago
I agree please be careful with the advice contained here, from my perspective: - DO NOT give up your full time salaried position until you have at least one contract lined up. - Use a separate bank account for your business and don't mix personal and business. - You shouldn't manipulate your company to avoid the 'risk of getting caught by IR35', this is a regulation that is in place for a reason. It seems this article has been written as a way to maximise income from affiliates - there are multiple sites in the UK that offer accountancy as a service.
- mattmanser 11y ago
  Strange advice, employment contracts in the UK generally have a minimum of 4 weeks notice, while contracts tend to require you to start in a week or so.
  - cpncrunch 11y ago
    It depends on the contract. My first contract allowed me to give my notice to my permanent job (pretty sure it was 4 weeks IIRC). I'm pretty sure some of my other contracts didn't start immediately -- it depends on the job. Also, if you have somewhat specialized skills they might be prepared to wait for you. It's definitely a high risk strategy to quit your job before you've found a contract.
fractallyte 11y ago
> agencies have been legally barred from employing people as self employed since the 1970s Do you happen to have a source for this? The reason I ask is that I've written to HMRC regarding this precise issue, since I haven't been able to find any official statement to that effect. While there are structural differences between a 'sole trader' (ie. self employed) and a 'limited company', it's up to the contractor to decide which is more suitable for them. I can't see that the client/agency has any say in the matter.
- MatthewWilkes 11y ago
  I was a sole trader for many years and am now incorporated. Usually agencies won't touch sole traders as they'd be on the hook for disguised employment whereas if you have your own Ltd it's your problem if HMRC decides IR35 applies to you. Sole traders won't be getting capital gains, so you won't personally be out anything, but the agency doesn't want to have to worry about having to have all their coders suddenly be able to claim on their employer's liability insurance or to be on the hook for NI.
- monkeyprojects 11y ago
  Here you go The original legislation is tucked away in section 6(1) Employment Agencies Act 1973. http://www.legislation.gov.uk/ukpga/1973/35/enacted http://www.legislation.gov.uk/ukpga/1973/35/enacted 6.-(1)Except in such cases or classes of case as the Secretary of State may prescribe,a person carrying on an employment agency or an employment business shall not demand or directly or indirectly receive from any person any fee for finding him employment, or for seeking to find him employment. (2)Any person who contravenes this section shall be guilty of an offence and liable on summary conviction to a fine not exceeding £400.

throwaway12357 11y ago

If you happen to get back to this thread and do have the time then please post it. I would appreciate it very much since I'll be taking that route. Thanks.

amouat 11y ago

It would be a lot more useful if said what these misconceptions and inaccuracies were. It seemed generally accurate to me. I think you should either back up this comment or delete it; otherwise it's unfair to the author. (I don't mind to sound snarky here; the rest of your comment is genuinely helpful).

ig1 11y ago
You should absolutely not have your business bank with the same bank you use personally. If your business account ever gets frozen (for litigation, tax investigation, etc.) many banks will also freeze any personal accounts you hold with them. IMO many of the services he recommends also suck. I've used Crunch before and wouldn't recommend it and Barclays Business banking has a terrible reputation. £50 cashback isn't a good basis on which to chose a bank account. Get a proper accountant that specialises in contractors (Nixon Williams and SJD have decent reputations). It also doesn't address withdrawing money out of the company (taxes, NI, pension, etc) which is a fairly important part of being a contractor.
- d_t_w 11y ago
  I used Nixon Williams for about five years, they were very good.
monkeyprojects 11y ago
Where to begin Am I ready - The biggest bit is actually having the confidence to do it and a CV good that will get you past both the gatekeeper (the agent) and the client checking CVs... That means you should have real experience across both multiple employers and multiple market sectors (retail, consultancy, banking for instance) before thinking about it. Timing - Never understood this one. Projects have different life cycles so require analysts before project managers before developers before testers. Outside of the week between Christmas and New Year there are always some companies looking to start projects or requiring another contractor to fix a problem. In fact the only time I've found it difficult to get work is in April which supposedly is a boom period due to new financial years... Bureaucracy - The easiest way to find contracts is through agencies. To do that you need either a limited company or to use an umbrella. You don't however need to create this before you get a contract as you can get a company created in about 4 hours.. Getting an accountant You need one but don't need 1 until you get that first contract. Crunch has a lovely interface and is a good site but frankly I don't think they would be that great if things went wrong as they haven't got many qualified accountants. Look at IPSE or Freeagent for many other possible options.. Registering for VAT On the flat rate scheme you don't keep 5.5% but rather .2 *.145 or 2.6% as the 14.5 is taken from the income including VAT.. Expenses You don't need to do anything until you have a contract (as I've continually said setting up a company can be done in 4 hours). You may need to wait before you get paid (although some agencies still pay weekly) but if that is the case you keep the expenses to a minimum, keep a record of them and take the money from the company as soon as it receives that money. Finding your first client The first client isn't the hardest. The second one is. Especially when your first client was a short term 3 month contract and they didn't renew you because the work was done. With 1 3 month contract under your belt you then start looking for a contract as your money starts running out. That is when things are difficult. And I'm out of time but just before I go Mailing lists and communities This is my real problem with this article. He doesn't seem to want to be a contractor. He wants to be a freelancer working for multiple companies on various projects. Perfectly acceptable but thats the world of code bunnies doing work for start-ups and advertising agencies rather than contracting in a consultancy firm or government department.
- amouat 11y ago

10dpd 11y ago

I agree please be careful with the advice contained here, from my perspective: - DO NOT give up your full time salaried position until you have at least one contract lined up. - Use a separate bank account for your business and don't mix personal and business. - You shouldn't manipulate your company to avoid the 'risk of getting caught by IR35', this is a regulation that is in place for a reason. It seems this article has been written as a way to maximise income from affiliates - there are multiple sites in the UK that offer accountancy as a service.

mattmanser 11y ago
Strange advice, employment contracts in the UK generally have a minimum of 4 weeks notice, while contracts tend to require you to start in a week or so.
- cpncrunch 11y ago
  It depends on the contract. My first contract allowed me to give my notice to my permanent job (pretty sure it was 4 weeks IIRC). I'm pretty sure some of my other contracts didn't start immediately -- it depends on the job. Also, if you have somewhat specialized skills they might be prepared to wait for you. It's definitely a high risk strategy to quit your job before you've found a contract.

fractallyte 11y ago

> agencies have been legally barred from employing people as self employed since the 1970s Do you happen to have a source for this? The reason I ask is that I've written to HMRC regarding this precise issue, since I haven't been able to find any official statement to that effect. While there are structural differences between a 'sole trader' (ie. self employed) and a 'limited company', it's up to the contractor to decide which is more suitable for them. I can't see that the client/agency has any say in the matter.

MatthewWilkes 11y ago
I was a sole trader for many years and am now incorporated. Usually agencies won't touch sole traders as they'd be on the hook for disguised employment whereas if you have your own Ltd it's your problem if HMRC decides IR35 applies to you. Sole traders won't be getting capital gains, so you won't personally be out anything, but the agency doesn't want to have to worry about having to have all their coders suddenly be able to claim on their employer's liability insurance or to be on the hook for NI.
monkeyprojects 11y ago
Here you go The original legislation is tucked away in section 6(1) Employment Agencies Act 1973. http://www.legislation.gov.uk/ukpga/1973/35/enacted http://www.legislation.gov.uk/ukpga/1973/35/enacted 6.-(1)Except in such cases or classes of case as the Secretary of State may prescribe,a person carrying on an employment agency or an employment business shall not demand or directly or indirectly receive from any person any fee for finding him employment, or for seeking to find him employment. (2)Any person who contravenes this section shall be guilty of an offence and liable on summary conviction to a fine not exceeding £400.