Going freelance (IT Contracting)

zippeh_2

I'm considering branching out and becoming an IT Contractor (possibly under a Ltd Co) in the near future and would like to draw on peoples opinions as to how I should structure my finances to enable me to do this.

I'm currently in permeant employment. If there are any freelance people here - I'm interested to know what you did to 'shore up' your finances before you made the leap...

ozzage

I arrived here from abroad with a lot of cash saved and a visa and started that way Found accountant (via PCG (https://www.pcg.co.uk), set up company and bank account etc, looked for business, and off I went.

Do you already have contacts willing to give you work? Might not be the best time to enter the contract market if you don't.

ozzage

I should add I had no debt and no kids, which helped take the stress out of things

97trophy

There can be a huge number of advantages of using a limited company - well worth looking into further.

PurpleBox

Don't even think about making the move - I'm an IT contractor and like all my friends I'm 'resting' at present. In twenty years of contracting this is by far the worst I've seen the market.

PurpleBox.

ohit

Some would say that the last 20 years of good quality contract wages would have you ok to ride out the down-time?

So, maybe that is a lesson, if you do become a contractor, don't spend all your cash?

isofa

I never made the leap, I started doing this from Uni, but actually running it as a company with varying clients all at the same time, rather than just 1 contract until it expired etc.

The business has grown slowly and steadily since I started it, and I'm pretty busy at moment, not seeing much evidence of a downturn personally. Depends what sector you work in, your specialisms and naturally how good you are. I've never advertised, work on recommendation alone, have a top set of qualifications and experience.

Limited company is the way to go, but talk to an accountant, an IR35 issue appeared a few years ago, and caused a lot of problems for consultants working for one company alone.

Lyncroft

I'm a permanent IT trainer working on a global rollout. We use IT contractors too and I have to say that on this particular project the contractors are poorly treated. Flakey terms and conditions which you could drive a double decker bus through. Money is tight at the moment and they're looking to cut costs all the time. Although they don't say it directly, the message to the contractors is that if they don't like it and in this economic environment they think they can get a better offer, then !!!!!! off.

I'd think very carefully about making the leap because at the moment in my sector the employers have you by the short and curlies. Probably vary from sector to sector though.

isofa

^ I'd say Lyn is spot on, although I'm fortunate, it wouldn't be a time I'd chose to go full time contracting at all.

zippeh_2

Thanks for the input guys, it's appreciated.

The plan is to accumulate 12 months living costs (mortgage, bills, e.t.c) in cash which would then enable me to break free. I'm not intending to leave permenant employment just yet, it'll take me around 10 months or so to save the living costs.

Although they don't say it directly, the message to the contractors is that if they don't like it and in this economic environment they think they can get a better offer, then !!!!!! off.

interesting point you raised there Lyncroft. In your experience do you think contractors typically recieve this response when working alongside their permenant counterparts?

Scanning the job sites reveals a reasonable boyant market for my particular skills, however I understand not all recruitment agents have a genuine job at the end of the adverts!

isofa

Contractors are always treated worse in general, by the employee, after all the T+Cs can be pretty thin.

And remember, permies don't like them either. Essentially you are being brought it to earn a vastly higher rate than the permies, often to do a similar job, so there will always be animosity brewing.

Amassing 12 months living costs is a great idea first, give you some flexibility and breathing space, good luck!