Setting up as a Contractor

ZeFrog

Hi all,

Does anyone have info on what to do to become an IT contractor ?

I have read that you need to set up a limited company and go through an accountancy firm. Any idea how difficult this is, how much does it cost ?

Any info, advice or experience you might want to share would be much appreciated.

Cheers.
zf.

yop

You have 3 options - Use a contracting agency , an umbrella, a limited company.

From exp - I have used the agency and the company.

The agency will handle all your PRSI and tax and you will actually be employeed by them. They will charge the company that you are working for, so you will not know what they are actually getting, possibly 10% of your daily rate. Is saves a lot of hassle but you do not get the chance to claim tax back for expenses. I recommend this for a short time contract.

Using an umbrella company they will charge you about 300-400 every 6 months, I have not used one so I cannot comment. They once again handle all the paperwork.

Limited company - If you intend to go contracting for a long time then this is the best option.
It is roughly 310 Euro to set up the company. You will also need an accountant. What I did was let the accountant handle everything, He charges me between 400-500 a year to do everything. You can put all the expense through the account, ie food, computer equipment etc
You also need to have 2 directors and one shareholder - big advantage is that you are not liable for any fuc ups

thegills

I set up as a sole trader. I'm contracting in Telecoms not IT but the principles are the same. Free of charge and your existing PRSI number becomes your VAT number. I invoice on a monthly basis and charge VAT as I am providing a professional service. My tax accountant (friend of mine) handles all the VAT and expenses. I wouldn't pay 10% to a 3rd party to handle your affairs as it's quite straight forward.

ZeFrog

Thanks a lot for that lads

Sorry if my questions might sound trivial, but I have little knowledge about the subject and I find it difficult to find the answers.

I have a few more questions please

When you talk about contracting agencies, are those recruitment agencies ?

For the limited company, you say you need 2 directors, and one shareholder. It s a bit in contradiction with the idea I had of a contractor : being free Can they be 'anyone' ...

Do you know on average how much the government is taking from u. (just to compare with the taxation for permanent employee)

Also I have questions regarding the actual job. Is it a lot more pressure to work as a contractor or is it the same as a permanent job (except for the contract duration) ?
What is the main difference between an interview to hire a contractor and an interview for a permanent employee ?

Are there further level of IT contractors ? By that I mean, do you need to be an expert absolutely, or is there some contracts that are accessible for less experienced people ?

I used to work in a company in Dublin, but I ve been made redundant. I am now Sun Certified Java Programmer and I intend to pass a few more certifications but unfortunately I don t have work experience in Java.
Is it a bad idea to start as a contractor , would you recommand to find a permanent job first ?

I really like the idea of being self employed.

Thanks again for sharing your experience with me.

yop

When you talk about contracting agencies, are those recruitment agencies ?

Yip

For the limited company, you say you need 2 directors, and one shareholder. It s a bit in contradiction with the idea I had of a contractor : being free Can they be 'anyone'

Make yourself a director and then get 2 other people to 'fill' the posts!!!

Do you know on average how much the government is taking from u.

Have not completed a tax year so I cannot tell u off the top of my ceann

Also I have questions regarding the actual job. Is it a lot more pressure to work as a contractor or is it the same as a permanent job (except for the contract duration) ?

You have to work your set hours for the week, you are expected to know more than the avg programmer BUT in most cases this is not the case, I suppose if you have a strong handle on one area and have exp with 3-4 others then you are in a good pos.

What is the main difference between an interview to hire a contractor and an interview for a permanent employee ?

You will have only one interview, any jobs I have got I had to show work that I had done and also had a techincal exam. This has happened lately due to the large amound of applicants for the one position

I used to work in a company in Dublin, but I ve been made redundant. I am now Sun Certified Java Programmer and I intend to pass a few more certifications but unfortunately I don t have work experience in Java.

Sorry to hear about the layoff, same as myself.

You would be better to get perm exp because I would be suprised if you got a contract with no exp

Gluck with it anyway, let us know how u are getting on..

ando

Originally posted by ZeFrog
What is the main difference between an interview to hire a contractor and an interview for a permanent employee ?

I'm not a programmer, i'm a sys admin. I tried going for a 6month contract a while ago, it offered really great pay but I was shocked when i had the interview. So much detail to specific minor areas to the job.... unreal the things they were asking me

when your a contractor, you are expected to be a guru... well in my area anyway

djk1000

Hi, I run a company and I thought you might like this information.

How much does the government take? You have to charge VAT at 21% and pass that on to the government. VAT is not a real expense to your employer because they can claim it back.

As a director of a company you are an employee of that company and you have to pay paye and prsi as normal, one thing to check is your prsi entitlements they are not as good as a regular employees.

If you have any money left over in the company bank account at the end of the year, it is profit and you must pay tax on it of 12.5%.

Someone mentioned that if you **** up you are covered in a company, that is not the case anymore, a company director can be held personably liable for fraud, neglegence and unpaid taxes in some situations so don't think your safe!!!

Hope this helped..

Victor

Check also the Business / Economy board. http://www.boards.ie/vbulletin/forumdisplay.php?forumid=106

Free of charge and your existing PRSI number becomes your VAT number.

This is often, but not always true. Mine went from 9999999Z to IE 9999999Z, you must register separately for VAT, you may not charge VAT if you are not registered.

Originally posted by yop

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When you talk about contracting agencies, are those recruitment agencies ?

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Yip

Not all recruitment agencies are employment agencies and vice-versa. You need a special licence to be a employment agency.

Originally posted by yop

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For the limited company, you say you need 2 directors, and one shareholder. It s a bit in contradiction with the idea I had of a contractor : being free Can they be 'anyone'

---

Make yourself a director and then get 2 other people to 'fill' the posts!!!

You only need 2 directors total, one can be the shareholder. Note there are strong responsibilities for directors and the usually look for some fee in return. Many directors of small firms are husband and wife.

Originally posted by yop
Have not completed a tax year so I cannot tell u off the top of my ceann

Tax take will be similar to when employed in your own right, except you pay lower PRSI (but you aren't covered for unemployment and most other benefits). Expenses can usually be written off on a more generous basis.