Re: [ljc] Moving from fulltime to Contracting in Java

From: Stephen L.
Sent on: Wednesday, June 27, 2012 6:04 PM

Hi,

I think the term umbrella company is being overloaded here. One is a simple device to take a contract but without the need to start a limited company. This is not a very tax efficient option. The other is an offshore tax shelter.

Cheers

Steve.

On 27 Jun[masked]:25, "Richard Gomes" <[address removed]> wrote:
Hi Craig,

In order to receive as much as possible, and according to the law, etc, etc, etc... there are schemes in which  you actually become an stakeholder of an offshore company... even if you are not fully aware of it, but this is what actually happens. In this case, you receive only a very restricted 'wage' every month, which is almost tax free or even tax free, and you receive 'the remaining' on certain 'financial event dates', which may happen once a year, twice a year or even 4 times a year. In this case, you pay taxes on your investments as stakeholder, not taxes on your income, as an employee... and this makes a lot of difference!

The problem is that, if your actual employer (the company who is paying the company offshore you are now stakeholder) ends a contract in dates not matching very well those 'financial event dates' I've mentioned above... you may end up receiving less than you should.

You might be confused at this point. Let me clarify:

For example: suppose a if a financial period is made of 3 months, starting on 10th of January. If you started work on 11th of January, you will not receive the first 3 months of your contract because you failed to 'invest' on the first date of the financial period.

Now suppose you started working on 11th of january and finished your contract on 9th January next year.
You will not receive the 3 first months because you failed to invest on the 10th january.
You will not receive the last 3 months because you failed to invest on the 10th January of the next year.
Conclusion: You've worked virtually 12 months but will receive only 6 months.

All these things can be managed, but you have to be aware of these aspects... and you have to make things happen on your interest, not the offshore company.

I hope it helps.
Richard Gomes
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On 27/06/12 11:43, Craig Silk wrote:
Hi Richard,

I was a contractor for three months about a year ago. I know three months is not a lot of contracting experience but I didn't find any problems when dealing with my umbrella company. As long as the time sheets were filled out correctly and signed off on time there were no problems. Tax, NI and student loan repayments went smoothly too (something that I've had problems with in every perm role that I've had).

I'm curious as to what problems you've had (or heard of) with umbrella companies and if you've ever had to deal with them directly yourself?

Thanks
Craig

On Wed, Jun 27, 2012 at 11:25 AM, Richard Gomes <[address removed]> wrote:
I would be conservative regarding remuneration / year in comparison to perm.

1. Keep in mind that you will be looking for work for a number of months a year, I'd say 3 months a year. Eventually you will not be unemployed like that. Good for you! ... but I would plan the worst case, not the best.

2. You will have to pay for your own medical insurance and other benefits a perm position would 'give' you.

3. You'd better save for future, like a perm position does, when they pay the pension 'for you'. Interest rates of saving accounts are absolutely ridiculous, which means that you will be responsible for managing well your money, which means you have another thing to think about.

4. Beware with umbrella companies and offshore registered companies alike. It's a minefield and there are traps. Understand how you will be paid and when. Understand what happens if periods of time do not match exactly the 'ideal' scenario they sell you in the 'welcome brochure'. I'm sure you will find traps if you look closely.

5. Consider a contractor is a 100-hands man and you will be powerless to determine your career progression. It's not a big problem if you still have energy to turn on your computer when you get home and take care of your own interests. But it's a point to consider.


According to my own calculations and my own criteria about these factors, £400/day (and not £300) is the equivalent of 70K/year.

I hope it helps

Richard Gomes
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On 26/06/12 12:36, Sameer wrote:
Hi Alexander,


I feel it is not difficult at all. Its just a matter of looking for it. I am soon going to start a new contract. I was permie till now, but I am being made redundant as my company is bought over by another company. Whwn i started looking, I was open to both permie or contracting whichever is first to come my way.

As for contracting, there are two things you got to bear in mind, you have to be really good at your job, secondly, you do not get paid holidays, so whenever you take a holiday, you lose that money.. which is hard to let go initially but after a while you get used to it.If you get a year's contract, I will just calculate my earnings over 220 working days, buffering for holidays or gaps between contracts.

But nevertheless, Java contracts over 300£/day do give you decent money in hand and in hand you will have more than what 70K perm job would give you.

Regards
Sameer Shah

On Tue, Jun 26, 2012 at 12:14 PM, alexander sharma <[address removed]> wrote:
Hi Everyone

I would like to know how difficult it is to move from full time to contracting in Java?
How many years of experience required. How are the interviews like etc.

Thnanks





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