The Business Side of Contracting

1
The Business Side of Contracting

• Nick Hilliard
• Network Ability Limited
• nick_at_netability.ie

2
Introduction

• Setting things up
• Area of specialisation
• Contractor or consultant
• Limited company, sole trader, partnership
• Working
• How to get work
• What to do when you can't get work
• Business administration
• Money matters
• Insurance and liability

3
Setting Things Up

• Specialisation
• Need experience before starting
• Balance between breadth and depth of experience
• Contractor or Consultant?
• Consulting short term, more challenging, high
  value, less stable
• Contracting longer term, more job-like, lower
  cost/hour
• Both anything to pull a buck
• Structure
• Sole trader simplest, low overhead, good for
  contracting
• Limited company much more complicated, more
  fees, arguably better for consultancy

4
Working

• How to get work
• Know the right people, be in the right place at
  the right time
• Keep well informed
• local mailing lists ILUG, IIU, open_at_webnet.ie,
  IOFFL, usenet, etc
• Get involved in things societies, conferences,
  etc
• Marketing - get to know people make sure
  people know you.
• Structured job-searching
• Ads in the media, agencies
• Multiple contracts
• Smaller retainer contracts if possible
• Chinese walls
• Interaction with 2nd parties
• Pass on excess work where possible
• Referral fees if appropriate

5
Working

• Fewer rights as contract employee
• Often little notice
• No redundancy payment
• What to do when you can't get work
• Don't do nothing
• Market yourself
• Think of a product, build a web-site, organise
  business card, polish CV, organise training
• If all else fails, food is more important than
  dignity
• Is it a recession?
• Are you in the wrong career?
• Are your colleagues finding work?
• Feast or famine is normal

6
Money Matters the good

• Bookkeeping
• Learn basics and buy software TAS, MYOB,
  Quickbooks, etc
• Or get your accountant to do it (costs )
• VAT
• Become VAT registered
• Charge VAT on all Irish invoices, not on
  international
• Reclaim VAT on work-related purchases, where
  appropriate
• Use ROS to pay / claim
• Expenses
• Genuine work-related expenses not liable to
  income tax
• Mileage, subsistence, entertainment, travel,
  training, computers hardware, pension, mobile
  phones, sometimes home heating electricity
• Important to know what can be claimed and to
  maintain proper records
• Complete list on http//www.revenue.ie/

7
Money Matters the bad

• PAYE
• No PAYE tax credit, otherwise same as PAYE
  worker
• PRSI
• S-class if sole trader or director of company
  which employs you
• Lose piles of social welfare benefits
• Carer's Benefit, Disability Benefit, Health and
  Safety Benefit, Invalidity Pension, Occupational
  Injuries Benefits, Retirement Pension, Treatment
  Benefit, Unemployment Benefit
• Rate is currently 3, no ceiling
• Therefore critical to get private health
  insurance and your own pension
• Can use ROS to pay these taxes

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Money Matters the ugly

• Sick leave / holidays
• If you don't work, you don't get paid
• Pension
• Critical to organise your own pension you will
  not get state pension
• Pension contributions are fully tax deductable
  for a company
• Professional Indemnity Insurance
• Will pay if you botch up and someone sues you /
  your company
• Some companies require this before signing
  contract
• Permanent Health Insurance
• Will pay you if you are unable to work for gt 3
  months
• Other once-off benefits, depending on package

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Money Matters payment

• Income ! Cashflow
• Many companies do not pay promptly
• 1 month standard practice 6 weeks is late can
  run to months
• If possible create a cash reserve
• Recent legislation changes allow interest on late
  invoices (ECB 7)
• If all else fails, get to know your bank manager
• The good news
• Contracting rates are much higher than full-time
  employment
• You can probably see why
• Expenses and VAT management are important part of
  this
• Both pay and hassle levels are higher
• Don't decide to contract purely for financial
  reasons

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That's all folks....
... any questions?