Ask HN: Contract or not to contract?

https://news.ycombinator.com/item?id=6353780

by mmiliauskas • 13 years ago

10 6 13 years ago

news.ycombinator.com

I currently have a permanent web developer job which pays £2.3k per month after taxes (£37k per year before taxes). I have never done any contracting and not really attracted to setting up my own company, however I heard about possibility of working under an umbrella company. By my rough estimate I think I could get a job which pays from £300-£350 per day, and after calculating Net pay on some of the umbrella websites it looks like I could get something from 3.6k - 4k.

Can somebody who has been in a similar situation advice, whether I should jump ships? I know this is quite abstract question, but I have no idea what questions should I ask in order to help myself to decide whether I should start contracting or not.

Thanks

nodata• 13 years ago

HMRC sees umbrella companies as potentially dodgy. Wikipedia has a good overview here: https://en.wikipedia.org/wiki/Umbrella_company

You don't just jump ships, you build your business on the side, then decrease the number of hours at your full time job.

Don't forget pension contributions.

gadders• 13 years ago

Setting up a limited company isn't that hard, and only costs a few hundred quid. Get something like FreeAgent and the book-keeping is fairly straightforward as well. You'll also need an accountant.

If you apply for a contract role, you can wait until you get accepted before creating your company etc. You can typically turn that round much faster than the typical company's contractor onboarding process (i.e. less than a week).

I started contracting about 4 years ago after 15 years as a permie and I love it. Greater variety of roles, much better money, no crap like appraisals or objectives etc etc.

reikonomusha• 13 years ago

I've had both good and bad experiences contracting.

Good Experiences:

* Variety of work. I've done contracting work from writing sophisticated parsers to financial computations to high-precision arithmetic libraries.

* The pay can often be better. Dollar for dollar, I've made as much as 75% more by contracts.

* If you're an excellent worker, you can develop many good connections.

* Contract work can sometimes lead to very good full-time positions. Sometimes known as "contract-to-hire", an employer might decide they want to keep you on board. (Unfortunately, your pay will almost surely decrease in exchange for stability.)

* Often you can work in the comfort of your own home on mostly your own time. Usually you're under no obligation to work a specific set of hours during the day at a specific location. All of my contract work has been remote.

Bad Experiences:

* Often don't feel a part of the company you're working for. Often feel excluded.

* Time tracking (if hourly based, which it often is) is annoying. Some services make this a lot easier, but it's still a pain to clock in and clock out every single time.

* Short to medium term contracting means you need to constantly be on the lookout for work. This, in turn, means you need to dedicate a good portion of your time applying for places and seeing who wants you.

* (In the USA) Have to deal with taxes. You might be getting paid $X but you must remember to reserve a portion of that to pay off later.

* Typically no benefits, like health insurance. This may be less of an issue outside of the USA.

* Not all employers are as nice as they seem. I have had my contract work terminated a month early because I finished a month ahead of time. They said I had no other work I could do to bill them for. Depending on where you live, a month of unexpected loss of life support can mean a lot. For me personally, it about drained what I saved up during the term.

* Short term contract work can sometimes look poor on your resume/CV. Even though any reasonable person understands what contract work is, seeing many companies on one's resume can often give the impression of lack of loyalty and lack of determination.

The Bottom Line

For me personally, I prefer full-time work, only because it is much more stable and I don't have to seek out work later. If you have significant delays between contract, and depending on where you live, your money supply starts depleting fast. While it's enticing to get paid, say, $6000 a month, if you have a 3 month delay between contracts, and each month you have $3000 in expenses, then your effective annual income is decreased by $9,000.

infinii• 13 years ago

I contracted for over a decade and I think this is pretty spot on.

I'd also note that there is no career progression. You can contract and grab lucrative low hanging fruit immediately, or work perm and build a career that may be more rewarding in the future.

hcho• 13 years ago

The rule of thumb was if your earnings are over £30K per annum, you set up your own company. Otherwise you stick with an umbrella company.

Finding a good accountant is the first thing you should do if you go by setting up your own company. They know the tricks and pitfalls, and are worth every penny.

ianpri• 13 years ago

as others have said, earning 300-350 per day sounds great, but you need to factor in any "perks" your fulltime job has that contracting can't offer - pension contributions (start making your own) hardware (buy your own machine + software etc), training, paid holidays etc.

You will also find that some contracts are working on fucked projects where contractors are hired as a last resort/scapegoat and the work will be "get this done fast" rather than any quality product being delivered. Not saying it's all like that, but prepared to be jaded if you do this long term

Ask HN: Contract or not to contract?

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