| Non-motoring > Adventure into self-employment | Miscellaneous |
| Thread Author: Rudedog | Replies: 61 |
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New Thu 17 May 18 21:08
Adventure into self-employment - Rudedog
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I'm hoping the collective experience of you guys can guide me with something.. My son has decided, after years of being employed, to go self-employed to hopefully try and earn a better wage. He's an outdoor person and since gaining a qualification in forestry has worked in all weathers getting up with the sun and earning a pittance for the hard work he does, he told me that last year he took home just over £13K which honestly almost made me cry! An opportunity has come up to go into construction working better hours …..but he will have to go self-employed. This completely new to us (myself and wife have worked 30+ years in the NHS), we have no idea of what he should do or how he should start. I'm very wary about him being caught with not paying the right tax and NI (previous PAYE) and ending up with a bill at the end of the year. I suspect this setup is quite common for many people. Please can anyone point me in the right direction as a starter. |
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New Thu 17 May 18 21:53
Adventure into self-employment - Zero
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He'll need a CIS card www.gov.uk/what-you-must-do-as-a-cis-subcontractor www.taxfile.co.uk/2008/04/types-of-cis-cards-in-the-construction-industry-scheme/ and then its a good idea to go for a CSCS card to move up the trades www.cscs.uk.com/applying-for-cards/types-of-cards/ Last edited by: Zero on Thu 17 May 18 at 21:55
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New Thu 17 May 18 22:02
Adventure into self-employment - Robin O'Reliant
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How much does he expect to earn if he goes self-employed? There will be no sick or holiday pay and he'll have to fund his own pension and to do that so he gets a decent return will cost a lot of money. I've read recently that a 30 year old will need to put around £400 a month into a pension scheme to get 20k per annum on retirement. Needs a decent salary to be able to do that - more than his current take home pay. How's his health? If he becomes self employed that is a gamble he takes. Break a limb and can't work for three months and he'll be Donald Ducked. I've been self employed for 33 years and I've been very lucky in that respect, it's a major move which needs careful thinking about. Last edited by: Robin O'Reliant on Thu 17 May 18 at 22:03
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New Thu 17 May 18 22:19
Adventure into self-employment - BiggerBadderDave
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| Work from home. |
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New Thu 17 May 18 22:22
Adventure into self-employment - Rudedog
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Thanks for all of that it will keep me going for a while. As I said he is on £13k at the moment and been told he will double that and do less hours, in his current job he works weekends without any extra pay doing 13 day stretches. Maybe he'll only do it for a few years (he's only 22) but although he likes his current job he just can't survive on his current salary. I've already got him to invest in monthly ISA's spread across high to medium risk to build on for the future (stocks ISA is doing 12% p/a at the moment, is that good?). |
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New Fri 18 May 18 14:37
Adventure into self-employment - Ambo
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>>I've already got him to invest in monthly ISA's spread across high to medium risk to build on for the future (stocks ISA is doing 12% p/a at the moment, is that good?). With such a low income I am amazed he can afford to set aside money for investment, especially in such risky stocks - if by "doing" you mean the yearly yield. I would call 12% yield a high to very high risk portfolio. |
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New Fri 18 May 18 23:23
Adventure into self-employment - Rudedog
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Only £50 a month, and we only started it 18 months ago so a long way to go, I've told him to keep it for at least 5 years. Got to speculate to accumulate! |
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New Thu 17 May 18 22:47
Adventure into self-employment - No FM2R
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This can be fraught; I assume that at least in the beginning he will be a labourer. Will that be as a general labourer on larger construction sites or to a small builder? The second is far better in my opinion since it gives much more opportunity to learn new skills. Do you know what he is intending / thinking to do? |
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New Thu 17 May 18 23:35
Adventure into self-employment - Rudedog
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From what I gather yes he will be starting as a labourer although he sort of knows the site manager so has been hinted that he could be doing 'other' things rather than just all manual work. Has experience with machinery from current job e.g. tractors + trailers. The smallish firm has several local construction sites on the go so might be travelling between them. Very willing to learn and use his head so I really hope hat part of it works out, we just need to get up to speed on the financial side of this so he ticks all the boxes and I can stop worrying about unpaid taxes and so on.. |
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New Fri 18 May 18 08:52
Adventure into self-employment - Pat
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www.gov.uk/working-for-yourself Loads of helpful information here. Pat |
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New Fri 18 May 18 13:35
Adventure into self-employment - No FM2R
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I don't know this firm, obviously, nor the people involved. Also bear in mind it's been a while. If it is a well run site, then knowledge of machinery doesn't mean he'll get to use it. Firstly there's competition for those jobs and secondly you have to be properly trained. 'skills' are what it's all about. So if he has the opportunity to learn stuff then he should. As a general labourer he'll get the rubbish jobs, he'll get the lowest pay and he'll be the most vulnerable to changes in the market. I have little faith in these "construction labourer" jobs but you never know, it may well work out. Fairly obviously it is all about other people's perception of him as a hard and reliable worker. There's enough idiots around that if he works well then he should stand out. I'd encourage him to look for a particular plasterer, or plumber, and other trades, who are looking for a labourer/mate themselves. That can work out well, especially if he wants to be one himself. On the financial side in principle it is this; The Contractor (construction company) will make deductions from the payments to the sub-contractor which will be passe to HMRC as a contribution towards the sub-contractor's tax liability. This deduction will be 20% of the gross if the sub-contractor is registered under the CIS scheme and 30% if he is not. At the end of the tax year the sub-contractor is responsible for making sure that his tax and NI is paid. [calculate his liability, take into account the deductions, pay the net]. There are agencies / small accountants that will help with this. His workmates should be able to recommend. Maker sure that he does count as a self-employed sub-contractor. This might be helpful... www.gov.uk/employment-status/selfemployed-contractor As an aside, has he thought about electricians / plumbing / etc. training courses ? There's never enough of those trades. At least, not in North Oxfordshire. Painter & decorator (as mentioned below) is also an excellent opportunity. Good luck to him. |
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New Fri 18 May 18 12:48
Adventure into self-employment - TheManWithNoName
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A colleague's son went self-employed a year or so back. Painting and decorating. Its the best move he ever made and always has work. |
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New Fri 18 May 18 13:11
Adventure into self-employment - Falkirk Bairn
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>>Painting and decorating. A good painter, joiner, electrician, plumber............skills - that is the difference. A son has been self employed for 14 years & done well but work is thinner on the ground. So 9 mths ago he took a job - 3 months later they were taken over - 750 people, 300 redundancies & he has been interviewed amongst 15 others for something like 8/9 jobs! In 2 or 3 weeks he will know an outcome - kept on or redundancy? Lots of people put in for redundancy but were refused - 55+ 20/25 years employed - it was a good shot for people thinking of retiring anyway. |
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New Fri 18 May 18 15:51
Adventure into self-employment - martin aston
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Our daughter has a journalism degree and has widened her skills to do video editing, websites etc. The nature of the work is such that you pretty much have to be self-employed to work. She tends to have 3-4 clients at a time. Could your son do say gardening as well as the building work? Round here gardeners to do routine maintenance always seem to be in demand. Like Rudedog we have salaried backgrounds and were concerned when she left her conventional office job for the world of a freelancer but she hasn't looked back. She earns about 50% more than when directly employed. Obviously hers is a different environment to the building trade but many of the principles will be the same. It may be worth using an accountant for the annual tax and NI return (in our daughter's case its paid for itself in legitimate claims against tax) and meanwhile setting aside an amount each month against tax and NI that will be due. Pension savings are very tax efficient but once you get out of public sector schemes, whether employed or self-employed, the pensions outlook is pretty bleak. It costs a huge amount to build up a fund. As for the ISA 12% is exceptionally good and therefore not without risk. He needs to be prepared for the ups and downs of the market but he's got many years for it to smooth out over time. I think this way of work will become increasingly common and, while it can be worrying to those of us who've worked conventionally in our careers, its becoming a fact of life. As the original title says, it can be an adventure. Good luck to him. |
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New Fri 18 May 18 16:02
Adventure into self-employment - smokie
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"...Pension savings are very tax efficient but once you get out of public sector schemes, whether employed or self-employed, the pensions outlook is pretty bleak. It costs a huge amount to build up a fund." But as I'm now finding, it's mostly the money which goes into your scheme early which determines the value when you retire. I suppose things are changing and this may well be less the case now, but I suspect not. I do also realise that there are other forms of investment which could outperform pensions. |
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New Fri 18 May 18 16:08
Adventure into self-employment - No FM2R
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>>Round here gardeners to do routine maintenance always seem to be in demand. Now that is a damned good suggestion. My gardener in the UK has always been buried with work. He has been extremely reliable, always pleasant and an absolute asset. He's been turning work down for years and reckons he could have the work to keep 3 or 4 gardeners going but most people are unreliable and don't like hard work, so he prefers not to get involved. As an indication of how well he is doing, he no longer likes working in the winter. So he came to visit me for 3 weeks, then went up to Mexico for a couple of weeks and then over to China for a month before returning to the UK. He tells me that his pension is so good that he doesn't need to work and he has no mortgage on his three bedroom semi. Though he is, these days, a single man. We had a long conversation about all this a couple of months ago when he was here. Now he is trying to retire and his customers, me included, are offering him much more money to continue part time, and we'll cover the cost of a labourer to do the heavy stuff. This is in North Oxon, but I doubt it's much different to anywhere else. The cost of tools would be a stumbling block though that depends on what he does. The need for machinery is avoidable, but a range of good hand tools is essential. Also a van or pickup is essential. As a forestry chap maybe that would appeal to your son? Last edited by: No FM2R on Fri 18 May 18 at 16:09
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New Fri 18 May 18 19:45
Adventure into self-employment - Roger.
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As fok get older and many live longer, they do find it difficult to do hard physical work. For all of our married lives (50 next February) we have done our own gardening and decorating. Recently we gave in and actually paid a decoratator to spruce up the internals of the house. Similarly, we are seriusly considering hiring some garden help a couple of times a year, at the beginning and end of the season. I can handle the lawn mowing but heavier work such as digging, hoeing and weeding the borders is getting fraught for both of us, with bad backs (me) and a duff knee (her); Finding reliable tradespeople is blooming difficult in our neck of the woods,even using the internet "find a tradesman" sites. Our daughter and SIL had a real job finding trades for the relatively minor re-furbing of a rental property they have reently bought. I think if the OP's son wants to earn well ,he sould look around his area to see which trades are in deand and train for one or two of them. I do think the idea of a gardening jobber also is good, as, despite asking around, we have not been able to come across a gardener for just a couple of days hourly rated work twice a year. |
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New Fri 18 May 18 19:56
Adventure into self-employment - CGNorwich
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| The problem with jobs like gardening is that people only want/can afford to pay a minimal rate for a few hours work on a seasonal basis . Its very hard to make sufficient to earn a living wage. |
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New Fri 18 May 18 19:59
Adventure into self-employment - No FM2R
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I can't remember how much we pay, £20ph I think. And, as i said, he gets tons of work. |
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New Sat 19 May 18 06:05
Adventure into self-employment - sooty123
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| Likewise, the chap I know that started doing gardening after he'd 'left' work. He ended up doing more hours than when he was in a career. The key to making it pay was doing the gardening in larger houses. It then took off by word of mouth, he ended up working 6/7 days a week. He had to slow down as he approached 70 but he certainly never touched his pension when going his garden jobs. |
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New Sat 19 May 18 06:13
Adventure into self-employment - sooty123
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despite asking around, we have not been able to come across a gardener for just a couple of days hourly rated work twice a year. >> I think it might be because the job is too small. certainly my experience of people doing gardening jobs. Try a handy man type if you can find one. |
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New Sat 19 May 18 07:02
Adventure into self-employment - martin aston
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Yes small one off jobs are not going to be very lucrative in themselves. While the underlying hourly rate for the job itself may be £20 or more you still have the travel, assessing the job, agreeing a price and the fact that not all quotes will result in getting the work. However if you can establish a name for yourself with word of mouth and social media (for example via free local online noticeboards) you can drive up the repeat business. The lack of competition helps with conversion rates. If Rudedog junior has the get up and go there could be a neat portfolio of labouring, handyman and gardening balanced according to the available work and seasonality. If one or other takes off, then drop the less attractive or lucrative ones. If work is drying up then add another string. Self-employment isn't easy but its possible to use it to your advantage. |
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New Sat 19 May 18 08:15
Adventure into self-employment - smokie
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There are online accountancy businesses which are often cheaper than a "real person" and might be of interest. I paid www.crunch.co.uk * I think about £800 a year, which gives you online payroll, invoicing, end of year accounts and submissions to HMRC etc etc, plus phone/email access to "real people" specialists for assistance with any questions. It's probably outside budget, and I suspect it's more geared to the likes of IT professionals but worth a look. * There was a time when a successful referral would earn me an Amazon card but I no longer work so not any longer... |
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New Sat 19 May 18 08:52
Adventure into self-employment - Bromptonaut
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>> However if you can establish a name for yourself with word of mouth and social >> media (for example via free local online noticeboards) you can drive up the repeat business. >> The lack of competition helps with conversion rates. We have a guy who comes around for an hour or so a week to keep the borders in our small garden under control. Retired early from Mental Health nursing and has set himself up as a garden tidying service - mostly weeding and lawn mowing. It keeps him pretty busy - at least in the summer. Won't be making him a living though. In same vein as paid CA work funds my caravan habit his funds a motorbiking hobby. |
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New Sat 19 May 18 09:54
Adventure into self-employment - Stuu
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When on car valeting jobs I often come across gardeners as part of the wide array of tradespeople they have in, all say they are not short of work. One of my customers paid me to scrape all the moss etc from their block paving last year, which took a couple of weeks, then re-sand it. Easy enough job and worth saying Yes to. It is useful to open the mind to doing those extra jobs such as the driveway work as quite often clients are happy to give you additional tasks if they like you and you are happy to do them - I know a gardener who spent some time rubbing down and treating some wooden garden furniture for instance. Some of the odd jobs actually pay better than the core stuff, but aren't enough to sustain a business on their own - I clean garage doors and pressure wash garage floors on occasion, esp after the winter, but its a seasonal extra. That said, I know one guy who literally just cuts grass, mows it, does the edges, goes, does nout else, so minimum equipment needed, also very busy. |
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New Sat 19 May 18 08:30
Adventure into self-employment - sherlock47
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| Choosing a "suitable" accountant is the the most important thing - not necessarily the cheapest. Most of what is necessary is just straight forward book-keeping which could be done by a monkey with a copy of the HMRC rules. What you need is somebody with experience of custom and practice and also how to apply the rules to suit your specific circumstances. If the accountant also submits your returns my experience was that the the likelihood of being subject to an in depth investiagation is minimised. |
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New Sat 19 May 18 10:59
Adventure into self-employment - Ambo
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>>I think it might be because the job is too small. certainly my experience of people doing gardening jobs. Right. I wait until I have at least 4 hours' work at a time. Luckily, my "gardener" will work on an "as and when" basis. (I found him from a newsagent card; he works like stink.) >>Try a handy man type if you can find one. I call mine a gardener but Garden Handyman would be a better job description. Of about a dozen "gardeners" used over the years, only one was a true one, someone who for example could tell me what plants would be most suitable for a particular spot and do a soil test to help him answer. The rest have depended on me to provide such information (and there were few lessons to be carried over from rubber and oil palm cultivation, over which I was once reasonably sound). But then this true gardener only lasted for three sessions before drugs overtook him and he would not have been able to paint the shed with preservative, clean the gutters and run-of drains and so forth, in addition to horticultural tasks. |
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New Sat 19 May 18 12:11
Adventure into self-employment - Falkirk Bairn
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Last spring I got a youngish chap of 38 to help with the garden. I knew of his parents, he had lost his gardening job with the council - drink & Facebook posts do not go well together. Came 3 times for 3 hours, then 2 x 2 hours - then turned up drunk @ 6.30 on a Saturday night looking for money - saying he would do the garden on Sunday. We had agreed the month before that I would pay him for each session - not in advance. I never saw him again. Looking for someone else took months, 2 of them came once, did a good job but never appeared again. |
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New Sat 19 May 18 13:37
Adventure into self-employment - Duncan
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>> My son has decided, after years of being employed, to go self-employed to hopefully try >> and earn a better wage. I don't know where you are in the country. I think if there is a large airport nearby, it would be a good idea to go along and have a chat with the HR/ whatever it's called department nowadays. I know some men that do baggage handling at LHR. Once you are in, it's a good long term job. Well paid, good holidays, free flights, good sick pay and pensions. It isn't such hard work as it sounds. The building, or gardening jobs are all very well until you have to work outside in the winter, or have an accident. |
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New Sat 19 May 18 15:42
Adventure into self-employment - Stuu
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>>The building, or gardening jobs are all very well until you have to work outside in the winter<< You get used to it and with a few winters behind you, prepare better. |
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New Sat 19 May 18 15:56
Adventure into self-employment - sooty123
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>> >>The building, or gardening jobs are all very well until you have to work outside >> in the winter<< >> >> You get used to it and with a few winters behind you, prepare better. >> Agreed, the winter during the day isn't too bad in the UK bar a few days. Nights can be somewhat cold, especially when the wind is up it can feel like it's going right through you. But I don't suppose there's much midnight gardening going on :) |
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New Sat 19 May 18 16:17
Adventure into self-employment - No FM2R
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>>Nights can be somewhat cold, especially when the wind is up it can feel like it's going right through you It's the early mornings that get you. I can still remember my erstwhile boss explaining to me that there was no reason you couldn't put up fence panels at first light. |
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New Sat 19 May 18 19:49
Adventure into self-employment - Stuu
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With car valeting you are mostly restricted to above -5 as the water freezes too quickly to make a decent hash of the job, but the actual cold doesn't bother me - I bought a Reebok coat years ago, big heavy thing and to this day, combined with two other layers, keeps me as warm as I need to be. If you do it right you warm up when you work anyway. Got one of those Thinsulate hats with the ear covers a few years ago, lovely for 8am jobs below freezing. My biggest challenge in the last year hasn't been working in the cold but managing to get out of the housing estate as our shared driveway is a long slope and always icy, then there is an even steeper slope at the junction with the main road, unsighted and never gritted - none of my hybrids have been any good on it, even the RAV4 with 4wd. I am hoping that my new motor, where I got 4 Michelin Crossclimates thrown into the deal, will prove more able. Fingers crossed, they get good reviews. |
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New Sat 19 May 18 16:08
Adventure into self-employment - No FM2R
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>>You get used to it and with a few winters behind you, prepare better. Indeed. Years ago when I was doing it, and I doubt it's changed much, there was lots of fencing and tree work in the Winter. 6'6" x 4" x 4" concrete fence posts were always a joy on frozen hand mornings. |
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New Sat 19 May 18 16:15
Adventure into self-employment - No FM2R
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Rudedog, If your son has been getting up at the crack of dawn and work all hours for a pittance and his now considering other hard work, then I rather suspect that he is the type to succeed as soon as he finds something that suits him. The more I think about Martin Aston's suggestion of garden work the more I think it would be a good idea for him and he could make it work. My gardener [Alan] is based in North Oxfordshire and I just spoke to him. If you or your son are in that area he is happy to meet, if you're not he is happy to speak on the phone / email - he could probably offer your son advice and suggestions. There's not much chance of persuading him to log on here I'm afraid. We're 8,000 miles apart and he still brings his new phones on holiday with him for me to configure! So if the idea of gardening interests your son I am happy to pass on Alan's phone number. I also happen to know from earlier conversations that Alan is looking to slow down significantly and so some of his equipment may well be for sale. My email address is in my profile. None taken if not. Last edited by: No FM2R on Sat 19 May 18 at 16:15
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New Sat 19 May 18 19:41
Adventure into self-employment - Rudedog
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Thanks, everyone. Son did a Forestry & Arboriculture course at a long established land-based college in Kent, went slightly off direction and ended up a greenkeepers for a chain of local golf-courses, this meant getting up as the sunrises and in all weathers, because of the very low pay and conditions many workers came and went but he got a good rep for quality work. Did apply for a job with the NT as there are three houses/garden near us but that didn't come off, current employer doesn't want to lose him but can't offer more than minimum wage. He's young and wants to try a change of direction while still working with his hands (there could be a chance of doing some kind of H&S courses to move up). |
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New Tue 22 May 18 17:04
Adventure into self-employment - Mapmaker
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Nobody ever made real money by being employed - with the exception of chief executives of FTSE companies, and bankers. Go for it, and see what happens. Don't worry about the accounts. A monkey can do it. Add up incoming cash. Add up outgoing cash. Deduct second from first. Don't put motoring expenses through this calculation, but deduct 45p per mile. (HMRC are quite happy with this method for the self-employed.) |
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New Tue 22 May 18 17:35
Adventure into self-employment - smokie
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... and of course pay yourself a sufficiently low wage to avoid paying any tax or NI (employer and employer - was a bit under £700 a month when I was last doing it 3 years ago)), then take the rest in dividends, which can be done as frequently as you want (monthly if needed). Less tax on dividends. Though that is changing. Also any essential tools, clothing and equipment can go through the company, provided they are solely for use by the company (i.e. not a phone you also used for private use) And there used to be a VAT dodge whereby if you registered you could charge VAT at 20% but only pay HMRC a lower percentage, based on your company's type of business. Hill farmers were best IIRC, but as an IT consultant I was paying around 15%. This may not be applicable or desirable on a lower wage rate though. (That's where accountants start to earn their corn) |
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New Tue 22 May 18 18:06
Adventure into self-employment - rtj70
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>> Though that is changing. Thankfully - we as workers need to pay tax/NI to cover pensions, NHS, etc. Why should the self employed be allowed to get around this? I'm glad HMRC are finally going after people who used off-shore trusts to bill for their work and get paid minimum wage and then get a loan for training that is never repaid. Some might be liable for 6 figure sums (I knew one and I strongly disagreed with how he was avoiding tax)... unless you come to an agreement or repay the loan. Except you won't repay the loan because the money loaned to you was your own via the trust. I know tax dodges are legal - but not morally right. Last edited by: rtj70 on Tue 22 May 18 at 18:07
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New Tue 22 May 18 19:02
Adventure into self-employment - No FM2R
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You appear to be conflating avoidance and evasion. I see nothing wrong with avoidance, not in any way at all. One should pay the tax one is supposed to. But some of your examples are evasion. And that is typically a very bad idea indeed. |
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New Tue 22 May 18 19:44
Adventure into self-employment - smokie
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I only did the last 4 years as a contractor. In the bank there were loads of "permanent" contractors. I hadn't come across the concept of paying yourself abroad but a number of them recommended it. Thankfully I didn't follow their advice. But as said above, I did take advantage of the tax "breaks", why wouldn't I? If they hadn't been there I would n#t have done. There is, after all, a not inconsiderable risk associated with being a contractor, e.g. no sick or holiday pay, no pension, potentially long gaps between engagements (in four years I had a total of 20 months "between jobs" - admittedly partly self inflicted but it's not all it's cracked up to be) |
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New Tue 22 May 18 20:20
Adventure into self-employment - Bromptonaut
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>> You appear to be conflating avoidance and evasion. A fine line made fuzzy by fee hungry advisers. |
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New Tue 22 May 18 20:31
Adventure into self-employment - No FM2R
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Sadly true. |And, as always with these things, people who are prepared to ignore the nagging of their own common sense in the face of a seemingly good deal. I've never cut it fine with my taxes. Not worth it. But if there is an obviously legal approach to my advantage, then I'll take it. |
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New Tue 22 May 18 20:39
Adventure into self-employment - rtj70
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The example I gave about the off-shore trust had someone I knew at the time planning on getting close to £100k without paying much tax at all. He was getting the minimum wage and then the rest as loans. These people (not just IT) have got them themselves in a hole and may cost them a lot of money to fix it... probably more than the tax they ought to have paid. |
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New Tue 22 May 18 22:16
Adventure into self-employment - Bromptonaut
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>> may cost >> them a lot of money to fix it... probably more than the tax they ought >> to have paid. As somebody who has never got beyond PAYE I rather hope so. |
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New Tue 22 May 18 22:44
Adventure into self-employment - smokie
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My post above mentioned some of the downsides of being your own boss. Here's a few more. No gold plated pension... no sick leave "entitlement"... no bumping you up the grades in your final year to enhance your pension... no redundancy payment if your contract should end early, no increased annual holiday or more comfy chair according to years of service and so on. No lavish Christmas parties. Supply (and pay for) your own laptop and other equipment (e.g. phone, car). No-one will pay you unless you issue invoices. Someone has to produce annual accounts. I am definitely against evasion, and I was an employee for nearly all of my working life, but having been a contractor I can see that there are reasons why they should earn at a better rate than employees. |
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New Tue 22 May 18 22:55
Adventure into self-employment - rtj70
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>> I am definitely against evasion, and I was an employee for nearly all of my working life, but >> having been a contractor I can see that there are reasons why they should earn at a better >> rate than employees. If you contract then there is no reason some of the money earned is not paid into a pension or covers holidays. If you choose not to do that and take the bulk as dividends then that's fine - but you'd get some benefits from putting some into a pension. |
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New Tue 22 May 18 23:26
Adventure into self-employment - smokie
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I also liked contracting but I'm glad I didn't move into it earlier, when I needed a steady reliable income and an acceptable job status to put on loan requests!! Of course you factor in holidays Rob but many permies get 30+ days holiday a year. That's about a month and a half, before you start looking at the other stuff. You then also factor in the employers pension contribution (what's yours, 10%?. Not uncommon in longer term employees) and it starts to stack up. I remember the early days when I was contracting looking at the quite expensive holiday I'd booked and thinking the cost of the holiday was insignificant compared to the loss of earnings... I am not saying it isn't lucrative if you can do it right, but it's also not quite as wonderful and carefree as permies tend to believe. (Remember I was a permie once...) |
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New Wed 23 May 18 01:13
Adventure into self-employment - rtj70
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I wasn't having a go at anyone on here. I was just saying that instead of avoiding tax (legally) some of the income could go towards pensions for example. I get a good pension contribution to compensate for a closed final salary pension. I get good standard holidays and buy extra. |
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New Wed 23 May 18 08:10
Adventure into self-employment - smokie
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Actually having your company put money into a pension is very efficient. No corporation tax, no personal tax (until you take it out, and then 25% is tax free, and very efficient for IHT is you don't touch the rest before you croak!!). It's what I did with about (equivalent of) two years money. EDIT: There is an annual limit on how much you can put into a pension, as well as the lifetime limit, You can use up to three years allowance at once if not already used, Last edited by: smokie on Wed 23 May 18 at 08:15
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New Tue 22 May 18 22:58
Adventure into self-employment - No FM2R
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All of that plus.... There is nobody to drive you at times of low motivation. In the early days that gap between one contract finishing and finding another can be heart-stopping. You can sell or you can work. combining the two is hard. Difficult to take time off. Partly because you need to work when you have work and partly because you (certainly I) cannot stop thinking about how much a day off costs. Different work relationships. OK, on the upside career and office politics are somewhere between much less and none, but so is anybody's interest in your well being. As it happens I like the life, but it's not for everybody. |
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New Wed 23 May 18 16:52
Adventure into self-employment - Bromptonaut
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>> No gold plated pension... no sick leave "entitlement"... no bumping you up the grades in >> your final year to enhance your pension... no redundancy payment if your contract should end >> early, no increased annual holiday or more comfy chair according to years of service and >> so on. No lavish Christmas parties. Supply (and pay for) your own laptop and other >> equipment (e.g. phone, car). Only one of those I got was a damn good pension and decent annual holiday. Sick leave was fair but any sense of entitlement was stamped on right back form day 1 in 1978. All of those carry a significant on cost for employer as does employer's NIC. Reasonable enough to give contractors a boost to reflect some of that. At one time the Treasury used to produce tables for the Civil Service showing costs per staff member by grade on various bases - marginal extra, with soft/hard facilities added etc. Later we had to do it ourselves using a spreadsheet. The hourly cost of a permanent Policy Officer at HEO grade, inc the add-ons, was such that the Quango, in mid noughties, preferred to use agency staff. At the time there were plenty of young antipodeans in London on tourist/working visas with excellent legal/academic qualifications who were happy to take work at agency rates and get some good CV material/references to take home. |
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New Wed 23 May 18 17:12
Adventure into self-employment - No FM2R
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If you have no interest in growing the person, training them, developing them into other roles, encouraging them to stay with anything other than money, managing them with procurement rather than HR, then a contractor is almost always cheaper. Essentially, short term or unchanging. Anything else then it is both safer and usually cheaper to use a permie. The problem is that so few companies understand the bigger picture that to the unsophisticated it can look like a contractor is almost always cheaper. That and crap metrics and motivation lead to incorrect behaviour. |
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New Wed 23 May 18 17:44
Adventure into self-employment - smokie
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| Don't contractors come off a different side of the P&L or something? |
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New Wed 23 May 18 17:55
Adventure into self-employment - No FM2R
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Different side, no, but different place. Simplistically if I was a fairly stupid middle manager I might tell you to reduce your headcount by 1. I don't have the brains or interest to know if that's a good idea, anymore than I knew enough to argue with the man who told me to do it. So I reduce my headcount by 1 and we're all heroes, except the poor b****** who lost his job on the whim of an incompetent. However, because I'm a thickie the group now gets itself into trouble because it's understaffed. So I go to my boss and explain that I need £20k to get a contractor and that will resolve the issues, and I'll probably only need him for a month or two but if I don't do it the group is going to hell in a handbasket. So we pay the £20k and we get a contractor. Because we're run by idiots nobody ever associates the £20k+ in OpEx General Expenses & Projects with the reduction in manpower of 1. Least of all me, because I've got naff all idea of what's going on anyway. Then the contractor's time is up, but because renewal processes are different to initiation processes it's not subject to heavy review and nobody wants to take the responsibility of screwing up the group over another £20k. And the Annual Report says that we have met all headcount targets and personnel costs are down. Procurement expenses were higher but we covered that by pushing the new hardware refurbishment project to next year. The total figures look right and nobody with any brains is ever going to look at it anyway. And then they wonder why people like me can go through a company like a dose of salts and improve everything just by firing a***hole middle managers. Last edited by: No FM2R on Wed 23 May 18 at 17:57
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New Thu 24 May 18 00:18
Adventure into self-employment - Kevin
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Absolutely correct, but in many cases it is now C-Suite demanding cuts. A guy I knew in the US had been a contractor for 12 years and had survived quite a few "Resource Actions" (a euphemism for redundancies) even though he'd coined in enough to own outright two good properties in Florida and one in Austin by his mid-30s. His boss had always told him he was safe because he didn't appear on payroll and headcount. |
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New Wed 23 May 18 17:48
Adventure into self-employment - commerdriver
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>> Anything else then it is both safer and usually cheaper to use a permie. >> The difficulty especially in government and local government which I worked with quite a bit in my early career, was that they used to employ permies and then find that, having got good training and experience for a few years, they were lured away by better money in the private sector. Things have changed over the years, mainly for the better, although some companies now who shall remain nameless, take on most of their new graduates and interns on 3 year contracts with no permanent job guaranteed after it. Surprising number of jobs in public sector, including NHS & others are done, on a rolling one year contract basis |
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New Wed 23 May 18 22:14
Adventure into self-employment - Bromptonaut
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>> The difficulty especially in government and local government which I worked with quite a bit >> in my early career, was that they used to employ permies and then find that, >> having got good training and experience for a few years, they were lured away by >> better money in the private sector. That brings back some memories. Opportunities for perm admins in Courts to move to legal were restricted because of perception that legal qualifications were needed but we still lost plenty to become Outdoor Clerks, Legal Execs or Barrister's admins. Attrition was much higher in what's now HMRC where tax accountants and import/export outfits needed a constant stream of advisers/form jockeys. Bright DHSS types could do well in advice sector too - we've got one working with us right now. |
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New Tue 22 May 18 23:23
Adventure into self-employment - Kevin
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>As somebody who has never got beyond PAYE I rather hope so. Consider yourself lucky Bromp. When I lived in the US my salary was paid in the UK but I also received an allowance in the US so I was paying taxes in both countries. Knowing what had to be declared and where it had to be paid was a nightmare. My employer had appointed PWC to help me but providing all the info was a real pain. IIRC, the IRS returns ran to about 50 pages and HMRC returns plus supplements, ran to about 80. HMRC wanted full returns for years after I returned to the UK. HMRC are now wanting me to provide proof of the date that we returned to the UK and the dates of any return visits I made while we were resident in the US. I'm waiting for them to demand details of my earnings when we lived in Namibia. |
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New Tue 22 May 18 22:41
Adventure into self-employment - No FM2R
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Who cares? That was someone indulging in tax evasion. Couldn't give a flying wotsit what happens to them. Though I struggle to see how it will cost more than the tax than they should have paid. Unless they've been busted by HMRC. Because typically as long as you are volunteering the information and can pay within 7 days, you just have to pay the correct tax. Still, again, serves him right. But had he been indulging in legitimate tax avoidance, then that is called - paying the tax you are supposed to pay. Why would anybody consciously pay more? |
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New Tue 22 May 18 22:42
Adventure into self-employment - No FM2R
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>>As somebody who has never got beyond PAYE I rather hope so. The one and time in my life my tax has ever been screwed up was when I was on PAYE. And that cost me a great deal of money. Even though everybody acknowledged that the fault was on the part of my erstwhile employer, it was still my responsibility. |
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New Wed 23 May 18 11:08
Adventure into self-employment - hawkeye
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If your son likes the idea of gardening, this might help. After 40 years in IT, I set up as a gardener/handyman in 2003 with no experience in the field other than looking after our own garden. I contacted the local contractor (in the pub) who cuts the village greens and asked him if he had any single private gardens I could look after so he could expand his contracting. I struck lucky, he gave me 8 introductions straight away for which I gave him commission in kind. I also contacted all local estate agents with the idea of tidying gardens before viewings. That gave me work as well, and a route into handyman stuff for their managed properties. Every garden I did, I asked their neighbours if they needed any work doing. It was good business; I started off doing the garden when folk were on holiday, then more often with some of them. Older people would often make a cuppa and ply me with biscuits. The handyman stuff (Light bulbs, painting, tap washers etc.) helped a lot in winter when gardening went quiet. My sons helped me with grass cutting in the holidays (and were paid); quality time still remembered by both. The weather could be a problem; I used raintoday.co.uk as soon as I had a smartphone to see when I could expect my next drenching. My mate in the next village took all my grass clippings for compost so I didn't have to trouble the local recycling centre (it banned trailers with wire mesh sides at one point). I used an accountant who had done our tax stuff when I was in business and paid very little tax. Against all advice to buy quality equipment, and having some experience of looking after mowers, I chose to buy Mountfield with Briggs engines and serviced the mowers and hedge cutters religiously. I had spare blades for each mower and a carburettor which would fit any of them. I used the MPV I already had with tools in the boot. My trailer had an advertising board on both sides from Vistaprint and (getting seriously technical here), the mowers rested on wooden rails when in the trailer because, assuming mower designers planned for their machines to do about 5mph, I couldn't understand how mower wheels and height adjusters would survive when the trailer went over a bump at 40mph. 2003 was a bit lean with 10K earned, but 18K was the norm rising to 22K when I finished in 2014. This taking place around Richmond, Yorkshire. I could have done more but I was turning business away in order to train to realise my aspiration of becoming a swim coach. Hope this helps. |
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