Starting in freelance in the UK, is that complex or not?
 

Hi my favourite club, I need your help.

More and more I wonder if I must stay or not in my current company. It's a small company (10 people) with a new IT department set up last year. We're 3 IT developers and I'm the team leader. Eveything could be perfect if I wasn't more and more bored with that job. My mates are very good guys but sometimes I'm fed up doing their stuff again and again. Then most of the time I disagree with my boss about the way a problem must be dealt with. Sure I'm not always right, but I have much more experience than her for the specific job she employed me (web systems development). So days after days, I can't find the motivation to go to the office. And more and more I think about working for me. So I always agree with the boss, and I'm always really responsible for the mistakes :)

Is that a difficult thing to start? Any advice of how to do it (or why not to do it) will be more than welcome.

Go for it. I have clients who have. Fairly easy as far as I am aware:

Register with an agency - Dibble?
If do all your work through them then will probably need limited company or be put in one of the agency's composite ones.

Thats all! Apart from earn lots and enjoy the work more.

Tonio, I guess you could say I 'freelance'. I contract using a management company. It's quite easy to setup and plenty of different companies do it.

If you want to know who I use etc just send me a u2u and I'll give you some contact information.

Can't comment on the IT side Tonio, but having only had about 12 months as an employee in the last 20 or so, being self employed and running your own business is infinitely preferable, especially if you are someone who can't stand to be ordered around by people who know less than you do.

I've also just set up a company, using an agent because for what it costs it's not worth doing it yourself. If you need any free advice on that, U2U me. Happy to tell you what I know about company formation, salary vs. dividends etc. People who know more about it than I do will be along shortly to warn you about IR34, no doubt. I think you're safe if you've got income from a number of sources i.e. not on a single contract but several customers paying you separately.

Anyway, my advice is Go For It. We'll start a new clique ;)

Well said Ruth - IR35 though:D

Ditto on company formation. I set up about 4 a month so any advice you need...

If thats the way you feel Tonio, give it a go, although it may seem a little daunting at first, its actually pretty straight forward, just find a good accountant and get some advice.

It it doesn't work out you can always work for someone else again.

Initially you'll have less security, and i can appreciate that a lot of peolple want the security that being employed by others brings, also the earnings at the beginning can be rather variable, and its not always as easy as people make out working for yourself (cash flow, bad debts, vat and tax man etc)

Having said all that i haven't been 'employed' since i was made redundant in 1980, and i wouldn't want to change back.

The days of jobs for life with the likes of the banks etc are long since gone, and i prefer being master of my own destiny.

Go for it.

I couldn't agree more with whats been said so far, I did it 15 years ago, still going and wouldn't change a thing.

Do some homework get a good accountant, be careful of IR 35 and the C660 bill the revenue are pushing at the moment.

If thats the way you feel then your only regret would be not giving it a go.

Good luck.

Tonio,

Give this website a look www.shout99.com lots of info for contractors.

Yes that is a good website for contractors.

Thanks so much your help guys and girl. I'll think about that during the next holidays... that may be my motion for 2006 :)

Lots of benefits. Oh, yes.
 

I freelanced doing advertising, design and retouching work for about 8 years - mostly enjoyable and didn't get too many non-payers. :flame:

I would say that you line of work would be pretty good for freelance contract work - either on a day to day basis or a contract basis. The hardest part I found when freelancing was talking about job costs - very easy when working for a company and it's not your money but harder to look someone in the eye and say it's going to cost xyz. It gets easier in time as you get a feel for how much people charge and what they are used to paying. So, I would definitely get a set fee in mind for what you want do and realistically know how long projects take - you don't want to be working for nothing. Also, the more clients you have, the more picky you can be about what work you want to take on.

Sorry, I'm waffling but in a typically powerpoint style, here's my advice:

1. Know your fee structure and how competitors charge. We use web programmers and developers here and they are often really busy but the going rate for them is £300 per day.

2. Have reliable back-up people who can help you out on technical stuff - and know how they charge. Do you want to make money on their time or get them to invoice direct.

3. Get VAT registered - you don't need to be earning over a set amount to register, it only becomes compulsory after a certain figure. All your computer and office equipment will be tax deductable and you will also be able to claim back the VAT on most things. You also have to fill in returns every 3 month which means that you have to keep up to date with your accounts. Oh, and make sure it assessed on payments received and not on invoices sent i.e. only pay the VAT when you get paid.

4. Motorcycles are (or were) tax and VAT deductable. I bought 3 new bikes and got all the VAT back on them all as I classed it as company transport. I can't remember exactly how it works but as I was registered from my home, every time I went out my door, I was on business so petrol and consumables i.e carbon fibre :saint: were also deductable.

5. Make sure you are not bound by your contract about contacting your companies clients for work. Some (a lot) companies have legal stuff about not being able to work for existing clients when they move onto competitors. If you don't have such an agreement, take your favourite clients out to lunch and sound them out about the possibility of doing work for them at a reduced rate. Obviously, this is dangerous but you only need a couple of good clients to begin with and you'll be sorted.

6. Supplement your own clients with agency work. Money's a lot worse but will still be better than PAYE and without the financial risks. You will still get paid by the agency rather than having to chase the clients yourself.

7. Oh lastly, as a start up and with a good accountant, you will end up paying a lot less tax. I think when I started, I ended up paying about 15% as opposed to the 40% I would have been stiffed for through PAYE and this was without the extra savings on my motorbike stuff.

8. Wait until after Christmas - get your bonus first. :devil:

Good luck whatever you decide to do.

Best regards

simon

[Edited on 22-11-2005 by marchesini]

Business Link which can be a source of good free help & advice...

http://www.businesslink.gov.uk

http://www.business.gov

up, up, & away......... :burn::burn:

Tonio, PM me and I'll send you my number over .. can answer most questions on this specific subject .....

Tonio, am in exactly the same boat myself. I am a network admin and have a great team and we all get on well, apart from the new boss who is someone's mate's brothers uncles dogs neighbor and the guy is a complete yogurt.
There are big shakeups at the moment in our co, and i am hoping for vol redundancy as i have been there for 15 years. I want to try it alone too, and with contacts i have made over the years i am sure i can support many smaller localish companys and earn a sallary just specialising in security, AD, exchange server, routing / VPN work etc etc hell i would even return back to desktop support if the money was there if needed.
Hope it all works out for you and like yourself next year is going to be a testing one i think

Simon, very interresting post. I wrote a big answer to it but forgot to post it and closed my browser :lol: I'll archive that post...

Dibble, cheers for the offer mate. I think I must speak to a few people before going further (my boss and my mother actually :lol: ). But I may have a few questions for you after the holidays...

crm250, hope it will work for you. I think our cases are slightly different as I'm in the UK since 1 year and if I'd do that now, the only customer for me I can think for the moment would be my current boss. I need to make me known :D

You have mail at your yahoo.co.uk address....

was good to re-read that :D

Go for it Tonio, if you're good at what you do you shouldn't have much trouble getting enough work in. You need to be able to market yourself or have someone to do it for you, it's not that hard though, there's so many incompetant muppets out there and it's easy to get work by just being competent and organised. I've been self employed the last couple of years (though not in IT), I've never worked so hard or so many hours, but I wouldn't go back unless I had to, no way!
As to being VAT registered, look into the flat rate scheme, you get to claim your vat back without complex paperwork etc, worked well for me for a while!
Good luck . . . .

Cheers mate :)
Looks like I'll have to get in touch with my sponsor to talk something else than bikes.

Actually, just reading some of the replies above and I thought Marchisini's advice was absolutely spot - on!!! :)

You'll need to check that your current solution remains compliant mate, if you are currently in a "composite" then the new IR56 legislation will screw you, and dont let your management company tell you any different, if you are already set up as a stand alone LTD comany then you'll be ok.

Tonio, you have a PM

Hes right ya know....

Only coz no one would have you. :)

But Dibble, surely if hes a 1 man Ltd Co he'll be screwed by IR35 unless he has a good contract...

As my new accountant can you expand on this?

email sent.

Cheers,
Tonio.

Well sort of. Not an area of expertise but have had previous dealings. Best places to get info on this are:

http://www.shout99.com/contractors/index.pl?n=10

http://www.startups.co.uk/What_is_it...F1oEYn0nA.html

http://www.startups.co.uk/IR35_Who_d...P1oEYn0nA.html

The second 2 are the best.

In reality it is still a very grey area and always will be. If you are a contractor it is likely you have very little expenses (ones I have dealt with have at least) so the calculation actually benefits you slightly initially at least:

If you are under IR35 basically you take the total income, knock off 5% for expenses and the rest has to be a salary (which is where you lose out cos dividends save money).

Don`t forget that some compan`y will not deal with you unless you have a schedule D insurance number and there hard to get hold of, so I`m told.

I have a normal national Insurance number as well as a schedule D but there`s so much hasle with tax, national insurance etc I just declare my stuff as unearned income, as I`m not VAT registered, and don`t bother using the schedule D as they can`t get there tiny mins around the fact that I have a full time job and do the accasional freelance work.

Good Luck and get a good accountant.