Contracting

[Glompbot]

It looks like if I get this job I'm going for, I'll be contracting through an agency
What I do know is its guaranteed 37.5 hours per week, and I get paid for overtime/etc.

Before I go to my interview, is there anything I should be wary of or ask?

I had a good chat with still life today, so I know a few things, but I just want to put this out there for general info.

Thanks :D

[Holster]

My only advice is dont let them shaft you on the rate.

[Glompbot]

What do you mean by that exactly?

[Holster]

negotiate, it is very rare that a contracting rate is set (unless it's helldesk), they always offer you the lowest amount they think they can get away with.

do a bit of research and find out what they are (and other companies) paying other people in similar roles

[Glompbot]

Well, I've asked about what they've offered other staff... about $22 an hour

And its Tech support with a fruit company... Callcentre drone work.

[Frau Farbissina]

will probably also mean that if you get sick and don't get to work you won't get paid, which is why you should be getting paid a bit more than a full time employee doing the same job. Of course with office temping that's not usually the case.. gotta love that office temping ;)

[Glompbot]

Yeah, I know, no sick days... I've already asked my friend who works there.

[Enthalpy]

I believe they mean don't let them get away with contracting you at a low hourly rate. For contracting you should typically aim for 40% higher than your hourly rate as an employee. This allows for holiday and sick leave (which they don't pay you for) and for your super contributions which you have to pay out of your hourly rate.

For example - say in your old job, your salary (ex super) was $50k.
Based on a 37.5hr week (peh like that ever happens) and about 47 workable weeks in a year (allowing for annual leave and pub hols) you end up with an hourly rate of $28.36. This translates to a contracting rate of ~ $40/hr.

nb some ppl like to include the 2 weeks sick leave in calculating your workable weeks.. Personally I feel you shouldn't set out to be sick for 2 weeks of the year, especially in contracting - but if you do it would push the contracting rate up to ~$42/hr.

On top of that you need to work out if you will end up earning > $50k as a contractor in the financial year. If you will, you have to - at some point when you are close - register for GST and then start charging your client the extra 10%.

Other general things to keep in your mind is that if you go down the contracting path you are also becoming a salesperson. Every job, every person you meet in professional circles may call upon you for work, or be your next boss so always build up that network of contacts and pimp yourself. About 4-8 weeks before your contract finishes, contact these ppl and let them know of your upcoming availability. This helps avoid the slump between contracts.

You're then really only 1 step away from effectively running your own business (which is what I do) and you then get the additional joy of revenue forcasting and managing staff / sub contractors (although the rewards more than make up for any additional headaches). Contracting probably has the best of both worlds, however it's probably the least secure of the 3 options.

[Enthalpy]

Oh - another thing. As a contractor with your own ABN check whether the agency provides work cover or whether you have to organise your own. Employees are covered by the company's work cover policy, however contractors aren't included in this coverage.

[Frau Farbissina]

Based on a 37.5hr week (peh like that ever happens)Hmmm.. never worked in a public service job, have ya? ;) I miss the hour-and-a-half lunch hours at the pub and running away at 4:30

[Enthalpy]

Hmmm.. never worked in a public service job, have ya? ;) I miss the hour-and-a-half lunch hours at the pub and running away at 4:30
Nope :( I have seen those who do though. While working for one eLearning mob I was often over at NSW Police when they were next to Hyde Park (2002). As a visitor you're always supposed to be escorted by the person who signed you in. Was stuck fixing a problem one day and didn't finish till 5pm. Place was a ghost town and I had to find someone to let me out (as you need a swipe card to open the exit gate as well as to get in).

[Glompbot]

OK

What hourly contracting rate would I need to end up with $700ish per week after tax?

Ideally I want as close to that as possible... cause I'm kind of on a tight budget.

[dozer]

you would need some accountant advice and setup some kind of tax avoidance operating as a company.

[Glompbot]

I wouldn't be working as a company though would i??

[Enthalpy]

OK

What hourly contracting rate would I need to end up with $700ish per week after tax?

Ideally I want as close to that as possible... cause I'm kind of on a tight budget.

$27.95 would get you $728 take home - but that's without applying the 40% rule to allow for annual leave etc. This figure includes the manditory 9% super, but doesn't include the 40% loading you should aim for as a contractor.

[Glompbot]

Bugger.

I have a feeling I'll probably only get $22 per hour....
which would be a huge paycut.

[Enthalpy]

I wouldn't be working as a company though would i??

When contracting you are operating as a sole trader. You have to get an ABN (or get stuck with withholding tax - read lose 50% of it till end of fin year). In many aspects you will be no different* to a partnership or a company in regards to the fact that you will have to start doing Business Activity Statements, organise your own super and work cover and you don't get paid if you don't work (ie holidays have to be factored into your working rate).

* Obviously there are big tax differences between a sole trader and the others, but it does mean you get to start claiming business expenses against your revenue. income = profit = revenue - expenses - tax (paid either quarterly or yearly depending on how much you earn).

Some agencies make the finances a bit easier for you by treating you more like an employee.. they withhold your tax for you and pass it onto the tax man, others pay you the whole amount and let you deal with it.

If you are going to start this, it's a good idea to talk to an accountant as dozer said and see how they can best save you as much as possible.

[Glompbot]

Hrm... I've got a better idea of what to ask for in regards to my pay at least.... I've always gotten screwed over on that in the past...

The whole contracting thing is so confusing. *sigh*

I'm not even sure if I'll be taken on as a contracter or an actual employee yet... but i've been told everyone starts as a contractor, so I thought I'd better prepare for that.

[Grumblefish]

I live with a guy who's a contractor, and he has to work his arse off.

[Enthalpy]

Bugger.

I have a feeling I'll probably only get $22 per hour....
which would be a huge paycut.

Well just on that alone $22/hr = $20/hr after super is deducted (9%) which = $750 per week BEFORE tax, or about $39k+Super if it were a real job.
$39k translates to a takehome of about $583/week.

[Glompbot]

Some agencies make the finances a bit easier for you by treating you more like an employee.. they withhold your tax for you and pass it onto the tax man, others pay you the whole amount and let you deal with it.

Well, it will be through an agency like the above... from what I've been told by employees at the moment...

[dozer]

as a contractor i can claim substinence (lunch), travel and any purchases that may relate to my business such as cumputer equipment as a tax deduction. i would recommend paying an accountant, it will make you money in the long term providing your rate makes it worth it, they will be able to advise you of this.

[Enthalpy]

Hrm... I've got a better idea of what to ask for in regards to my pay at least.... I've always gotten screwed over on that in the past...

The whole contracting thing is so confusing. *sigh*

I'm not even sure if I'll be taken on as a contracter or an actual employee yet... but i've been told everyone starts as a contractor, so I thought I'd better prepare for that.

Contracting does mean more paperwork each year + can take some a while to get used to it - however it does allow for some great opportunities to reduce your tax each year. Things like your Car and any IT gear you buy, can be factored in and effectively end up costing a fraction of their price as they come out of your revenue, not your profit.

The first 1 or 2 6 month stints you do as a contracter are often at a lower rate than you'd hope, but after each job, you should be able to start commanding a higher and higher fee, esp if you're keeping up your training etc and get excellent references from previous clients.

[Glompbot]

Well just on that alone $22/hr = $20/hr after super is deducted (9%) which = $750 per week BEFORE tax, or about $39k+Super if it were a real job.
$39k translates to a takehome of about $583/week.


eergh... shiit...

Jesus, contracting sounds like it sucks.

[Enthalpy]

eergh... shiit...

Jesus, contracting sounds like it sucks.

Contracting doesn't suck, in itself. It may just be a case of it's not the right time for you to consider a change. I don't know your background, how many years experience do you have in the helpdesk field? Do you have any experience or skills that would warrant getting $28ph instead to meet your take home goal? Mentioning things like that to seperate you from the crowd justify the increase in remuneration.

[Enthalpy]

eergh... shiit...

Jesus, contracting sounds like it sucks.

Could also just be these guys are paying below average. Quick look on seek at helpdesk shows a few jobs on the first page offering the sort of $$ you are after with only a year or so's experience required. (Searched for Sydney, Any area, IT, Helpdesk, Contracting)

[Glompbot]

Contracting does mean more paperwork each year + can take some a while to get used to it - however it does allow for some great opportunities to reduce your tax each year. Things like your Car and any IT gear you buy, can be factored in and effectively end up costing a fraction of their price as they come out of your revenue, not your profit.

The first 1 or 2 6 month stints you do as a contracter are often at a lower rate than you'd hope, but after each job, you should be able to start commanding a higher and higher fee, esp if you're keeping up your training etc and get excellent references from previous clients.

Well, if I get this job I plan on getting my CCNA... so hopefully that + apple experience (the job i'm going for) + the 2 years of tech support ISP experience SHOULD get me a better job.

Ungh, I guess I need to decide if its worth a pay cut... even if I only take this job for a year its more experience plus allows me to work hours which means I can go back to tafe.

We'll see how the interview goes in 11 hours time :/

[Glompbot]

Could also just be these guys are paying below average. Quick look on seek at helpdesk shows a few jobs on the first page offering the sort of $$ you are after with only a year or so's experience required. (Searched for Sydney, Any area, IT, Helpdesk, Contracting)

Unfortunately, I am not help desk.... so there is a big difference there... Tech support and help desk roles generally have about 20k pay difference. I don't have the knowledge for any well paying helpdesk jobs. :/


I'm sleepy, I'll sleep on this, and maybe post back after I've gone to the interview tomorrow

Thanks anyway, I'm a little bit more prepared if I need to discuss what I expect to be paid with them.

[Enthalpy]

Unfortunately, I am not help desk.... so there is a big difference there... Tech support and help desk roles generally have about 20k pay difference. I don't have the knowledge for any well paying helpdesk jobs. :/


I'm sleepy, I'll sleep on this, and maybe post back after I've gone to the interview tomorrow

Thanks anyway, I'm a little bit more prepared if I need to discuss what I expect to be paid with them.

Ah - for some reason I read as helpdesk (need sleep). If it's the going rate, there's not a huge amount you can do about the rate unless you have some fantastic skills that can make use of. Getting a CCNA will help get you to a higher role. I saw some on seek where there were substantial increases in pay rates. They required a degree as well, but you should still get a significant jump in pay if you get your CCNA.

Best of luck with the interview - after all this talk about pay rates, don't forget the golden rule of not ever focusing on pay rates during an interview ;)

[Holster]

The issue of when rates will be discussed is really dependant on the process they have. My rates were discussed after my 4th interview, with the recruitment agency. In some cases if you are being hired directly by the company you will dicuss rates with them before the final shortlisting.

The company I am contracted to hires people all different ways.

I was hired through an employment agency, 1 guy on my team was hired directly by the company and told to find any agency he wanted, and another guy on the team was hired directly and the invioces the company.

The only good thing about being treated as an employee of a recruitment agency is that your get paid on time, if you have your own abn and invoice you are at the mercy of accounts payable if you are on a tight budget this is something to seriously consider.

[dwarfthrower]

eergh... shiit...

Jesus, contracting sounds like it sucks.

It depends on your skills, experience and circumstances.

The most important thing is to be prepared. Find out not only what this company are paying, but also what the average is around Sydney for the same sort of roles.

Most of the technical stuff has already been covered off:

Find out whether the agency is paying your tax or leaving it for you to worry about - some places just write you a cheque and you need to work out how much to put aside for the tax man.
Check to see if the rate covers your super, if it does whether you need to organise a personal super fund.
Make sure the rate is enough to cover you for your annual leave.
Look into income protection insurance - with contracting it's a matter of "don't show up to work = don't get paid" whereas employees tend to be able to ride out a week's worth of the flu or gallstones without issue, such things can be financially crippling to a contractor.
Get an accountant. Unless you are one, or are closely related to one, find one.
It's ok to change jobs for a paycut as long as it's a strategic move. If taking a paycut for a few months means better job progression in the future then go for it. As long as you enjoy the work and have enough cash to let you do the things you want to do.

[Glompbot]

I don't understand the annual leave thing.

As it is I don't take holidays, I've never taken a break when changing jobs... I don't really have an overwhelming desire to take a few weeks off *shrug*... All I need to do is take one day here and there off work, and I generally only do this if I've got something social which clashes with my work hours (I work nights at the moment)

I'll use my parents accountant... My dad was a contractor for a very long time...
I also have a financial planner through AMP who I can speak to for free as well if it comes down to me having to organise everything.

[dwarfthrower]

I don't understand the annual leave thing.

As it is I don't take holidays, I've never taken a break when changing jobs... I don't really have an overwhelming desire to take a few weeks off *shrug*... All I need to do is take one day here and there off work, and I generally only do this if I've got something social which clashes with my work hours (I work nights at the moment)

OK... well at the moment I presume when you take time off for one of your social engagements, you take it as annual leave which means you still get paid for it, so you still take home ~$750.00 for the week even though you've only done four shifts instead of five.

As a contractor, you won't have an accrued surplus of leave to dip into whenever you like, so if you want to take a day off for something, you'll have to cover your own costs as you'll only get paid for the four days you worked meaning (if the pay was the same) you'd only take home ~$600 .00 for the week.

It's not just annual leave - also sick leave, bereavement leave and (entirely unlikely I know) maternity leave. That you might have to take into account. If you get sick for a week does the contracting rate allow you to put a bit away so that you can still pay the bill. That sort of thing.

[Glompbot]

OK, well, I got the job and I accepted (they told me IN THE GODDAMNED INTERVIEW!)

its 22 an hour after super is taken out... they'll keep me on for at least 12 months unless there are major issues... and I'll get made perm before that 12 months if i'm good, or after...
the job agency is going to do the tax stuff so I'm essentially treated as an employee of the agency...

which makes it all easy for me.

The agency is going to call me this afternoon to discuss it :D

[Holster]

One thing you need to clear up with the agency when they call is the OT rates, 1 contract I was on I got time and a half on Sat, and double time on Sundays, another contract I got a flat hourly rate.

Oh and congats, getting out of ISP support is the best thing you can do for your career :D

[Glompbot]

Flat hourly rate for extra hours.

Anyway, i'm off to get a facial :D

[Cassa]

Congratulations :)

A shame you're not getting quite as much as you'd like, but you'll get the chance to move up I am sure.

[Enthalpy]

Congrats on getting the job Sapia.

At least that rate was excluding super which will bring it a bit closer to your target take home amount. Just keep working on that CCNA and get ready for a nice jump next year.

[Glompbot]

Yeah, I just need to find $800 to start my CCNA :D


WHEE!
Waiting for the agency to confirm my rate of my and start date, then I hand in my resignation.

WHEEEE!