2013-10-21
As the demand for contractors within the actuarial sector increases it is clear that there is little information available for actuaries wanting to set themselves up as contractors. The reason why individuals might want to go contracting varies from person to person but boils down to three main things 1) Earnings 2) Variety of work and 3) Flexibility to work and then take a break to go travelling etc. Contracts would typically be day rate contract roles. Companies would have a particular project that they need completed which may require specialist technical skills or a temporary increase in resources.  The company defines their need and the contractor shows how they can match these needs. There is normally an interview process but these interviews are conducted by hiring managers and technical employees - HR tend not to be involved in most companies. Once a contractor has been identified the contract has a start and an end date and can be extended by mutual agreement.  Contractor rates are normally negotiated by the agency. Once the contractor starts work the contractor completes a time sheet each week which is signed by the company.  This time sheet is evidence of time completed and is what enables a contractor to produce an invoice. The contractor bills their agency and is paid by the agency within 5 days of submitting their invoice. In order to invoice as a day rate contractor you need to set yourself up as either your own Ltd Company, an umbrella company or as a sole trader. Setting up a company sounds complicated but it’s actually very easy.  You simply order your company off the shelf and any accountant can set this up for you.  The charges vary but the best deal I know of is €200.00 for the complete set up (anyone wanting the details of this company then please feel free to contact me and I will pass the details on to you). Being a limited company protects the employer from any PAYE/PRSI liabilities but also enables you as an individual to take advantage of a variety of benefits (expenses, pension etc) which your accountant or book keeper will make you aware of. Some contracts are very short term and where you as an individual know that you will be a permanent employee again within the next 6 months but you need to be bill as ltd company for a particular contract then the solution is to use an umbrella company.  There are a variety of service providers in this regard but essential the company acts as your vehicle for billing and then pays all the taxes and charges needed.  You are given the option of being treated as an “employee? for tax purposes or you can opt to become a short term director in the umbrella company.  This service does mean that you will need to pay monthly fees and is only an option if the contract is short term. Whilst setting up your own company is easy – shutting it down can be painful so as a short term option using an umbrella company eliminates this. Being a sole trader is an option but many hiring companies will no longer work with sole traders.  If a contract becomes long term then there are risks for the company in taking on the services of a sole trader.  The sole trader needs to have at least three different clients in any tax year to justify the sole trader status.  If the revenue deems that actually there is a master servant relationship between you and the hiring company and you are billing as a sole trader then the revenue may deem that the company has to pay employers PRSI.  If the contractor runs off without paying their taxes then the company may become liable.  As an agency at Raretec we will not work with sole traders unless it’s literally for a 1 – 8 week project. The company is not recruiting a person; the company is recruiting a set of skills that they need to deploy.  It is an important distinction as whilst normally contractors are treated as part of the team and will be treated professionally it is the skills of that individual that the company is looking for. The company is not looking to develop your skills as a contractor as they would a permanent member of staff. It is worth mentioning that some companies also offer roles on fixed purpose contracts.  This is where a company needs a temporary resource but wants to process them on their payroll to reduce the expense to the company. A fixed purpose contract can be extended for up to three years without explanation and a fourth year with written justification.  If it goes beyond four years then the individual automatically becomes a permanent member of staff and is then entitled to redundancy if the position is eliminated. Whilst on a fixed purpose contract the individual is entitled to the same benefits as a permanent member of staff to include holiday entitlement, sick pay, pension etc.  Individuals take these contracts to get a particular experience or as a way of getting in the door with these companies.  In times where work can be difficult to find particularly at the junior end it can be a case of taking a fixed purpose role or not working.  The option of fixed purpose contract work is one of the reasons why Ireland is seen as having a flexible work force and is part of the attraction for foreign investment in Ireland. If you are interested in becoming an actuarial contractor then do get in contact on 01- 5311400 or 0862931015 or through email at jacqui.vanteutem@raretec.ie