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I am currently in a permanent position and considering making the jump to contracting as the financial side is considerably better. I'm a senior developer and have over 12 years experience as a .net developer. What considerations do I need to make when making the switch? Is it a good idea for someone with three small kids?

closed as off-topic by Philip Kendall, gnat, mxyzplk, dwizum, Martin Tournoij May 15 '18 at 0:49

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    The advantages and disadvantage of each vary a lot depending on why you want to do the switch. Having recently done it myself one thing that changes much is the way I see days off. For example here in Belgium the month of May is packed with national holidays and as a permanent I was glad to see it coming whereas as a contractor I only see it as a month with less billable days... regarding stability well I never considered any of my permanent jobs as being a job for life anyway so I don’t mind it being more "official" with shorter term contracts... – Laurent S. May 12 '18 at 10:13
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I have worked alongside several contractors in the UK who had families with small children. They have done well for themselves, so while it is not guaranteed, it is certainly not unheard-of to have a family and contract.

The considerations are:

as a contractor, you should be making roughly 2 times more than you would have as a permanent. So if you were on 100K before, you would want a day rate of around 7-800.

as a contractor, you should be aware of tax liabilities and issues that come into play after ~2 years. Generally all contractors find a new role after 2 years to work around this. (Example, you can no longer use your company to pay for transport costs, and you become at-risk of IR 35 issues)

as a contractor, you should be aware of what IR 35 is. It's not an impossible obstacle, and most contracts will have wording to ensure you do not fall under it. You should also be aware that there are contracting bodies in the UK that, for a small fee, offer to litigate in your defense

as a contractor, you need a good accountant. Ask for references, and generally tend to spend more than less on your accountant. They're invaluable in saving your company money, and also ensuring you don't get fined or otherwise run foul of HMRC.

as a contractor, you are now in charge of your own training and skills development. You won't be on a track to management within a company, and you won't get training. Please don't be afraid to use your extra income to get engage in further training.

as a contractor, while you should do a good job where you are, you must always be looking for your next role. This will involve meetups, networking and checking job roles every few months, if only to see what technology/trends are appearing.

Contracting is very lucrative, but it really is only if you love IT and want to see yourself doing it for many many years. You won't get management training in the companies you work in, and your rates will be dependent on how well you can upskill to newer technologies (eg scala v java).

Also, be aware that when contracting it is better to get 2-3 offers simultaneously, and then turn down the lower paying ones. Invariably, companies have more money to offer contractors, and you can net a very swift 30-50+% increase in your day rate through strong negotiation. This is much easier to do with a fallback role!

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You can make the switch if you are confident to get another permanent position, you have an amount of savings enough to cover you for some months (if you minimise your spending), and you got one decent contract offer.

The idea is that the income from six months contracting should cover you for six months. You don't get the complete tax benefits if you already were employed for the tax year. And one thing that you can do as a contractor is only take the money out of your company that is most tax efficient and leave the rest in the company - you can make up to about £45,000 net from £54,000 gross income; above that you pay a lot more taxes. (You can make a lot more with low tax payments as long as the money stays in the company).

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When working as a contractor (with or without a family), you need to put aside enough money so that you can live a good few months without any pay.

You also need to bear in mind that you have to pay for your pension, sickness and sort out your own tax (perhaps an accountant).

So, on the outside the money looks terrific. But taking this into account the deal may be not a lot better than permanent. You will have to do the maths.

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