I am currently employed full time, and have been picking up a couple of clients on a self employed basis, working weekends & nights.
One of my clients has asked me to carry out work four days a week, which would then allow me to hopefully pick up a couple more.
As long as I more then cover my wage with the four days, I am happy.
However, as usual, the decision boils down to money.
How much would you charge for the four days? I currently charge him £15 ph for the work I do now, and it wouldnt really be worth the risk of leaving a permanent job for any less.
Also, if anyone else has any advice it would be much appreciated!
Would HMRC classify working 4 days a week on one client as being self employed? Sounds like employment to me if not full time then certainly part time. Especially if you are working at the clients premises, using their hardware and software, working fixed hours, etc.
What you charge is up to the both of you. If you are happy to charge £15 per hour and they are happy to pay £15 per hour then everyone is happy.
Personally I wouldnt want to work 4 days a week on any client as wouldnt give me time to work on much else. The most I work on any one client is probably a couple of days a month. But then again I have over 80 clients so would be physically impossible working on one client 4 days a week.
I have thought about the self employed/employed status too.
If I do go ahead, I will set up a ltd company.
Also, although it is at the clients premises, I will be looking after two businesses. I have also been asked to process the payroll for both companies, which I will using my own software/payslips etc.
They are also very flexible regarding hours ( I have my own keys to the premises already). As long as I am there at some point in the day to resolve queries in office hours, they dont mind.
The big problem you face, and others (including myself) have come unstuck with, is putting all your eggs in one basket. What if 2 months down the line the work isn't there with that client? I have a rule about the percentage of turnover I allow one client now after a bit of a fright a while back.
That is also a big part of making my decision, it is basically replacing (hopefully more than) my full time wage.
However, I dont think I would be able to cut my hours in work to say three days a week to allow me to build up more clients. So it is now or never really
don't know if its any help but following on from Kris' point about percentage of turnover the guidance is that less than 10% of turnover from any one client is generally deemed to be ok. More than 15% dependancy on a single income source is deemed to be a threat.
10-15% is very much down to your own personal judgement.
There is a first two year exception to the rule but even within that you should attempt to keep as close as possible to those dependancy limits.
Also following on from Mark's point this has IR35 written all over it. If such is deemed the case by HMRC then you will be hit with (with some exceptions mainly around travel) having to run the company basically out of 5% of turnover with everything else as deemed salary.
Note that each role may be judged on its own merits so you can be IR35 and non IR35 for different roles at the same time.
The downers and warnings aside, good luck with the new venture,
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Re Kris and Shauns point about not having too large a % of turnover attributable to one client is all fair and well but would you turn down a client on that basis alone.
Provided I had the scope to take on I wouldnt though you would need to bear in mind that you shouldnt depend on that income should they decide to walk.
I have over 80 clients but 2 of them provide 24% of my income. Did I turn them down because they make up such a large amount of my turnover, no I didnt. But I try to bear i mind that I shouldnt be dependent on their income as if both were to leave then would have a significant affect on turnover. So probably subconciously they get a better level of service that a client who contributes say % of income.
But I look on the positive of how to provide a better service and get more fees from them rather than focus on negatives.
Obviously it would be my main income, however, if I dont do it now I may never! The alternative it to try and build up a client base of say 20 clients, but I would be working 80-100 hours per week before I could go for it full time.
WHAT... There's an option where we don't work 80-100 hours a week!!!
I'm going back permanent for a holiday. lol.
You have basically two options Chris and the route that you go depends upon your attitude to risk.
Staying permanent and building up the business is the slower approach and is the equivalent of approaching things with a safety net.
Biting the bullet you have the opportunity to grow faster but also without the safety net have the opportunity to make a quite spectacular splat mark if you cannot find sufficient clients of the right quality.
There is no middle ground between those two and from the sound of your replies the 80-100 hours per week will be the cost of maintaining an income whilst you build your business.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
In reply to Mark, I actually would refuse work if it was going to represent too high a proportion of my turnover. Following on from a bit of a nightmare I had early on I wouldn't do it again. If I was considering something like that I might as well become an employee again.
I'm with Kris here... I have a client who represents about 60-70% of my income and I'm doing ALL i can to reduce this!!! They already may be in financial difficulty, and i may loose them... and then most of the business... as it pays for my costs such as insurance etc.
By all mean use them short term, but the way to run a sustainable business is NOT to rely on one client financially; you only have to look at these farmers who got into bed with the like of TESCO and Morrisons. First they start off asking for 40% of what they produce, then 50... then 60... the next thing they know they are devoting 100% of what they produce to them and them alone. And then the supermarkets find they can get it cheaper elsewhere and drop them like a stone! BAMN... business goes under...
All I can say, and offer advice (personally speaking), is go for the client, but think SHORT TERM!!!, work on the rest of the client base and grow yourself as quick as your able too. Anything can happen!!!
I have for the last 5 years always had a 'big' client and to be honest yes when I loose them its always a pain but I have always managed to replace them pretty quickly. Infact one I ditched because I had an opportunity with someone else which paid more and was more up my street, so left one week and started with the new one the following week so no gap and I actually earnt more money so no problem with that one. Then last year I lost my really good client due to them moving the business, but 3 months later I have replaced them with 2 new clients who I now earn more money from, so not bad really. I have quite a few smaller ones that are my regulars and a few annuals. I also have alot in the pipeline which could break in a few months time, so I'm hoping that the later part of the year could be my highest yet.
So I personally would take it but with the view to build up the business to fit around it and try and get it down to 3 days a week to give you chance to market yourself and proceed forward. The bit where I fell down was at one point I had stopped marketing myself because I was satisfied with where I was, but this was a mistake and they say that you learn from your mistakes! So now I continually market myself and its picked up because of this.
Also like Mark and Shaun say be careful of the employment rules etc, and don't get your fingers burnt. Good luck with what ever you decide to do.
Hi, just a quick update. Decided to take the plunge and go for it, been about 5 weeks now. Not going too bad, I have around 3-4 days work per week, which isn't great but at least there is room to grow. Enjoying it far more than being in a full time job, even with risks etc.
Cheers! Just trying to find more work! Been ringing accountants within 20 miles for subcontract work, mostly its a no, but some ask for a CV etc. I have managed to get one job from this, so if I get one job out of 100 phonecalls it'll be worth it.
Keep plugging away at the accountants they will come good in the end. I have 3 that I regulary speak to and have clients with all 3 of them, sometimes I refer work to them and sometimes they give me a client or two, I have just made contact with another one and there maybe something there for me in the future. Dare I say it but networking is the way to go, the fruits of your labour will pay off!!
I think another problem was that I started at the beginning of August, so the majority of people were on holiday/covering for people on holiday. Im hoping that people will remember my CV in the run up to 31/1, although I will be ringing up again before then.
Well done Chris on going for it, the work is out there. On the debate about big clients, I have recently had to bounce back from a massive bad debt from my biggest client so you do have to be careful, In my situation it didn't impact on my overall work but did hit me for cashflow as I paid another bookkeeper to do most of the work (I was paying £15/hr and charging £30). Just shows you have to be hot on credit control on these bigger clients.
TO be honest, there isnt as much work as I thought from the bigger client, which isnt great, but does give me the option to find more work. I think any more time there would have been like having a part time job anyway. On the plus side they are great payers, normally within the day of handing my invoice in. Where are you based Rob?
You want bigger clients Chris then Networking is a must! I would think it'd be echoed around too but this is the only way i managed to get big clients.
Definately, Ill look into that. Friends/family always suggest taxi drivers etc, but I can't see the point. They can go to an accountants and have everything completed for around £300.00, doesnt seem worth me getting involved for £50-£70. Id rather have one day a week/one day a month at most type of clients, although a couple of smaller ones are nice for the odd weekend too.
