Before making the leap from a permanent SAP role (or Oracle/IT) into a contract SAP career, there are a few things you need to prepare and understand.
Choosing how to operate
Agencies and clients require that SAP contractors work through a limited company. Your options are:
- Working for an umbrella company
- Starting a limited company
It’s always advisable to seek professional advice from an accountant, to understand which approach is most suited to you. In April 2016, for example, HMRC announced that contractors who are ‘supervised, directed or controlled’ in their occupation can no longer claim for Home to Work Travel and Subsistence. Expert advice can be found in umbrella companies, or accountants.
SAP contracting through an umbrella company
An umbrella company is an organisation that acts as a middle man between you and client, handling all payments and tax issues. The main benefit of this approach is you simply need to do your job, and submit a timesheet. You’ll then be paid as you would in a permanent role, with your tax and National Insurance deductions already made.
|Pros of working through an umbrella company||Cons of working through an umbrella company|
|Mostly hassle free. You submit timesheets to the umbrella company and will be paid as per their timescales/terms.||You pay National Insurance and tax on the money you earn, regardless of expenses incurred.|
|The umbrella company handles all your tax and National Insurance payments.||You pay the umbrella company a fee for their services.|
|Insurance policies are provided as part of the service.|
|The umbrella company will chase overdue payments as part of their service.|
You should speak to your umbrella company to understand how and when you get paid. Normally, the faster you get your timesheets in, the faster you get paid!
Setting up and working through a limited company
Creating a running a limited company involves costs and additional work, but where contracts and working practices permit a contract to be considered outside of the scope of IR35, a limited company can result in tax savings. You will probably need to hire an accountant for an ongoing monthly fee and you will have to spend time each year preparing documentation (invoices, expense receipts etc.) for the accountants to be able to complete your annual company tax returns. You will also have to complete a personal income tax return.
Starting and running a limited company
Starting a limited company is an easy process that can be done online or by post. Once it’s done, you then invoice clients your work for through the limited company, you then get paid by your company in the form of annual dividends and/or a regular taxed salary. You should seek formal advice from an accountant on any and all questions about limited companies and tax.
|Pros of working through a limited company||Cons of working through a limited company|
|Tax efficient.||Paperwork – even if you have an accountant, you will need to provide them with invoices and receipts.|
|Ability to register for VAT, reducing the costs of goods and services you use as part of your business.||Hiring an accountant (often for 12 month period minimum).|
|Ability to manage tax payments on an annual basis rather than monthly deductions.||Cost of insurances (also 12 month minimum).|
Update your CV
When you’re hired for a fixed-term or contract SAP position, you’re being brought in to complete a very specific task. Recruiters and clients will want to see examples of specific SAP experience that matches or is related to that task.
Whilst you can talk about the projects you were involved in, you will need to mention the specific technologies you worked with. Do this for all previous roles. Rather than say you worked with “a range of server side languages”, explicitly state what those are.
Update your LinkedIn
Ensure your entire LinkedIn profile is completed. Whilst you want to keep it brief, don’t just list job titles of the past. You should at least include a sentence or two detailing your responsibilities and the specific technologies involved – use terminology that recruiters and employers use to ensure your profile is found.
Find specialist recruiters
You also need to get in touch with industry specialist recruitment agencies. At Whitehall, we’ve built client and candidate relationships across the globe. We’re the partner of choice for companies searching for the very best SAP, Oracle and IT specialists.
Ways you can get in touch with us: