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Contracting through umbrella company vs setting up your own

  • 14-11-2005 3:12pm
    #1
    The Troll
    Closed Accounts Posts: 686 ✭✭✭


    I've been an IT contractor for the past 2 years. For the past 18 months i've been with an umbrella company that do my finances, taxes and every other administrative duty for me. I pay them 5% of my gross salary per month which is quite a large amount for them to receive(i feel it is anyway). Recently, i've started to feel slightly ill at ease about the deal I have with them.

    1. I've transferred a few assets into the company to lower my taxable income (currently about €4,000s worth)
    2. When i make purchases, they don't refund the VAT to me. They do however refund VAT for home office and mobile phone bills.

    Can someone please explain the pros of setting up my own Ltd company as opposed to using an umbrella company(aside from the 5% charge). I realise, i'll probably end up paying 5% of my wages to an accountant anyway, but what differences will there be with VAT refunds etc if i had my own co.

    Thx.


Comments

  • #2
    The Troll
    Closed Accounts Posts: 686 ✭✭✭The Troll


    Anyone?


  • #3
    GP
    Closed Accounts Posts: 250 ✭✭GP


    The Troll wrote:
    I've been an IT contractor for the past 2 years. For the past 18 months i've been with an umbrella company that do my finances, taxes and every other administrative duty for me. I pay them 5% of my gross salary per month which is quite a large amount for them to receive(i feel it is anyway). Recently, i've started to feel slightly ill at ease about the deal I have with them.

    1. I've transferred a few assets into the company to lower my taxable income (currently about €4,000s worth)
    2. When i make purchases, they don't refund the VAT to me. They do however refund VAT for home office and mobile phone bills.

    Can someone please explain the pros of setting up my own Ltd company as opposed to using an umbrella company(aside from the 5% charge). I realise, i'll probably end up paying 5% of my wages to an accountant anyway, but what differences will there be with VAT refunds etc if i had my own co.

    Thx.



    not sure abuot why they don't refund the VAT..maybe there is none to refund?

    I guess if you're not happy you should change. Go and speak to accountants about costs etc and way up the 2 options.


  • #4
    The Troll
    Closed Accounts Posts: 686 ✭✭✭The Troll


    GP wrote:
    not sure abuot why they don't refund the VAT..maybe there is none to refund?

    I guess if you're not happy you should change. Go and speak to accountants about costs etc and way up the 2 options.

    There is definitely VAT paid on my equipment purchases. Possibly the VAT gets repaid to the company as it's company equipment being purchased. The other VAT seems to be VAT incurred on personal expenses.


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