Back to IT....contracting!

pclancy

Im having a bit of a mid twenties career-change. Basically I want to go travelling next year as Ive never done it and would like to live in NZ for a year and maybe Canada or OZ after that. I worked as a field service engineer for 2 years previous for a large Dublin firm, then left to start my own business doing the same. There I did some field service and a good bit of sales as well. Finally I left that, worked as a system admin for a year then did 8 months of recruitment which im now bored with.

Im thinking about going for IT field service contracts for about 6-12 months to get some money together and maybe do an MCSE or CCNA along the way to help get jobs abroad when I go, does anyone know how contracters are taxed and how easy it might be for me to get back into IT after basically doing a sales job for the last 8 months? I should be able to put together a good CV and im gonna get server 2003 and brush back on on admin stuff....is contracting worth it? Money seems good but ive never done it before so a bit apprehensive about not having a fulltime role...

brettman

I've been looking for the same kind of information regarding taxation of indepedent contractors. Seems some of my friends doing it in the IT field are getting hit for about 30%, but I don't have many specifics or details. I'd really like to know more about how to predict the tax bill when contracting. Corporate tax is only 12.5% in Ireland, but it doesn't seem like it applies.

Also, what kinds of companies are best to set up from the standpoint of an independent contractor? Are there any ways to squeeze out (legal) tax advantages as contractor?

pwd

I contracted as a sole trader, which is cheaper than setting up a company. If you are making big big money there may be some advantages to setting yup a company (something to do with charging VAT), if you want to trade as anything except for your own name you need to set one up. If you set up a limited company you can't be sued personally, only the company can be, so you protect yourself in that manner too.
I'm a bit vague on the details but I remember that I concluded that if you were working for non-huge rates, you weren't concerned about being sued for something, and the companies you were contracting for were ok with it, being a sole trader was the way to go.

As a sole trader you can get some legal tax advantages. You can claim expenses for travel to and from work, depreciation on items you buy for work (like that big screen monitor ), and if you are working at him you might even be able to claim the rent/mortgage on the portion of your living space that you use as an office.
Online tax returns are easy. Tax office staff are very helpful in my experience. You ought to be careful about keeping receipts for anything you claim as epxenses but you are unlikely to need them unless your claims seem outlandish afaik. You also will pay all your tax at once so you need to make sure you don't spend the money you need to pay it.

You don' pay prsi if you're self-employed, so you may not be eligible for the dole if you find yourself out of work for a few months.

brettman

Thanks for the info. Can I ask what kind of tax rates you pay (paid?) as a sole trader? That is really the crux of the bicuit, as far as I'm concerned. Also, some people have recommended third party companies (like CXC) to handle the paperwork etc. I've set companies up in a couple of different countries, and can't imagine that its so hard here, but then again, this is Ireland after all...

pwd

same income tax rates as I would have paid with the same income as an employee, except I did not pay prsi, and I was able to deduct expenses. So slightly less tax.
The paperwork is easy and straightforward.

pclancy

Good info there, cheers. Never thought about the prisi thing...I spose the benefits of contracting have to be weighed up against perm work, both have pros/cons. I like the daily rate and 6 month thing about the job im looking at. Would make next years travel plans very possible!

Do I realy wanna do field service again though...

information

pwd wrote:

If you are making big big money there may be some advantages to setting yup a company (something to do with charging VAT),

Sole traders and company are treated the same way for VAT

pwd wrote:

if you want to trade as anything except for your own name you need to set one up.

Wrong

pwd wrote:

If you set up a limited company you can't be sued personally, only the company can be, so you protect yourself in that manner too.

Wrong

pwd wrote:

You don' pay prsi if you're self-employed

Wrong