Bookkeeping subcontracting-Employment law??

Tribezz

Any Ideas,help or contacts on the below would be very much appreciated.

I am setting up a bookkeeping services business whereby I place bookkeepers into various companies to do the day-to-day accounting but they still work for me. Ideally these people would invoice me for their hours and I would in turn invoice my client(+fee of course).
My problem however is that I feel the Revenue will class these people as employees instead of sub-contractors and I will be forced to pay all employee costs(annual leave,public holidays,PRSI). Which will make the business non-profitable and a nonrunner.

Any Thoughts?

Alix

Hi there

if you use these book-keepers as Sub- contractors and they say send you a monthly invoice for their services then they are not regarded as an employee and you are not liable to pay holidays , tax , prsi and all that good stuff. They themselves are deemed as self-employed and are responsible for their own taxes.
Hope this helps some , sounds like agreat idea , best of luck !!

Tribezz

Alix wrote: »

Hi there

if you use these book-keepers as Sub- contractors and they say send you a monthly invoice for their services then they are not regarded as an employee and you are not liable to pay holidays , tax , prsi and all that good stuff. They themselves are deemed as self-employed and are responsible for their own taxes.
Hope this helps some , sounds like agreat idea , best of luck !!

Thanks a mil for the response, as you described this was my general idea. However I have been told that because these subcontractors in some instances will have my contracts as their sole source of income then the revenue will regard them as my employees????

I don't see how the revenue could hold me responsible for a subcontractor not having work elsewhere, I thought surely not my problem. However I have been told by a Lawyer and an Accountant that the revenue would indeed see these people as employees and not subcontractors?????

Any thoughts welcome and appreciated!!

pd2006

Hi Tribezz

Your accoutant and solr are correct. In order for your sub contractors to be classed as sub contractors they would need to have more than one client paying them for their services. So in order for your business to work you are depending on them looking for more than one contractor, if they dont take on more clients and you are their only source of income, the revenue will treat them as employees of yours and you are liable for holiday pay etc.

Also why would they need you if they are already subcontracting, in the sense that they bill you for their fees and then you add a mark up and bill the firm that you sent the bookkeeper to. If the Bookkeeper is subcontracting and has ads in the same papers as you, will a potential client ring the bookkeeper for a quote and than ring you for a quote and compare quotes. you could be potentially in competition with you sub contractors.

Its easier if you go onsite to do the work and as your client base gets bigger you will have no choice but to hire staff be it full time or part time.

Best of luck which ever route you go.

Tribezz

pd2006 wrote: »

Hi Tribezz

Your accoutant and solr are correct. In order for your sub contractors to be classed as sub contractors they would need to have more than one client paying them for their services. So in order for your business to work you are depending on them looking for more than one contractor, if they dont take on more clients and you are their only source of income, the revenue will treat them as employees of yours and you are liable for holiday pay etc.


Thanks for the reply, this is the advice I have been given to the letter almost. I am currently trying to see if there are any cases where Companies have set up and are operating as I would like to, test cases if you like. One area that would spring to mind would be Large national roads 2-10 years worth of work for Large contractors and sub-contractors alike, sole income for Subcontractors in a lot of cases. Should they not be classed as employees of the main contractor??

Hopefully there is a grey area for the revenue on where they draw the line.

And again I don't see legally how a Company could be held responsible after taking on a sub-contractor for that subcontractor not working elsewhere??

Also why would they need you if they are already subcontracting, in the sense that they bill you for their fees and then you add a mark up and bill the firm that you sent the bookkeeper to. If the Bookkeeper is subcontracting and has ads in the same papers as you, will a potential client ring the bookkeeper for a quote and than ring you for a quote and compare quotes. you could be potentially in competition with you sub contractors.

Its easier if you go onsite to do the work and as your client base gets bigger you will have no choice but to hire staff be it full time or part time.

Best of luck which ever route you go.

Where my opportunities lie are in the fact that I already have solid relationships with some clients due to other associations.
And my company work for the client for the fee not just 1 person, so were the bookkeeper to leave, take annual leave or sick leave we would always have another to fill their place. If it was 1 person whether fulltime or on contract basis then the client could be under presure to find a suitable replacement, get the payroll done on time, keep a/c's to date ect ect. Also we have the additional back up of fully qualifed accountants should our bookkeeper on site have any issues. Thru "pc anywhere" we can log onto the computer at any number of sites from a central location, so the client effectively has an accountant on call.

We then can get into offering Total and full account keeping packages for the client.

I feel if we can offer these services, having sub-contractors and not employees then the fee we can charge will be very small when compared to the added value services we can provide

Any thoughts??

Tribezz

Sorry got this part mixed in above.


Thanks for the reply, this is the advice I have been given to the letter almost. I am currently trying to see if there are any cases where Companies have set up and are operating as I would like to, test cases if you like. One area that would spring to mind would be Large national roads 2-10 years worth of work for Large contractors and sub-contractors alike, sole income for Subcontractors in a lot of cases. Should they not be classed as employees of the main contractor??

Hopefully there is a grey area for the revenue on where they draw the line.

And again I don't see legally how a Company could be held responsible after taking on a sub-contractor for that subcontractor not working elsewhere??

Chevy RV

Tribezz wrote: »

Where my opportunities lie are in the fact that I already have solid relationships with some clients due to other associations.
And my company work for the client for the fee not just 1 person, so were the bookkeeper to leave, take annual leave or sick leave we would always have another to fill their place. If it was 1 person whether fulltime or on contract basis then the client could be under presure to find a suitable replacement, get the payroll done on time, keep a/c's to date ect ect. Also we have the additional back up of fully qualifed accountants should our bookkeeper on site have any issues. Thru "pc anywhere" we can log onto the computer at any number of sites from a central location, so the client effectively has an accountant on call.

We then can get into offering Total and full account keeping packages for the client.

I feel if we can offer these services, having sub-contractors and not employees then the fee we can charge will be very small when compared to the added value services we can provide

Any thoughts??

I am in a very similar position to yours with the person doing part -time work for me actually already working directly as a part -time employee for a different employer.

Would that be enough to get around the subcontractor if she is employed elsewhere P/T



Regards


Chevy RV

Mr. Incognito

whoa- hold on a minute- the test is not whether they are working for you and someone else.

The question Revenue will examine is whether they are engaged in a contract of (employment) /contract for (contractors) service.

They are going to be working for a company providing book-keeping services, however that company is not going to be invoiced by them, they are being "sub-contracted" out by you who will be invoicing the company, therefor they are not autonomous and are indeed employees. There is a long line of case law on this including a similar Dunnes Stores case where persons giving out free samples in a store who were held to be employees of a company who had maintained they were sub-contractors.

If the company has a problem with the service they are not eligible to fire the sub-contractor they will revert to you- it's blatant employment according to Irish law.

I could go on but your professionals have already explained this point to you and you didn't seem to be able to accept it.

Chevy RV

Hello SetantaL

I think that you may have misunderstood the situation from the poor explanation I gave it.

The situation is as follows :-

This person is employed 5 mornings a week as a book-keeper for a business that I have no dealings with or connection to whatsoever. She would obviously be paying PAYE & PRSI on these employment earnings as normal.

I have hired her to do afternoons in some of my clients who also have no connection to her employer.


My question is can she be classed as a subcontractor by me or do I have to treat her as an employee with all that entails?

She uses a laptop which she provided herself and I am not obliged to provide work for her so where do I stand now?

Many thanks for the advice already.


Regards,


Chevy RV

Mr. Incognito

I'll be blunt. She's an employee of yours.

Do you really think that your accountant/solicitor and the law is wrong just because it's inconvenient?

robbie checker

I attended a tax course recently and the lecturer commented on this situation. He confirmed that some of his construction clients in Dublin who were principal contractors and who had a large number of employees in the past, now have no employees - the employees had set up individual companies and invoiced the principal contractor as subcontractors. I assume the principal was the sole customer of the subcontractors - the limited company gets around the mutiple customers issue. This may not work for you though as the subcontractor appears to be on a part time basis.

Mr. Incognito

That is all well and good when you are talking about teams of workers but in this case their is only one employee- though it is envisioned the business would grow. Construction comapanies are notorious for incorporating shelf companies to circumnavigate the law. In this case how is he going to convince this book-keeper to incorporate a company, file CT returns and income tax returns as a company director and then what do you do for any new hires? have them incorporated as companies also? or have them hired by the original lady booker-keeper as employees of her shelf company and all the costs that that entails.
A company needs at least two shareholders- where are they going to come from. Madness.

Tribezz

Hi Guys, sorry for not posting. I actually forgot that I had started this Thread at all.

Well the initial questions I had have been answered and thank you for all the replies and advice. If anyone has any more questions or queries post away and now that I have remembered the thread I will reply with any useful opinions.

The Revenue were very helpful and quite clear, having subcontrators in my circumstances was not possible. They would clearly been seen as employees.
In fact the construction industry I think can look forward to closer scrunity in the coming years on this issue.

I pushed ahead and now have a rapidly growing list of clients and employees.

Our website was completed last week www.bookkeepingpartners.ie

On the site we have news items and weekly tax tips that may be of interest.I hope to expand this aspect of the site over the coming months and hopefully the site can below a good free source of information for all interested.

Thanks for your replys.:)

Sean

www.bookkeepingpartners.ie

Chevy RV

Hello Sean,

I looked at your site and was impressed by it. I even submitted my name for your weekly tax tips which I thought was a good idea.

I gather that you have accepted that your bookkepers have to be treated as staff after discussions with the Revenue.I will ultimately have to do the same I suppose.

I would like to talk to you directly about your busines model approach to doing business as my situation is very similar and I want to put the proper structures into place berore going any further. Would you be open to a chat about this.

I would like to point out that I live in South Tipperary and would certainly not be a competitor of yours.


Regards,


Chevy RV

Tribezz

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