Self-employed opportunity -- is it worth it?

Grolschevik

Hi all; sorry if this is a stupid question, but...

I have the opportunity to work on a self-employed basis, but I don't know whether it's worth giving up my job for, in terms of how much I will have to live on.

(The opportunity is attractive because it will give me time to write!)

Basically, the work would be for two weeks a month, ten months of the year. I'd be paid about €2,300 gross for those two weeks a month (so, €2,300 per month for 10 months; €23,000 pa; or the equivalent of about about €440 per week gross).

As I say, working part-time like this would suit me, but I don't know what my tax liabilities would be, so I don't know if I'd have enough left over to live on.

I'm single, renting, have no kids.

I understand that there'll be income tax and PRSI.

But what about VAT? I read that you don't have to register for VAT unless your turnover exceeds something like 37k. But does that mean I don't have to charge VAT? Because, if I did, that'd come out of the gross, which is the absolute max that this client would pay me....

Roughly how much would I be left with, net?

(The work, for what it's worth, would involve freelancing on a magazine, though technically I think I'd fulfil all the criteria to be classed as a part-time employee, though the company will not treat me as such...)

Thanks!

PhoenixTax

Hi,

Whether you should be an employee and not self employed is a separate question and to be honest, more an issue for the company than for you. They will be the ones exposed to non-payment of PAYE/PRSI etc.

However assuming you will be treated as self employed then you will be subject to Irish income tax under self assessment on your net trading income. Therefore it will be necessary for you to keep track of all trading expenses incurred during the year and to deduct these from your income to calculate your income liable to Irish income tax. Assuming no/negligible expenses then an estimate of liabilities using 2010 rates etc is as follows:

Income Tax: 23000 @ 20% less tax credits of €2,230: €2,370
Income Levy: 23000 @ 2%: €460
PRSI/Levies: 23000 @ 3%: €690

Total Deductions: €3,520

Net Income: 19480

You are correct that VT need not be charged unless annual turnover exceeds €37,500 i.e. you do not need to register for or charge VAT.

mozattack

Re VAT - consider registering if the customer is VAT registered and can absorb/reclaim the VAT cost. You can then reclaim VAT on purchases (provided your sales are VATable of course)

Grolschevik

PhoenixTax wrote: »

Whether you should be an employee and not self employed is a separate question and to be honest, more an issue for the company than for you. They will be the ones exposed to non-payment of PAYE/PRSI etc.

Hi, thanks for the replies.

Another quick question. What does the quoted text mean? In what way would the company be exposed?

PhoenixTax

Hi, I was highlighting the potential risk of Revenue looking into the arrangements under which you will provide services to the company and concluding that you are in fact an employee of the company. You mentioned in your original post that you thought you would be more a part time employee than a self employed individual providing services to the company. If Revenue reached the same conclusion then the company would be liable for the PAYE/PRSI (and related interest and penalties) that it should have operated on your income as an employee. It may well be that the company has taken advice on the matter and are satisfied that an employer/employee relationship will not exist. May be worth mentioning to them though. There is loads of info on the Revenue website re Employed V Self Employed issues.

Grolschevik

Thanks! I'd say this particular company knows what it's doing in that regard...