Can you contract and be an "employee" at same time?

yop

Folks,
You might be able to give me some light on this

I have a potential option that a company has 2 days of work for me per week, they want me to contract to them for the 2 days.

Also I may have an option to work for a company, as an employee, for the other 3 days.
I currently work for the 2nd option there but with major cashflow issues this could be an option for me. So if I can 2 days per week on contract to one company and then work the other 3 for the current company, is there any issues here in doing that?

I haven't a bean how the tax works out but I suspect that its separate?

Thank you.

Nody

Be careful about clauses in your second company (3 days a week) about working a second job.

Taxes obviously would need to be done as well (I'd simply pay full tax on the second income and put all tax credits on the first were you contract).

yop

The 2nd company know the setup about my first job so that shouldn't be an issue.

I don't quite get the setup with the taxes, who would advice me here? An accountant?

Thanks

djk1000

As soon as you start the second job, you need to ring the tax office with their employer number. Tell the tax office that you have a second job and you want a certificate of tax credits issued. Nothing more to it than that!

There is a good explanation on the revenue site here, http://www.revenue.ie/en/personal/faqs/overtime-bonuses-second-jobs.html#section4

yop

Ok I will do.

The 2nd option I already work for as a PAYE. So once I start the contracting I need to inform revenue of this also.

Thanks

Thoie

It's the 3-day week employer (the one you're not contracting for) that you need to be careful with. Reread your employment contract, or ask your HR dept if there's any problem with you having another job. Some industries/employers forbid it.

An accountant will do the taxes for you. As a contractor you might need to set up your own company - an accountant could help there as well.

The tax thing is relatively straightforward (though the explanation below is a little long winded).

Let's say your total income puts you in the 20% tax bracket (all numbers are made up for simplicity). Your weekly tax credits come to €100 a week. Job A (the employment) earns you €300 a week. Job B, the contracting, earns you €200 a week. Whichever way it goes you will owe €80 a week on taxes (20% of €400).

If you assign all the tax credits to Job A, then you will get taxed on €300-100= 200 - so you'll get €260 into your hand at the end of the week.

Job B now has no tax credits available to it, so tax is due on the full amount of profit. If the full €200 is profit, then there's the other €40 tax. The difference is you will have to put this €40 away yourself each week, waiting to pay the tax man once a year.

An accountant will help you find ways to legally minimise the amount of tax owed - for example if you have to purchase things for Job B from your own money, then that's not profit, and your tax bill will be reduced accordingly.

yop

Thanks Thoie, I will need to sit down with the company, Job A and explain to them that I have the contract offer. They will need to give me the nod to do this, I presume once they do this that I am ok to work for job B.

Since job B will be working Mon, Tues, Wed full-time then I will be working for Job A as PAYE on Thurs and Fridays.

I understand what you are saying about the tax, the contract rate is 250 and the breakdown of my salary currently is 180 per day.

I will need to sort a "good one"

This is a 6 month contract and hopefully the company I work for will be back on their feet so won't need to contract again.
So I wonder is Sole Trader the best way to go?

Thanks for all the answers, sorry for been such a nube!!

Thoie

yop wrote: »

So I wonder is Sole Trader the best way to go?

I think so, but it might be worth looking into umbrella companies as well. There are some companies out there who will take you as an employee (of sorts), have you on their payroll, so you're still PAYE, and in return they'll take a percentage of your contract rate. There's advantages and disadvantages to this.

-
You're handing over some of your income "for nothing"
You don't necessarily have the same rights as a normal PAYE worker
You can't claim for business expenses

+
There are no tax headaches at the end of the year
You're still building up PAYE "stamps" for PRSI - even though a self-employed person pays more PRSI, they're not eligible for Job Seekers Benefit

Mrs OBumble

yop wrote: »

So I wonder is Sole Trader the best way to go?

Thanks for all the answers, sorry for been such a nube!!

I also think so - can't see the point of registering a company unless you need to.

BUT as well as taxes, you need to do some research about professional indemnity insurance: imagine what would happen if things went bad for the first company, and they (with flash lawyer) decided to sue you for causing the problems due to incompetence. It won't matter that you weren't incompetent if you cannot afford the legal representation to prove it in a civil court case. Also, if there's any chance of the general public coming into contact with your business premises, you may need public liability insurance too.

I haven't researched this myself (yet), so cannot offer any pointers except that possibly it's something else that an umbrella company covers.