Agency contract via 'Umbrella' or 'Limited' company

patrix

Hi,
Looking for some advice here. I've been approached by an agency for a 12 month contract but they said that they would pay me through an 'Umbrella' group or a limited company.
For my last 2 jobs I had permanent contracts and haven't been with an agency in years so all this is new to me. First impression is that it sort of seems you'll be the one lumbered with all the paperwork to do and expense in setting everything up with the agency essentially passing the buck and expensive fees as well.
Has anyone had experience of working with an agency in this manner and would they recommend it, what are the advantages, pitfalls etc? I've seen the same job with another agency and they're not offering this method of payment so wondering if I should go through them instead.
Thanks for any advice offered.

quietsailor

I'm going back to an old role I had a before returning to college where I worked as a Ltd company. I'm being asked to cover someone who is sick at the moment so it is short term work.

Some of the people there are already using "managed companies" and they are happy with them as these managed companies handle all the PAYE/PRSI/Income tax paperwork, take a percentage of your monthly GROSS salary and then transfer the rest to you as your NET monthly income.

I'll be ringing them tomorrow and I'll re-post here with some info.

MODS: Would it be ok to post the company name and the general infor they give me as a guide to the OP/future people searching

Mrs OBumble

quietsailor wrote: »

MODS: Would it be ok to post the company name and the general infor they give me as a guide to the OP/future people searching

Dunno about the others, but I'd prefer if you just posted the general info. And maybe a list of names of companies offering the service. Don't really want to get into advertising any of them.

Mrs OBumble

patrix wrote: »

Hi,
Looking for some advice here. I've been approached by an agency for a 12 month contract but they said that they would pay me through an 'Umbrella' group or a limited company.

They are two quite different options, and you need to investigate lots.

With the umbrella company option, they use their company structure as your employer, and pay your employer PRSI out of the total that they invoice the customer. So if the job ends, you have continued class A "stamps".

With the limited company option, you are self employed: you invoice for your services, and you handle all the tax. But you only pay class S, not class A PRSI. So you save a lot on that - but are not necessarily eligible for benefit it it goes belly-up.

quietsailor

JustMary wrote: »

They are two quite different options, and you need to investigate lots.

With the umbrella company option, they use their company structure as your employer, and pay your employer PRSI out of the total that they invoice the customer. So if the job ends, you have continued class A "stamps".

With the limited company option, you are self employed: you invoice for your services, and you handle all the tax. But you only pay class S, not class A PRSI. So you save a lot on that - but are not necessarily eligible for benefit it it goes belly-up.

This THIS (the bit in bold) has very badly screwed me over. I went back to college as a mature student but as for most of my life I worked as self employed or at sea (considered the same thing by the social welfare bods/revenue) I was cut off from a considerable amount of grants/funding/aid.

if there is any way of getting class A stamps, even if you have to pay higher PRSI then take it. It will save you so much grief in the long run - example it affects the old age pension you will get when you retire.

srsly78

Not entirely correct. Class S prsi gives you the same OAP entitlement as other classes. The difference is that class S doesn't give you "stamps" for the dole.

The employers PRSI contribution is 12.5% I think. OP do you want to pay an extra 12.5% tax? If so then go with umbrella. If not then set up your own company. Note company management can be a lot of work, so don't go down this road unless you will be using it for several years.

Note that self-employed people CAN get the dole, but it is means tested. Also you will have to cease trading/wind up company.

Info here: http://www.welfare.ie/EN/Publications/sw19/Pages/sw19_sect1.aspx

Also pretty sure your prsi class has nothing to do with eligibility for college grant etc. Only your income does.

Mrs OBumble

srsly78 wrote: »

The difference is that class S doesn't give you "stamps" for the dole.

Correct.

It also doesn't cover maternity, sickness, back-to-education .. and lots of others. In fact, state-contributory-pension is just about the only thing it covers.

Thanks for the link.

srsly78

I don't see anything on that page about BTEA. I got BTEA years ago after being self-employed. The only requirement back then (2003) was that you were unemployed for 6 months ( so I stopped working to qualify).

patrix

Thanks everyone for the advice and information posted, most of which was new to me and really informative. I've spoken to a couple of people in the meantime and have decided to apply through the other agency for the same role as they manage payroll themselves and will cut out all that hassle. The contract is only for 12 mths and with the current climate I don't want to risk making life any more complicated.

quietsailor

srsly78 wrote: »

I don't see anything on that page about BTEA. I got BTEA years ago after being self-employed. The only requirement back then (2003) was that you were unemployed for 6 months ( so I stopped working to qualify).

I foolishly worked right up to the morning I started college - that was 2008. Had I gone on the dole in 2007 so I would have been seen to be unemployed for the last tax year before I went back I would have been elegible for the BTEA and the maintenance grant.

Whats a real sickener was I would have been able to get very high paying work at sea for Jan-Sept 2008 and earned a lot of money towards rents etc as well

quietsailor

srsly78 wrote: »

Not entirely correct. Class S prsi gives you the same OAP entitlement as other classes. The difference is that class S doesn't give you "stamps" for the dole.

The employers PRSI contribution is 12.5% I think. OP do you want to pay an extra 12.5% tax? If so then go with umbrella. If not then set up your own company. Note company management can be a lot of work, so don't go down this road unless you will be using it for several years.

Does this mean if I had paid the extra 12.5% through my limited company I would have been entitled to class A stamps??

srsly78

You don't have a choice, Director can't make extra contributions even if they want to...

Situation is different for a sole trader, they can make voluntary extra contributions tho. This stuff really needs to be discussed with a proper accountant / tax advisor.