PAYE vs sole trader cost to employer

derickmc

I have been offered a job paying 45k per year after being out of work for 3 months it is more than anything a relief. However I have a wife and 3 kids, a mortgage and a car to put petrol in. I am still going to be some way short of making ends meet.

I want to suggest to my potential employer that he take me on as a sole trader and pay me a bit extra. What I am wondering is what does the 45k I am to be paid actually cost my employer (with employers PRSI etc) so that I can ask for around that amount as a sole trader?

Many thanks in advance,
Derick

DublinDilbert

The employer will have to Pay 10% PRSI for you, along with holiday pay, sick pay etc... http://www.taxworld.ie/taxes/prsi/current/summary/

If its only on a short term basis he may well take you on as a sole trader, but will typically not do this on a long term basis as he'll run into trouble with revenue if your not doing work for other people. You also have to factor in the cost of getting an accountant, eg €500 / year too.

If he was employing you 3 days per week, and you could work for other people 2 days per week, then the sole trader route would be the way to go. But if its a 5 days per week job, then I think you should just go the traditional route.

kennyb3

This isn't actually a choice its due to the nature of your relationship.

Please read this first.

http://www.revenue.ie/en/tax/rct/determining-the-correct-employment-status-of-a-worker.html

derickmc

DublinDilbert wrote: »

The employer will have to Pay 10% PRSI for you, along with holiday pay, sick pay etc... http://www.taxworld.ie/taxes/prsi/current/summary/

If its only on a short term basis he may well take you on as a sole trader, but will typically not do this on a long term basis as he'll run into trouble with revenue if your not doing work for other people. You also have to factor in the cost of getting an accountant, eg €500 / year too.

If he was employing you 3 days per week, and you could work for other people 2 days per week, then the sole trader route would be the way to go. But if its a 5 days per week job, then I think you should just go the traditional route.

Thanks for the info DublinDilbert,

All things considered you'd want to be getting 25% extra based on a 48 week working year when you factor everything. That would work out a nice bit more expensive for an employer and would probably be something they would be unlikely to go with.

I didn't realise you could have problems if all income was coming from one source. I have a couple of small incomes for maintaining websites. They might only come to 2k in the year but if this was to work out it might be enough to keep the revenue off my back.

derickmc

kennyb3 wrote: »

This isn't actually a choice its due to the nature of your relationship.

Please read this first.

http://www.revenue.ie/en/tax/rct/determining-the-correct-employment-status-of-a-worker.html

Very interesting read. After reading that it looks like a huge number of IT and Pharmaceutical companies have staff employed as contractors when the shouldn't.

kennyb3

derickmc wrote: »

Very interesting read. After reading that it looks like a huge number of IT and Pharmaceutical companies have staff employed as contractors when the shouldn't.

Probably true. Its an area they certainly have an eye on, see here .

Also there is the change in recent re locum's in GP practices who are now required to be included on the payroll.

anyway best of luck - was just trying to keep you on the right side of things.

smeharg

Having more than one source of income or contract doesn't necessarily mean Revenue will accept that you are self-employed.

Don't forget it's possible to employed and self-employed at the same time.

There has not been any change to the rules for employed vs self-employed. It has been on Revenue's hit-list for a number of years and GPs is one of the sectors that has been targeted.

As self-employed you'd also lose your PAYE tax credit; but you may be able to claim expenses to off-set this.

There's a lot more to this decision than monetary considerations, the most important probably being job security. Your contract could be terminated without notice if you're self-employed and you'd only be entitled to means tested benefits.