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Company formation query

  • 05-03-2013 1:09am
    #1
    Dunnangallabu
    Registered Users, Registered Users 2 Posts: 4 ✭


    Background - insurance professional 15 years experience, fully qualified etc

    Currently work for a firm as a PAYE worker.
    Have been approached for advice / consult by another firm.
    There is no conflict of interest.

    I can see where I may be able to branch out to other firms with this service.

    Question: is it feasible to set up a consultancy company, then hire out my services to my current employer as well as other firms, therefore paying corporate rate of tax.
    Question: from the tax mans point of view would this be permissible as I'm obviously moving from higher PAYE rate to lower corporation tax rate.
    Question: what would happen if for arguments sake we say my clients shrink in the future to one, namely my current employer?

    Thanks


Comments

  • #2
    mneylon
    Registered Users, Registered Users 2 Posts: 7,740 ✭✭✭mneylon


    You wouldn't be paying corporation tax only.

    Talk to an accountant - they'll be able to explain your tax obligations and whether or not there are any advantages or not ..

    Blog | Tweets



  • #3
    dbran
    Registered Users, Registered Users 2 Posts: 2,094 ✭✭✭dbran


    Hi

    You could of course do this but your type of business would normally attract a professional services surcharge on undistributed profits of the company which increases the effective rate of corporation tax to 20%. You will also need to take out a salary to live on.

    This effectively means you will pay the same amount of tax in the long run when you take into account the CGT rate on disposal of shares is currently 33%.

    However there are other reasons why operating as a company may prove worthwhile. For instance a revenue approved company pension scheme is much more tax efficient then an equivalent PRSA etc

    If you are operating as a company there is no reason why there would be any problems with the number of your clients fall to just one.

    PM me if you wish to discuss this further.

    Best Regards

    dbran


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