Do you have to register a company in order to become self employed?

BZRLevin

Hi,

As stated in the title; Do you have to register a company in order to become self employed? I was offered a contracting position and I'm now faced with the option of becoming self employed or setting up through an umbrella company. I was told that you can become self employed and not register a company and that all you needed was your tax clearance certificate (or something like that). However everything I've read online started with having to setup your own company. Can anyone shine any light on this or what other contractors prefer?
Thanks for your help and suggestions.

Kind Regards,

yesman2000

No you do not HAVE to register a company in order to be self-employed, however it may be beneficial to do so for a few reasons (tax purposes). This may be why there was so much information about registering as a company. Your circumstances and the length of time you wish to work as self-employed will dictate whether it is best for you to incorporate or not.

exaisle

People often understand the term "company" as being the same as "business" which it's not.

Put simply, a "company" usually means a limited liability company....that's a separate legal entity which is owned by the shareholder(s). The management and admininstration of the company is the responsibility of the directors, who can also be shareholders. The reason it's called "limited liability" is that the risk of the shareholders is limited to the amount they paid for their shares.

If you're starting a business you can also do so as an individual....this is the type of business which is most common...and a person trading in this manner is called a "sole trader".

There is more administration involved in a limited company and there are rules which must be observed.

If you're a contractor, you'd generally trade as a sole trader, to start off with, but there are no hard and fast rules.

If in doubt, consult an accountant.

E.

BZRLevin

I might only be contracting for 6 months but was told it still would be beneficial to do my own tax returns etc as I could claim for all work related expenses. How is registering a company more beneficial for tax purposes do you mind me asking and why do people who are contracting for a shorter time prefer umbrella companies? Thanks for your help. I've done contracting before but I received my wages through the agency which was handy (basically employed by the agency). To be honest, I'm not happy about this setup as I still have to submit my hours to this agency and they then pay the money to another company. Presumably this means they don't have to pay PRSI for me or any other little charges. So they get payed a monthly rate for me and it costs them nothing. Kind of infuriating and having second thoughts on the job now.

Mrs OBumble

Some companies that use contractors will only do so if they have limited-liability companies.

_Kaiser_

This is why I've never bothered with contracting myself. It seems like a lot of effort for 6 months work and if you go the self-employed route it'll affect what payments you are eligible for should the worst happen afterwards.

Unless this involves a lot of money or you're stuck for a job I'd probably keep looking myself.

tatli_lokma

Kaiser2000 wrote: »

if you go the self-employed route it'll affect what payments you are eligible for should the worst happen afterwards.

that is only if you choose to pay S class PRSI. If you wish, you can make additional voluntary contributions to ensure your benefits are secure.

http://www.citizensinformation.ie/en/social_welfare/irish_social_welfare_system/social_insurance_prsi/voluntarysocialinsurancecontributions.html

phormium

That won't help with jobseekers benefit though if you are out of work, there will be no entitlement and you will have to apply for means tested jobseekers allowance. Voluntary contribution just preserves your pension benefits.