PRSI

L.Jenkins

I am currently contracting with a Multi-National, but I am paid through an Umbrella company. I'm not complaining as the management fee is pretty low. My concern is, I am aware that I must pay PAYE, PRSI and USC, but should I be paying the Employers PRSI also, which amounts to nearly €85 per week before any other deductions? The total Employers PRSI I have paid to date is €152.39, not including my own contributions of €56.90. So in total, I've paid €209.29 for 9 days pay.

Alan Shore

Itzy wrote: »

I am currently contracting with a Multi-National, but I am paid through an Umbrella company. I'm not complaining as the management fee is pretty low. My concern is, I am aware that I must pay PAYE, PRSI and USC, but should I be paying the Employers PRSI also, which amounts to nearly €85 per week before any other deductions? The total Employers PRSI I have paid to date is €152.39, not including my own contributions of €56.90. So in total, I've paid €209.29 for 9 days pay.

You are not paying it your employer is!

L.Jenkins

It's being deducted from my wage though.

Arbiter of Good Taste

Are you sure it's being deducted from your wage and not just appearing on your payslip for information?

You should not be bearing that cost, the company should be.

L.Jenkins

Arbiter of Good Taste wrote: »

Are you sure it's being deducted from your wage and not just appearing on your payslip for information?

You should not be bearing that cost, the company should be.

I made sure I was absolutely certain, by whipping out the calculator and checking it out several times before raising the issue.

dbran

This is one of the problems with Umbrella Companies.

The reason that the customer is using UC's is to avoid having to pay employers PRSI. As you are not one of their employees it is not a cost that they have to incur. However someone has to pay it and unfortunately that means you.

However, the up side is that you will be paying the A stamp as opposed to the S stamp which means you will be entitled to increased benifits from DSP. So it is swings and roundabouts really.

The only alternative is to form your own company.

dbran

L.Jenkins

dbran wrote: »

This is one of the problems with Umbrella Companies.

The reason that the customer is using UC's is to avoid having to pay employers PRSI. As you are not one of their employees it is not a cost that they have to incur. However someone has to pay it and unfortunately that means you.

However, the up side is that you will be paying the A stamp as opposed to the S stamp which means you will be entitled to increased benifits from DSP. So it is swings and roundabouts really.

The only alternative is to form your own company.

dbran

Well if there's a benefit to it, then I'm not too fussed. I don't think I'd go down the road of setting up my own Company for the sake of a few extra Euros.

srsly78

10.5% of your entire salary is not "a few extra euros". Umbrella companies are not worth it, they don't save you any work compared to having an ltd company + accountant. In my experience the umbrella actually creates more work, since you have to fill out their forms and mail them all your receipts etc. When running your own company you can mange this stuff more efficiently.

Only use an umbrella company if it's your first contract and you are just trying it out. If you plan on doing it for a few years you should get proper advice (this means not advice from an umbrella salesperson!!).

As to whether you should be paying employers prsi or not, if you read the small print you signed with the umbrella you will probably find that you agreed to pay all costs associated with the employment - in addition to their management fee.

Other factors to be considered:
If you are a proprietary director of a ltd company you will not get the PAYE tax credit.
Proprietary director pays class S prsi - so only means-tested social welfare is available.
Accountant costs money, but usually a lot less than the umbrella management fees - shop around.

L.Jenkins

Well that's more food for thought. If things don't work out in the long run, I'll have to wind up the Company or is it easier to lodge accounts with Revenue stating I haven't earned anything?

srsly78

Yeah limited companies are annoying to close down. Talk to an accountant for proper advice. Also ask other contractors you may work with, most of them use limited companies.

If you want to close the company down your accountant can probably manage all that for you. Try to negotiate a good deal with accountant, you will likely want help with your personal tax affairs as well as your company. These are both closely related for self-employed people but not the same thing