Work Setup

paul7g

Hi,

I have just been offered a new job and i am in the process of discussing various different options with my new potential employer.

I am currently in full time (PAYE) employment with my current employer and i have a small sole trader business (VAT Registered) which i run in the evenings and at the weekend.

I am trying to decide if i would be better starting the new job as a PAYE employee or as a contractor. I will be working from home 2 days a week too.

A few things to note / consider:

CONTRACTOR (12 month contract)
- i can expense some of my rent as i will be working from home
- i will need to include / charge VAT on top of the salary

PAYE (12 month contract)
- i will be entitled to some form of benefit when i am older (i think)
- will be perceived better by the banks if i plan to seek a mortgage

Which option would you recommend and why? Thank you in advance for help.

Paul

Graham

Have you taken into account things like paid holiday, sick leave etc? Are you being offered a better daily/weekly/monthly rate for going self-employed?

oo7

Thanks for your reply.

Yes, i have taken that into account and they will give me the same holidays if i am contract.

If i want to go contract they will pay me what ever works out the same as if i was PAYE... they're being quite flexible.

Stheno

oo7 wrote: »

Thanks for your reply.

Yes, i have taken that into account and they will give me the same holidays if i am contract.

If i want to go contract they will pay me what ever works out the same as if i was PAYE... they're being quite flexible.

So if you were PAYE and they were going to pay you say 52k, which is 1k a week, as a contractor will they pay you 1k a week, even for those weeks that you are holiday? Or if you are on sick leave?

Mrs OBumble

paul7g wrote: »

PAYE (12 month contract)
- i will be entitled to some form of benefit when i am older (i think)
- will be perceived better by the banks if i plan to seek a mortgage

The first point is irrelevant: self-employed people pay class S (I think that the right name for it) PRSI, which gives them credit towards some benefits including maternity and contributory pension.

My very rough rule of thumb is that you need to take home twice as much cash as a contractor than as an employee, to cover the extra costs you face as a contractor (pay your own PRSI, training, sickness cover, annual leave, accountant, covering the risk of some time unemployed between contracts).

Really, the decision should be made after reviewing Revenue's guidelines about what counts as a real contractor and what doesn't.

oo7

What is classed as a real contractor?

Stheno

oo7 wrote: »

What is classed as a real contractor?

Essentially, someone who has control over whom they work for and when, and is not constrained by a single employer.

If you are going to be going into the same office at set hours, every day for the same organisation, revenue may not consider you a contractor.

paul7g

Thank you for the replies. I'll look into the revenue site to see what their guidelines are.

Bigcheeze

No way are you a genuine contractor in the eyes of revenue. However this is more the employer's problem than yours as they will be held accountable for the paye and prsi.

Really bad idea for the company to do this.

Stheno

Bigcheeze wrote: »

No way are you a genuine contractor in the eyes of revenue. However this is more the employer's problem than yours as they will be held accountable for the paye and prsi.

Really bad idea for the company to do this.

Also the ops problem as they may end up paying a shedload of expenses etc back to revenue.