Working as sole trader opposed to paye

zzfh

Hi, i have been offered a job which i am happy enough about but the catch is the owner wants me to work as a sole trader and work as a consultant for him,as it were.
What is the upside/downside to this for me?
If i was earning 20k yearly n my old job (paye)after tax, and i'm on the same rate of pay here will i end up with less take home pay?

DublinDilbert

zzfh wrote: »

Hi, i have been offered a job which i am happy enough about but the catch is the owner wants me to work as a sole trader and work as a consultant for him,as it were.
What is the upside/downside to this for me?
If i was earning 20k n my old job (paye)after tax, and i'm on the same rate of pay here will i end up with less take home pay?

Yes you will end up with less take home pay.

If your on €20K at the minute, you'd want to be paid €30K as self employed, this would cover things like holidays etc... If your a PAYE employee you get 21 days holidays + bank holidays, so your looking at 5 weeks off paid per year. But as a sole trader you'll get none of these, so your rate must reflect this.

Also if you work as a sole trader for just one employer you may eventually run into problems with revenue.

By being a sole trader not only does your employer not have to pay you holidays, he will also not have to pay employers PRSI, so again saving him money.

I would think long and hard before going out as a sole trader.

zzfh

Grand job,Cheers. it's all that's going at the minute. Maybe i'm better off holding out for something else.

Steve

What DublinDilbert said.

You also will have no access to social welfare if it all goes south.

I would recommend calculating your previous gross earnings and doubling it.

You also cannot claim regular expenses as a ST, e.g. milage for a customer visit etc but there are other things you can claim for.

As this is is a fairly life altering decision, maybe you should consider a consultation with a tax accountant. It might be the best €100-200 you ever spent considering what's at stake.

zzfh

Steve wrote: »

What DublinDilbert said.

You also will have no access to social welfare if it all goes south.

I would recommend calculating your previous gross earnings and doubling it.

You also cannot claim regular expenses as a ST, e.g. milage for a customer visit etc but there are other things you can claim for.

As this is is a fairly life altering decision, maybe you should consider a consultation with a tax accountant. It might be the best €100-200 you ever spent considering what's at stake.

i'm starting to feel this is a very bad idea,yeah i'm going to set a meeting with one on Friday. Cheers.

Geuze

Steve wrote: »

What DublinDilbert said.

You also will have no access to social welfare if it all goes south.

Note that self-employed people can apply for JSA, known as the dole, the exact same as an other worker.

phormium

Self employed out of work people can apply for the dole/jobseekers allowance which is means tested for everyone. However than cannot avail of jobseekers benefit/stamps if out of work which is not means tested.

Help!!!!

phormium wrote: »

Self employed out of work people can apply for the dole/jobseekers allowance which is means tested for everyone. However than cannot avail of jobseekers benefit/stamps if out of work which is not means tested.

I was told if you were self employed you would need to file for bankruptcy before getting the dole.....Is that not true?

relax carry on

Help!!!! wrote: »

I was told if you were self employed you would need to file for bankruptcy before getting the dole.....Is that not true?

No, you can apply for jobseekers allowance which is means tested. Jobseekers benefit is also only available for 9 months and then switches to the means tested jobseekers allowance.

http://m.welfare.ie/en/Pages/Self-Employed-and-Jobseekers-Supports.aspx

mcneil

Steve wrote: »

What DublinDilbert said.

You also will have no access to social welfare if it all goes south

.

So your saying someone who is self employed earning 20k for few years finds himself with no work, he can't get help from the government by way of dole! If so, that's scary.

relax carry on

mcneil wrote: »

So your saying someone who is self employed earning 20k for few years finds himself with no work, he can't get help from the government by way of dole! If so, that's scary.

No, as stated above, you can apply for jobseekers allowance which is means tested. Jobseekers benefit is also only available for 9 months and then switches to the means tested jobseekers allowance.

http://m.welfare.ie/en/Pages/Self-Employed-and-Jobseekers-Supports.aspx

rahmalec

relax carry on wrote: »

No, as stated above, you can apply for jobseekers allowance which is means tested. Jobseekers benefit is also only available for 9 months and then switches to the means tested jobseekers allowance.

http://m.welfare.ie/en/Pages/Self-Employed-and-Jobseekers-Supports.aspx

But the problem is the means test, which considers a whole previous year's income (or more) that may not be there anymore!

Also, unlike PAYE earners where only 60% of their income or so counts towards their means test, it's 100% for self employed.

relax carry on

rahmalec wrote: »

But the problem is the means test, which considers a whole previous year's income (or more) that may not be there anymore!

Also, unlike PAYE earners where only 60% of their income or so counts towards their means test, it's 100% for self employed.

Thanks for the answer but that's not the same as self employed people can't get benefits as is commonly thrown about. I've only briefly looked at the difference between the means test for both paye versus self employed so if there's a discriminatory means test in favour of PAYE taxpayers then, the self employed taxpayers need to highlight that discrimination. I'd be interested to see how a paye and self employed person stack upon terms of the means test to see how discriminatory it actually is.

BoatMad

mcneil wrote: »

So your saying someone who is self employed earning 20k for few years finds himself with no work, he can't get help from the government by way of dole! If so, that's scary.

You will be means tested on combined income if jointly assessed as well.

By the way do not accept your employers suggestion that you become a sole trader , under any circumstances. Revenue take a very dim view of employees essentially being forced into a sole trader position and can disallow it and cone down on both you and the employer. They have got very strict about this to the point where long term " contractors " have had to incorporate into a ltd company and even then revenue can disallow it.

There is no upside and several serious downsides

BoatMad

relax carry on wrote: »

Thanks for the answer but that's not the same as self employed people can't get benefits as is commonly thrown about. I've only briefly looked at the difference between the means test for both paye versus self employed so if there's a discriminatory means test in favour of PAYE taxpayers then, the self employed taxpayers need to highlight that discrimination. I'd be interested to see how a paye and self employed person stack upon terms of the means test to see how discriminatory it actually is.

The self employed are poor relations , higher tax on same income , poorer social welfare ( and other benefits ) , and expensive pensions ( fully self funded ) even start your own business schemes and revenue seed capital schemes. Effectively disallow the self employed.

There is no advantage and several disadvantages.

zzfh

Thanks for the info guys, i have weighed up the pros and cons and done some research. There is really no pro's in this for me and too many negatives.

amtc

What you can do is what I do. Suits my employer to keep me off payroll due to head counr. I don't want to work self employed...doing my tax in 2014 nearly killef me...so I contract through an umbrella company. Means I get paid every month, no time lag plus tax, prsi paid up

Lockedout2

There is no reason why proprietary directors should be treated differently to other PAYE workers.

They should pay Class A PRSI and get the PAYE tax credit.

This would result in a higher PRSI bill of 10.75% but a lower PAYE bill each year.

So if the "company" generates a profit of €50k and the director out of that takes a salary of 35k the employee tax PRSI and USC is €6,500 the employer PRSI is €3,762!

Not sure why anyone would advocate paying €3,762 each year to secure 9 months of unemployment benefits!

BoatMad

amtc wrote: »

What you can do is what I do. Suits my employer to keep me off payroll due to head counr. I don't want to work self employed...doing my tax in 2014 nearly killef me...so I contract through an umbrella company. Means I get paid every month, no time lag plus tax, prsi paid up

as long as you are not a director or major shareholder of that umbrella company, thats fine