Umbrella vs Ltd - Rough net income difference after year

St1mpMeister

Assume you have a Ltd company all setup (ignore the setup fees etc), how much roughly do you save by going this route, rather than joining an Umbrella organisation like Fenero?

Say you have a 12 month contract at €400/day. So that's €2000 / week, and all income would be drawn down.

Using these figures, what is the rough net income after 12 months (ignoring holidays) going either method ?

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grahamor

I assume it would be identical as you're getting paid through PAYE either way.

You're expenses would be similar too i would imagine. You would be entitled to the yearly tax free voucher either way.

If I was contracting and had a limited company i would pay myself a bit less and keep money in the company account. Then, after 12 months i would take 3 or 4 months off and continue paying myself a salary from the company account !

St1mpMeister

I see Fenero have two different options: Umbrella Employee and Umbrella Director

"Umbrella Employee" retains PRSI status, but what would the benefit be of choosing the Umbrella Director instead if I decided to use an umbrella company?

testicles

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St1mpMeister

testicles wrote: »

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Any other umbrella companies to consider, or much of a muchness?

amtc

I used Contracting Plus and they were very good.

In my case I knew it was a finite number of days so went the umbrella employee route and they were already set up on payroll. However essentially you will get slightly less money.

Depends how many clients you have. Personally I hate invoicing ( never a good thing when working on contract) so suited me.

St1mpMeister

amtc wrote: »

However essentially you will get slightly less money.

So, assume you have a 12 month contract, single client.

How much is "slightly less money" when going with umbrella over ltd, using average accountant fees and other general costs?

Talking in the tens, hundreds, or €1000 ?

amtc

Well it depends how much your earnings are obviously as they're all percentage wise. If you have a 12 month contract personally I'd go limited company. Umbrella you are paying employer prsi as well.

Or do umbrella for one month and see how it goes.

L.Jenkins

amtc wrote: »

...Or do umbrella for one month and see how it goes.

You'd have to remember the OP will earn less as a PAYE worker and if they wait for a time before moving to an LTD setup, they'll be on the hook for set up fees. Anything less than 12 months and less than €350 per day, it's not worth setting up an LTD.

amtc

You're right. The only reason I suggest it is cash flow if that's an issue.

St1mpMeister

Hi, cheers, I was basing my questions on the original income estimates I posted in the first post.

So assuming this sort of annual income what is the benefit of going ltd over umbrella?

Everyone suggests that you should go umbrella first to "try it out" but then move to ltd after. Why? Why not remain umbrella forever?


From what I can tell the main benefit is that you can control how much you are paid in a ltd (i.e. take a lower salary and put rest into an executive pension) to lower tax paid (i.e. go for salary of 33K or less).

But apart from that, there is no discernible benefit going ltd over umbrella? Umbrella obviously has the benefit that you can leave after 5 years and not have any company closing fees and procedures, so umbrella has a benefit there.

L.Jenkins

St1mpMeister wrote: »

Hi, cheers, I was basing my questions on the original income estimates I posted in the first post.

So assuming this sort of annual income what is the benefit of going ltd over umbrella?

Everyone suggests that you should go umbrella first to "try it out" but then move to ltd after. Why? Why not remain umbrella forever?


From what I can tell the main benefit is that you can control how much you are paid in a ltd (i.e. take a lower salary and put rest into an executive pension) to lower tax paid (i.e. go for salary of 33K or less).

But apart from that, there is no discernible benefit going ltd over umbrella? Umbrella obviously has the benefit that you can leave after 5 years and not have any company closing fees and procedures, so umbrella has a benefit there.

Since I worked for an Umbrella Services Company, I understand the benefits of each. Personally though, no matter how long my contract and daily rate, I'd choose the Umbrella PAYE. Prsi contributions and no need to worry about compliance.

At the end of the day, if the Services Company fúcks up, as a PAYE worker, your only issue is the underpayment of tax. As for an LTD set up, you have the set up fees, filing with the CRO and Revenue. If things go wrong, there is the possibility of you being striken off as a Director, therefore, never being allowed to hold a Directorship of any Company.

I could be wrong in some of the above, but I will say, choose wisely, very wisely.