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Is become self employed worth it.

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  • 04-04-2022 6:57pm
    #1
    Registered Users Posts: 86 ✭✭


    Hi. I'm have been offered the opportunity to become self employed and being Contracted in to a well known company. Been employed by a contractor of the company with a few years.

    I roughly work 58 hours every week .

    As PAYE I earn a straight 23 euro a hour

    If I was to become self employed I would be a rate of 35 for 39 hours and 40 for overtime. Paid monthly

    I have priced insurance which is about 3200

    Safety statement 400

    Accountant 1400

    I currently suppling on my tools so that don't come In to it. Don't get paid for travel.

    Would this be worth going self employed for?.

    Consent work

    Thanks



«1

Comments

  • Registered Users Posts: 29 ShelbyInc


    Just focusing on the finances:

    Assuming those figures are gross then you currently earn just shy of €70k per year pre-tax annually(58 hours*€23*52 weeks).

    A five day week would mean you work roughly 11.6 hours per day (58/5). Assuming a similar working pattern, that means you would work, on average, 3.8 hours over time per day if you were self employed (58/5)-(39/5). So your daily rate would roughly be €425 (7.8*€35)+(3.8*€40)

    Assuming a 5 day week, 10 public holidays and 25 days off. You will work 226 days annually 365-(104+25+10), so your annual profit will be €96,050 as a self employed individual(226 * €425).

    As you mentioned you will incur additional expenses as a result of being self-employed, you'll assume an additional admin burden as a result of being self-employed, lots of paperwork. The additional expenses you incur will be partially offset by a lower effective tax rate as you can deduct business expenses from your income.

    It's really up to the individual from there, pros and cons. Best of luck.

    *assuming your weekly hours worked are set, then for the purposes of this exercise it does not matter if you work a 5 or 6 day week. It will balance out e.g. five day week results in a higher daily rate but fewer days worked. Vice-versa with a six day week.



  • Registered Users Posts: 86 ✭✭cianlynchali


    Thanks. That's a fantastic breakdown of numbers. Would be better off self employed according to that. Could claim expenses against tax and also Vat . Roughly 25k less insurance and other expenses.



  • Registered Users Posts: 3,636 ✭✭✭Wildly Boaring


    Been down both roads.

    Thee are other factors to consider. For example does your PAYE employment include sick pay?


    In a lot of instances contactors are employed to fulfill a role. Where the full time employee may be seen as part of the company and having a career there with promotion and/or training.


    This may not be the case for you.



  • Registered Users Posts: 773 ✭✭✭capefear


    another thing to take into account is a mortgage, if you need a mortgage in the future its easier to get it as a paye employee then a self employed contractor.



  • Registered Users Posts: 86 ✭✭cianlynchali


    Yeah. Worked hard after the leaving cert serving my time and bought a house when I was 22 just 2 years ago. I'm set up in the sense.



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  • Registered Users Posts: 1,805 ✭✭✭mrslancaster


    Revenue have a code of practice about whether a person is classed as an employee or self-employed. Some info here:

    https://www.revenue.ie/en/self-assessment-and-self-employment/documents/code-of-practice-on-employment-status.pdf

    Lots of reasons an employer might want a self-employed person rather than an employee, mainly down to costs. There are new rules coming for paid sick leave and pension schemes on top of current legislation which gives employees many rights that self-employed don't have.

    If a person is truly a sole-trader who selects his own clients/customers and works the hours they choose, controls how the work is done and who does it, then it can be a great option and allows for a very flexible work/life balance. A true self-employed person usually sets their own rate in agreement with a client and it needs to cover all their costs plus a profit. Also, as Shelby said, there is a lot of paperwork, if your income is above certain limits you should be registering for Vat and charging it on your invoices.

    If on the other hand, it is just a fictitious label to facilitate an employer who wants to avoid all the costs and legal responsibilities of being an employer, that might not be so good for the individual.

    At the end of the day, self-employment suits a lot of people but there's lots of rules to be aware of.



  • Registered Users Posts: 86 ✭✭cianlynchali


    Just another question for you in regards bank accounts.

    I have a current account and 2 savings (wedding and rainy day) .

    Would I be best setting up a separate account for the business and using the current as my personal account? .

    Also we were hoping to use savings the girlfriend savings for setting up the business. In regards to the insurance and safety statement etc. Would this be applicable. If she transfered for her savings to my current account to use for business or would I be taxed on this money also?. She already has tax paid on it.

    Thanks



  • Registered Users Posts: 4,841 ✭✭✭Deeec


    Op I think you may be better off staying as an employee. The above calculations sound impressive but they are assuming you will be working the exact same hours - this may not be the case when you become a contractor. In fact most businesses would try to keep contractor hours to a minimum. When you invoice the company you may have to wait until the following month or more for payment. Security of your wages being in the account on a certain date is gone.

    You have alot more rights as an employee rathar than a contractor. As a contractor you could literally be told at any time that they don't need you. You would have no notice period or redundancy entitlement. Sick pay is also gone so if you are off sick you are relying on state benefits.

    Also do you have any other benefits in your current package - pension, health insurance etc. Any benefits you currently have would now have to be funded by yourself.

    Also do consider the point Mrs Lancaster made re employee v subcontractor.

    Op weigh the pros and cons up very carefully. The company you currently work for has more to gain by you becoming a contractor than you.



  • Registered Users Posts: 86 ✭✭cianlynchali


    Hours will be that same. Currently no pension or health insurance being paid.. the first 2 months are the hardest. Work in April paid end of May. Its consent then.



  • Subscribers Posts: 41,349 ✭✭✭✭sydthebeat


    Absolutely you should set up a new business bank account. Do all transactions thorough that account.

    Also create a sub "holding" account for vat, income tax, usc etc.

    Get very used to putting vat and a percentage for tax, and a percentage for company costs, aside off every payment into this holding account, and don't touch it.

    Withdrawing out of this business account into you own personal account is essentially how you will pay yourself a wage.

    90k can easily be rendered under 70k when you take out running costs of a company, especially if you decide to set up an office away from home



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  • Registered Users Posts: 86 ✭✭cianlynchali


    Thanks very much. Currently supplying own tools and van so won't be a issue.



  • Registered Users Posts: 4,841 ✭✭✭Deeec


    Im not being nosey only trying to help but can you give us a rough idea what you do? Are you in the building trade - if so you need to look at what revenue define as a subcontractor.

    You could run into problems if you are only invoicing one company - this does not meet revenues rules - they would deem you an employee. You could avoid this problem though by doing other small jobs for other clients.



  • Registered Users Posts: 86 ✭✭cianlynchali


    Im a maintenance fitter in a aggregate company.



  • Registered Users Posts: 4,841 ✭✭✭Deeec


    Ok thats good you probably wont come under RCT as you are maintenance. Make sure you are well covered insurance wise as you will be hung up as a contractor should an accident happen relating to a machine/vehicle you maintain/repair.

    Best of luck Cian - I hope it works out well for you😀



  • Registered Users Posts: 86 ✭✭cianlynchali


    Yes. It's tricky for insurance alright.

    Thanks very much



  • Registered Users Posts: 25,837 ✭✭✭✭Mrs OBumble


    As an employee, it's illegal to work for more than 48 hours per week on average. Yet you are doing 58 all the time. If your employer got audited, your hours could be a world of trouble for them. So they have an incentive to change something.

    To do 58 hours/week, you must be pretty much working the equivalent of 8am-6pm, Monday to Saturday. There must be virtually no time in your life to do anything else.

    Presumably you are able to manage this load because you get annual leave at 8% of time worked. But as a contractor, your leave is never paid. No work = no pay.



  • Moderators, Music Moderators Posts: 3,719 Mod ✭✭✭✭eeloe


    58 hours a week must be giving him absolutely no quality of life?



  • Registered Users Posts: 667 ✭✭✭PeaSea


    I'm an IT contractor, I realise that a/ its a different industry and b/ its'a different country (UK) but one thing is, how safe is your contract as self-employed ? Can they terminate your contract with a weeks notice, for example, so no redundancy, etc ? Might make a difference to you.



  • Registered Users Posts: 10,796 ✭✭✭✭Furze99


    There's more to this than you think. I'm self employed many years, one thing you soon learn that there's little enough loyalty when push comes to shove, you're as good as your last customer. If you're wise, you don't put all your eggs in one basket, you build up a reputation and a customer list.

    Remember no sick pay, no pension etc. If you're genuinely self employed, quite likely you'll end up working at least the 58 hours a week.

    That said, if you like being you're own boss and have a bit of discipline to get stuck in, has it's advantages.



  • Registered Users Posts: 39,178 ✭✭✭✭Mellor


    I think you are making one or two errors here. You based it on a 52 weeks, ie paid holidays . Maybe OP gets holidays. But maybe not as he working for a contractor.

    You've also assume that overtime is paid daily, when it might be weekly. Doesn't matter when its a full week. Weeks were there are holidays will come off the overtime is the contract is weekly.

    It will definitely be more profitable. The question is how much work is guaranteed. Ultimately I think only the OP has all the info,



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  • Registered Users Posts: 791 ✭✭✭CreadanLady


    Also, as a PAYE your employer pays your PRSI and maybe something into your pension.

    As self employed, you have to provide that for yourself, so that definitely eats into the bigger headline earnings.

    The MFV Creadan Lady is a mussel dredger from Dunmore East.



  • Registered Users Posts: 29 ShelbyInc




    Correct, I assumed he is paid holidays. in his first post, the OP stated he is currently a PAYE worker.

    In terms of your second point, the difference would be roughly €1.5k annually. *(25 days * 40% =10 days * 3.8 hours * €40 = €1,520).It's something the OP can avoid by planning his breaks optimally. Additionally, most companies offer a daily rate.

    *Assumes the OP takes his breaks/holidays in blocks of two days per week as opposed to five day blocks per my original daily rate calc.



  • Registered Users Posts: 39,178 ✭✭✭✭Mellor


    Regards the holiday, I've no idea what he is getting. Was just flagging that it may or may not be the case.

    With the second, it might not be material. I just realised that the overtime is only 5 extra. The difference between daily and weekly for a 4 day week is marginal.



  • Registered Users Posts: 984 ✭✭✭Still stihl waters 3


    58 hours and above are common in a lot of industries whether self employed or an employee



  • Registered Users Posts: 984 ✭✭✭Still stihl waters 3


    You say you're a fitter for an aggregate company so I'm assuming roadstone, lagan or someone like that, while it might sound OK now while things are relatively busy just remember as a contractor you'll be the first to get a rate cut and the first to be told you're not needed this week if/when things slow down, and heavy goods fitting is quite a niche industry so not something you can easily find a job in if the proverbial hits the fan especially as an independent contractor



  • Registered Users Posts: 86 ✭✭cianlynchali


    Yes. Mainly contractor now than employee's now I these company's



  • Registered Users Posts: 791 ✭✭✭CreadanLady


    Companies taking people on as contractors is a creeping issue. It is basically a way for companies to circumvent their obligations to workers as employees. And they lure people into it with higher rates, but say nothing of the risks. Companies obviously do it because it is beneficial for them.

    A lot of it is big pharma companies and multinationals. Doing it for reasons of greed and exploitation. And a lot of those hired as contractors are just ordinary workers who might not be fully aware of the costs coming with their apparently higher pay packet.

    I think it is a serious worker welfare issue in the making and it is something the labour and union movement need to tackle and have the law tightened up on.

    The MFV Creadan Lady is a mussel dredger from Dunmore East.



  • Registered Users Posts: 18,319 ✭✭✭✭bucketybuck


    Are they still going to expect you to jump for breakdowns or issues out of hours?

    And will you jump, or will you do work for other places now as well and maybe give those priority? If you aren't at their beck and call will they start to use a different contractor instead?

    There is a reason they want contractors and it isn't because they are thinking of you. They want to have their cake and eat it too.

    The only way I would advise this is if you are actually going to operate as a sole trader who sets his own terms. If you are going to be treated as an employee in what they expect from you, then you should remain an employee.

    A good HGV fitter will always get work but I know plenty of lads who jumped at offers like this and found out the grass isn't always greener.



  • Registered Users Posts: 791 ✭✭✭CreadanLady


    You have far more protection as an employee. Say for example there was some dispute or falling out. As a contractor they could dump you off immediately. As an employee they could not just sack you at short notice. They would have to make you redundant at best, or face an unfair dismissal hearing at worst.

    It is always the companies advocating people go as contractors - it is for the company's benefit, not the workers.

    Whats more, an aggregate company, I assume will be closely linked with quarries and construction, so I would imagine they are as crooked as they come and run more or less by borderline gangsters , as is often the case in quarries and construction.

    They do not have your best interests in mind.

    The MFV Creadan Lady is a mussel dredger from Dunmore East.



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  • Registered Users Posts: 10,796 ✭✭✭✭Furze99


    Being going on for years and we'll see more of it, especially with the demand for 'work from home'. The transport/ haulage industry at it years, letting go drivers on the payroll and taking them back on as self employed. Anybody not in a regular office environment for a company, is fair game. Makes a lot of sense from the companies POV.



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