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contract Day rate Full time employment vs contracting.

  • 21-05-2022 9:32am
    #1
    Registered Users Posts: 53 ✭✭ vmware


    currently in full time employment, but looking at options to go into a full time contract role with a new company

    im just wondering on how much tax i'll have to pay and also what would I be entited to claim , exmaple, power, broadband, mobile, etc


    I know I wont have holiday pay or a pension or sick leave,


    what are the pros and cons of contracting


    Thanks



«1

Comments

  • Registered Users Posts: 2,118 ✭✭✭ wandererz


    Google the Icon Accounting tax calculator.

    Input your daily rate. Generally put in 18 working days to account for bank Holidays, time off etc.

    You can claim all of the above up to certain limits.

    I on charges a low enough monthly fee to process your payroll etc.



  • Registered Users Posts: 53 ✭✭ vmware


    I assume diesel and runnign costs of car also allowed? could I emply my wife part time to carry out book keeping etc



  • Registered Users Posts: 1,236 ✭✭✭ Bigmac1euro


    Yes

    you will need to setup your own business and run it that way. Business bank account and pay yourself your wages from it. You can also pay your wife to manage the books from the business account.

    Also as she’s an employee you can also benefit from 2x500 euro gift vouchers per year (handy at Christmas)

    I actually kind of miss contracting. I didn’t setup my own business I hired a company (contracting plus) to manage my taxes and I was setup as a PAYE employee of an umbrella company but if I was contracting again I’d go the other way and pay my own taxes and setup my own business as there is ways you can avoid taxes etc.



  • Registered Users Posts: 53 ✭✭ vmware


    thanks sounds interesting these umbrella companies charge alot and possible more to benefit if you go as a solo trader?



  • Registered Users Posts: 828 ✭✭✭ downtheroad


    If you're a sole trader you can't employ your wife. You need to be a limited company to do that. You can do your own limited company set up rather than going down the umbrella company route.



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  • Registered Users Posts: 53 ✭✭ vmware


    there 2 options as


    staff 60k

    contractor 70k


    what are the pro and cons of each ?



  • Registered Users Posts: 1,236 ✭✭✭ Bigmac1euro




  • Registered Users Posts: 53 ✭✭ vmware


    are there pros and cons of solo trader vs limited



  • Registered Users Posts: 828 ✭✭✭ downtheroad


    Ltd Co- employ spouse, can often make larger pension contributions. However you've to file an income tax return and Corporation Tax Return with Revenue and B1 Annual Return to the CRO.

    Sole trader only files an income tax return. Has no limited liability but shouldn't be an issue in your field. Can't employ spouse/family. Pension contributions are limited to a % of your income (depending on your age).



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  • Registered Users Posts: 828 ✭✭✭ downtheroad


    Class S PRSI for a company director doesn't incur any employers PRSI



  • Registered Users Posts: 1,237 ✭✭✭ mrslancaster


    Sole traders may have employees.



  • Registered Users Posts: 8,291 ✭✭✭ Royale with Cheese


    I'd want to be looking at a contract rate equivalent to 80-90k a year after holidays to think about that really. If you setup a limited company there are overheads of running that per year, it's costing me around 3k currently. Is the 60k just the base salary? Would there be a bonus, pension contributions, health insurance, stock options etc? There is a possible recession coming too, maybe not a great time to be moving into contracting either. I've heard anecdotal evidence of revenue cracking down on one man companies employing their spouse to do nothing too.



  • Registered Users Posts: 2,466 ✭✭✭ Car99


    I'd take the staff 60k out of those two options . If you had to go down contractor route 70k sole trader would be the better option.



  • Registered Users Posts: 2,481 ✭✭✭ ahnowbrowncow


    As a sole trader, diesel costs and car maintenance are not allowable if they are incurred when travelling between home and your normal place of work i.e your commute to work.

    As a limited company, if this is claimed as an expense it would then be treated as benefit in kind. Expenses relating to travel to a temporary place of work are allowed to be claimed.



  • Registered Users Posts: 18,818 ✭✭✭✭ Ash.J.Williams


    No , the government treat you like an employee, they know you’re onsite working as an employee and employee mileage and expenses apply. However if you work away from the office you can claim mileage minus distance to office .



  • Registered Users Posts: 23,582 ✭✭✭✭ Mrs OBumble


    Correct. But it only gets you a class-S "stamp". So it counts towards eligibility for Maternity Benefit and pension, and not a lot else.

    If the poster wants to keep their eligibility for all welfare benefits (eg in case they get sick or the work dries up), they need class A paid. And that will cost the employer-contribution rate, no matter whether it's done thru an umbrella company or a sole trader voluntarily paying class A. (I'm told the latter is possible, but have never found out how to actually do it).

    Also, as a contractor, if the work dries up or the company is sold, you get no redundancy or TUPE rights. You can be dumped out with little warning, and no compensation. The contract rate needs to be high enough to make it worth taking this risk. The more I think about this (with the economy heading into a recession), an extra 10k for contracting is just insulting.



  • Registered Users Posts: 1,067 ✭✭✭ CPTM


    An extra 10k for contracting is laughable. Typically it's double or close to it. In the IT world a business analyst role would be about 65 to 75k, and contracting 500 to 550 a day which is about 120 to 130k per annum.

    I would imagine sole trader isn't an option for you. For example in the IT world, the clients want invoices issued under LTD or umbrella companies. But maybe you're in a completely different field that allows that.

    Pension contributions can be way way higher as well, in the self employed world.

    There are some benefits to contracting, but generally it's the cash that is the main benefit. If you're not seeing that, stay permanent.



  • Registered Users Posts: 53 ✭✭ vmware


    take the staff job so is what im hearing?



  • Registered Users Posts: 53 ✭✭ vmware


    less say I was getting 500 a day and worked 48 weels in the year, that would b €120k for the year.


    cani then setup as a ltd company and claim mileage to work

    mobile

    broadband

    esb

    heating etc?


    also can I pay into pension ?? to reduce my tax, and how am i fixed with prsi etc to ensure I still get the state pension in time



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  • Registered Users Posts: 828 ✭✭✭ downtheroad


    Yes you can set up a Ltd Co. Your company would then employ you (and you can pay employers PRSI to cover your PRSI query).

    The company can then make executive/directors pension contributions which will qualify as a tax deductible expense for the business.

    Your company could pay you the €3.20 work from home allowance free of tax, that covers your heating/broadband query. Company can also pay for a mobile.

    Mileage would be based on civil service rates but can't be claimed for a commute (also if you're working from home then no mileage).



  • Registered Users Posts: 53 ✭✭ vmware


    am i better off as LTD or Solo trader? what are the pros and cons.

    will be a mix of on site / working from Home.


    just would like to max what I can claim for expenses etc is €500 a day a good rate?

    I assume no need to register for VAT, as as such wnt be buying much ??



  • Registered Users Posts: 828 ✭✭✭ downtheroad


    You'll be providing a service and earning over €37,500 so you would have to register for VAT.

    Ltd Co pros - higher pension contributions than a sole trader

    Ltd Co cons - must file Corporation Tax return and Annual Return to CRO as well as income tax return. Therefore extra bureaucracy and cost.



  • Registered Users Posts: 1,067 ✭✭✭ CPTM


    You can double check but I'd be fairly sure they won't take sole traders. Day rate contracting jobs tend to require a ltd company or umbrella company through the likes of Icon accounting.

    You can get a 500 euro gift voucher tax free which is nice. Also your office set up at home like laptop, printer, blinds, chairs, desks,keyboards,screens etc are all expense-able.

    500 is decent, expecially if you can do a half day over time here and there.



  • Registered Users Posts: 828 ✭✭✭ downtheroad


    And kites being flown about raising this limit to €1,000 which will be even nicer again. If you have a Ltd Co you could also employ your spouse to assist with your admin, which may be beneficial depending on their income.



  • Registered Users Posts: 1,067 ✭✭✭ CPTM


    Very good I didn't know that. I must keep an eye out for any changes.



  • Registered Users Posts: 12,751 ✭✭✭✭ Fr Tod Umptious


    Hi OP

    lf it's your first time going down this route I would really advise going the umbrella route using someone like Contracting Plus or as others suggested Icon.

    They really do take all the hassle out of it and you still get many of the tax benefits.

    Once you find your feet in the contracting world you could go it alone.



  • Registered Users Posts: 53 ✭✭ vmware


    what does this mean?


    And kites being flown about raising this limit to €1,000 which will be even nicer again. If you have a Ltd Co you could also employ your spouse to assist with your admin, which may be beneficial depending on their income




  • Registered Users Posts: 48 Mungret Native


    Not enough difference to make it worth while. You'd need approx. 30% difference to make it so.



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  • Registered Users Posts: 53 ✭✭ vmware


    with pension i can only contribute myself so will loose the company matching what I put in . but not so bad



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