Being Paid as an Employee vs a Sole Trader

MisseyB

MisseyB

Registered User
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I've been a sole trader since 2003. I've always been paid directly by clients on foot of an invoice. Now I've a client who wants me to pay me a large portion of my fee (about €10000) as an employee. They've asked about this because the funding they have for the project allocates money for staff and for external consultants separately and they've still some money left in the staff pot.

I return an Form 11 every year and pay my tax that way.

I'm not sure what effect that will have on the total value of this contract. Do I need to charge extra/less to allow for different USC & PRSI rates?

Or is just so complicated I should stick with what was agreed, i.e. payment on foot of an invoice?

Thanks in advance for your help.
 
Are you an employee of the business in question?
If not then how can they pay you as one?
 
ClubMan said:
Are you an employee of the business in question?
If not then how can they pay you as one?
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If they wish to pay her as an employee, and presumably within the terms of an employment contract, she axiomatically becomes an employee for its duration. Temporary project-specific employments are neither uncommon nor particularly complicated.

If I were @MisseyB I'd be minded in principle to oblige the customer's wishes but she probably needs to be talking to her accountant or another trusted advisor about any business aspects and consequences of the arrangement.
 
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Thanks for the responses. It's much appreciated. I'm currently between accountants and while I'm trying to source a new one, wanted to see if there were any immediate red flags about doing this.
 
The rates of USC and PRSI should be the same in either system.
Becoming an A rate Prsi contributor could be to your advantage in the future.
After the employment is ceased you could continue to sign on for A credits.
These credits could be used for qualification for the contributory pension, if you retired early from your self employment and could help you qualify for 65s benefit.
 
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bstop said:
The rates of USC and PRSI should be the same in either system.
Becoming an A rate Prsi contributor could be to your advantage in the future.
After the employment is ceased you could continue to sign on for A credits.
These credits could be used for qualification for the contributory pension, if you retired early from your self employment and could help you qualify for 65s benefit.
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Thanks for that info. I accidentally let my PRSI contributions lapse when I left the PAYE system 21 years ago. I've been meaning to try to get back into it.
 
MisseyB said:
Thanks for that info. I accidentally let my PRSI contributions lapse when I left the PAYE system 21 years ago. I've been meaning to try to get back into it.
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They won't have lapsed if you've been earning and filing returns as a sole trader in the meantime.
 
MisseyB said:
Thanks for that info. I accidentally let my PRSI contributions lapse when I left the PAYE system 21 years ago. I've been meaning to try to get back into it.
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You can be self employed and paying an S class Prsi and also be registered as a Jobseeker in the Prsi A class system. This means that you can have paid S class and A class credits in any particular year. It's good to keep the option of gaining benefits under both systems open.
 
bstop said:
You can be self employed and paying an S class Prsi and also be registered as a Jobseeker in the Prsi A class system. This means that you can have paid S class and A class credits in any particular year. It's good to keep the option of gaining benefits under both systems open.
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Presumably you can only do so if you're actually seeking work?
 
T McGibney said:
Well obviously. But their reckonable contributions for OAP pension won't.
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Yes. But the point I am making is that it is advantageous to remain in the paye system because if the poster was to retire early from self employment they could use the A credits gained after retirement towards qualification for the contributory pension and the 65s benefit. They cannot claim S class credits. If they were short of 40 years contributions at early retirement and not in the paye system they would need to pay for voluntary contributions.
 
bstop said:
Yes. But the point I am making is that it is advantageous to remain in the paye system because if the poster was to retire early from self employment they could use the A credits gained after retirement towards qualification for the contributory pension and the 65s benefit. They cannot claim S class credits. If they were short of 40 years contributions at early retirement and not in the paye system they would need to pay for voluntary contributions.
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She's been out of the PAYE system for 20 years, so your point is moot.
 
Thanks for all your comments. They've been very helpful and I appreciate you all taking the time to make them.
 
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