Director of company, employee or self assessed

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streamer

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My husband and I are directors of a company that we established last December to run his IT business. I work for a different company and receive income through the PAYE system. We're jointly assessed for income tax in my name.

We've both received preliminary tax reminders. My husband hasn't paid PAYE/PRSI during the year as I understood he didn't need to as a proprietary director and that both will be paid via his income tax return due at the end of the month. Having scanned some other posts this doesn't seem to be the case, ie the company should be treating him as an employee and deducted PAYE and PRSI each month. I'm confused, can anybody clarify this for me?

Thanks in advance for any help.
 
If he takes a salary from the company then paye/prsi should be deducted and paid to revenue monthly. However, some people who set up a company do not take a salary from it for the first year or 2 until the business is established, provided they have enough other income on which to live.
 
Get proper accountancy advice urgently. Your husband could be unwittingly committing serious breaches of company law if he is drawing funds from the company without observing paye/prsi formalities.
 
if your husband is a proprietary director they he is in band S self employed
so there is no Company obligation to pay prsi and your husband does
his normal self employed returns.

***NOTE***
this was the case when I was a Prop. director 3 years ago, I am no longer
a Prop. director and don't know if its still the case.
If you are ever in doubt you should always ask a professional.

[broken link removed]
 
if your husband is a proprietary director they he is in band S self employed
so there is no Company obligation to pay prsi and your husband does
his normal self employed returns.
Click to expand...
This isn't correct, nor was it correct 3 years ago.
 
ubiquitous said:
This isn't correct, nor was it correct 3 years ago.
Click to expand...

What exactly isn't correct?

Its what I did, company payed no PRSI and I did 1 tax return.
this was signed off by my accountant.
 
Companies ARE obliged to deduct paye and prsi on directors salaries. This is a basic premise of the tax system and it is surprising that your accountant did not know this.
 
Yes, on proprietary directors.

Judging by your use of the above link I suspect that you may be confusing employee and employer PRSI? Employee PRSI on prop. director salaries is 5%. There is no employer PRSI. However the onus is on the employer (ie the company) to deduct the employee portion of the PRSI at source from salary payments made to the director, and to remit these sums to Revenue via the PAYE system.
 
ubiquitous said:
Yes, on proprietary directors.

Judging by your use of the above link I suspect that you may be confusing employee and employer PRSI? Employee PRSI on prop. director salaries is 5%. There is no employer PRSI. However the onus is on the employer (ie the company) to deduct the employee portion of the PRSI at source from salary payments made to the director, and to remit these sums to Revenue via the PAYE system.
Click to expand...

I 100% payed only once.
I was a sole trader and then setup a Ltd and the Ltd had no
tax to pay.
Now the Ltd pays their tax and deducts mine monthly, like a normal employee.
Accountant is a mate so i'll ask him.

Your above seems correct, (maybe I was still working as a sole trader
and the company sub contracted me)
 
Well at least you had an accountant so you're probably Ok, maybe just wasn't clear to you the detail of what was going on. For tax purposes, the company is a different entity to the directors, all of whom are obliged to pay PAYE/PRSI on salary or wage drawings from the company. PRSI is at 5%. There is no "top up" PRSI contribution required from the company, although this is required for non-director employees of the company.

Clear as mud, right? :)
 
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