Director or Employee

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I'm an IT contractor with my own limited company. Am I better of, for tax purposes being a director or an employee of my ltd company...or can I be both or does it make any difference?
 
You will be both. You will be a Director but you are also obliged to register yourself as an Employee and pay PAYE/PRSI as normal. So in effect, you will be paying yourself a salary from your own company's profits, rather than simply lodging cheques into your personal account.
 
If you set your company up in 2006 you need to make a From11 return by 31st Oct 07
 
For teh record - in my experience you're far better off going under an umbrella company as an IT contractor.

I was originally under an umbrella company - then i set up my own Ltd. company - now i'm switching back.
It was WAY too much hassle as my own company.
It was awful hassle in fact having to dela with all ur own taxes and vat and red tape in registering etc.

YOu'll actually save nothing either - i found the umbrella company far more 'accomodative' for handing in expenses.
 
qwertyuiop said:
YOu'll actually save nothing either - i found the umbrella company far more 'accomodative' for handing in expenses.
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That's strange. I thought the conventional wisdom was that umbrella companies are less flexible in terms of expense deductions etc than a properly-run and well-advised owner-managed company.
 
Maybe in general they are.

All i can comment on is my own experience.

I suppose it depends on the accountant you have.
 
ubiquitous said:
That's strange. I thought the conventional wisdom was that umbrella companies are less flexible in terms of expense deductions etc than a properly-run and well-advised owner-managed company.
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Maybe it's a properly-run and well-advised umbrella company..
 
Purple said:
Maybe it's a properly-run and well-advised umbrella company..
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Aren't they all? Otherwise they would not be in business. Its just that I have heard it said (and read on AAM) that umbrella companies can be quite restrictive in terms of allowable expenses. As this runs counter to qwertyuiop's experience, I was just interested in finding out more.
 
we provide accountancy services to contractors, both umbrella companies and personal limited companies and it is true that (properly run) umbrella companies tend to be more restrictive when it comes to expenses. One of the benefits of having your own company is you have more flexiblity, for example with your own personal company you may be able to claim a portion of your electricity/phone/broadband costs as your home is effectively your place of business. Under the umbrella company the offices of the service provider is the place of business of the company so you cannot claim "home office" expenses.

be very careful of umbrella companies that are are more "accomodating" when handling expenses, whilst it seems like a better deal they may not be giving accurate advice and if the Revenue carry out a routine audit you may find yourself with a problem - under any routine PAYE audit the expense payments will be closely scrutinised.

in terms of having your own company, it can be a hassle to deal with all the paperwork & returns if you do it yourself but if you use the services of a good accountant the hassle should be minimal, and sometimes the costs involved are not much more than you pay for umbrella company services (in the case of umbrella companies who charge on a percentage basis the cost of having your own company can actually be cheaper)

Rgds

podowd
www.prima.ie
 
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