Going self-employed: how do i work out a daily rate?

[MissSherry]

Hi there,

Apologies if this is in the wrong area of the forum.

My employer has made a few of us redundant (statutory) and wants us to work as contractors from next month on. The plan is for me to come into the office to do my work. I'd imagine I will probably end up working something like a three week month although it will vary.

I know that i will need to register as self-employed but i need to work out a daily rate for my work. If my gross monthly pay is currently €2600 (single person) how do i calculate a daily rate taking into consideration i'll be moving to Class S PRSI and won't be getting holidays or sick pay etc?
I don't want to leave myself short when i go to the boss with this figure.

If anyone can point me in the direction of a calculator or could point out a method for working this out to me i'd be very grateful.

Thanks

MS

 

[papervalue]

You might give a small bit extra info on background. What is the main reason for redundancy?

Can he pay the Redundancy?

Is their enough work their in next 12 month?

Can you use skills in other weeks/days not working in another company

Some will say on board that you will be still seem as employee in revenue eyes on inspection if self employed as no real change(just to think about)

Can you see him paying you more self-employed? or will he try to pay less

What costs will you incur self-employed eg Will you have many costs such as phone/travel/stat/etc

Items to look at

1. No paye credit
2. Holidays/sick at own expense
3. Hard to get social welfare in future

What you daily rate depends on is what costs you think you will incur plus will he pay more for a self-employed person than an employee

Estimate you annual income
Estimate your annual expense
Difference is profit

Your tax prsi/levy etc is calulated on the profit

You will have to file a tax return each year and pay tax on profits( So now you will have to save tax money as before your employer took it before you got it)

You weekly earnings might go up but the tax is included in this

If you come back with a few estimates say for 2011 some one on board will give estimate of tax bill based on 2010 tax rates as a guide

 

[bluemac]

dont forget you need to cover all costs now and holidays then also cover down time.. ie time when your company would normally let you sit around making the tea waiting for work to come in .. as know youll be at home instead..

I freelance and roughly if you are on €32k a year plus holiday, bonus sick pay etc you want to be looking for about €200+ a day basically this means you will need to do about 40 weeks a year to break even, and don't forget you are now taking the risk of not having work tomorrow which you need to factor in.

Dont forget the 600-1000 accountants bill.

one piece of advice keep your head down, save for a rainy day as you can have months of them each year and look for other clients all the time.

 

[MissSherry]

Thanks for your replies. The reason for redundancy is that the company is going through a very bad period and in they need to reduce the number of full-time staff. Two whole departments have been made redundant. I know he will be keen for us to come back to him with a low rate and he knows our backs are against the wall on this. Some of us have mortgages and families, thankfully at the moment i have neither.

I won't incur any more costs than i do now while working on contract for them as i will be working in the office.

My job is one which i would be able to do as freelance thankfully and i have every intention of trying to get contract work elsewhere while i'm working for my current company as i know we won't be getting as many hours next year.

I will bear everything you've said in mind and try and come up with a rate that doesn't leave me too much out of pocket.

Thanks again

MS

 

[Complainer]

The employer has probably broken the law, if he is claiming the state subsidy for redundancy payments, which this is clearly not a genuine redundancy situation.