Hiring partner as consultant ?

[ksieve]

Hello, I have recently set up a limited company in which I will be the only employee. I live with my partner, we share finances etc and are taxed separately. She works part-time as an accounting technician and her salary is currently c. € 20K per annum.

To increase our total net pay, we would to increase her pay closer to the € 29,400 threshold. I do not want to employ her as the co. would then be paying 8.5% PRSI and so the net benefit would be reduced.

What I propose to do is employ her on a consultancy basis to help me with my year end accounts/tax return etc. She would then declare that income in her tax returns.

Does this make sense ? Anyone see any problems with this ?

thanks.

 

[c1966]

Hi - afriad I see a few problems with this. The main one is that your partner may be regarded as an employee. If that is the case then your company could get hammered for the PAYE and PRSI (employee and employer) that you should have deducted. It is the old question of the employee v self employed. As your partner is not working for a few companies such as yourself then my feeling would go that she is an employee.

A very simple solution would be to make your partner a 50% shareholder in the company. She would then be class S1 for PRSI purposes and employer PRSI would not apply. 5% flate rate PRSI would apply though this is less at lower levels. You may want to seek a ruling from Scope Section of the department of social welfare (or whatever they are called now) to protect yourself.