IT Contractor setting up a ltd co. wondering what is the best way to pay myself?

Hi everyone,

I am thinking about setting up a limited company and I am wondering what is the best way to pay myself?

I should explain I am going to be working as an IT Contractor - some people may recommend setting up as a sole trader but I have been told by a few recruitment agencies that they cannot (I think its their policy) hire sole traders to do contracts for them, I need to be either a Limited Company or work under an umbrella company. I have decided to got with the Limited Company option but I am not sure how to pay myself. Needless to say I will be a director of this company and my dad has agreed to be the other director (without a wage).

Should I make myself an employee of the company and pay myself with PAYE and PRSI or is there a way to pay a director without me having to do a personal tax return - ie I want the money I get from the company to be all sorted for tax so I cannot get into a trouble from the tax man thats why i thought PAYE employee would be easier...

Anyone got some suggestions???

Thanks

Well,
You will be an employee of the company. You will pay tax on your salary like an employee. As you will own more than 15% of the company you will have to make a tax return anyway.

You will have to follow all the Paye rules, know your PRSI class (S) and rates, work out your income levy deduction, and make P30 returns probably every month. But if you are the only employee you will soon get the hang of it.

Do you think you will be contracting for more then a couple of years? If not, I would not recommend going the limited company route.

Joe_90 said:

As you will own more than 15% of the company you will have to make a tax return anyway.

Click to expand...

Was just about to ask about this, received a Pay and File Reminder this morning and wondered why since I'm PAYE/PRSI with my own company now.

I used to have another small source of income in the form of a website but I sold that to my company last year, so I presume I should fill in 0 for Prelim Tax for next year, but how do I calculate the balancing amount for last year?

(Note that the "sale" is carried forward, no money has changed hands, and it won't until the company can afford it. So no CGT.)

OP, pardon thread hijack.

Thanks,
adam