Small business needs to restructure to survive, how to?

D

DavyJones

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I run a small business in the construction industry and would like advise on how to change my full time employees from PAYE to sub contractors. PRSI,Holiday pay and Pension payments are killing me. I fear this next budget may tip us over the edge.

Can i swap them over legally?

We also supply company vans, how does this effect the swap over? Since the workers would be self employed I assume they would have to supply themselves with transport/fuel costs etc.

Thanks for any help.
 
It is not as simple as that, if the sub contract works for you and no one else, then they are treated as employees. A sub contractor has to be free to work for anyone, if they can only work for you then revenue will insist that they are treated as employees

Also will the employees accept being sub contractors and the loss of Social welfare entitlements by moving from employee to self employed.
 
The old "contract of services or contract for services" question. Revinue will nail you to the wall.
 
Hi Davy

It seems that you need to cut the cost of your employees. Don't get hung up on PAYE vs contractors.

Can you cut the salaries or are they set by regulations?

If it's a question of survival, then you will just have to cut the salaries and stop contributing to the pension fund until things improve.

To move your employees to sub-contractors, you will have to make them redundant which has a cost. The cost could be significant if they are long-term employees.

If the business is not viable, is there any possibility of closing it down temporarily until things improve?

I did a Key Post on business viability here. If you would like to post some further details, we could do a Money Makeover project.

Brendan
 
Thanks for the information.

I think I may have to go back to a one man show, I would be far better off. Thankfully I am in a position where I am up to date with my suppliers and revenue. I have almost paid off our bad debts, this came from a reduction in my wages. I have staff that are paid more than I am.

I could soldier on but am a bit disillusioned by the whole system and feel I am working tirelessly for my staff,suppliers and revenue. I do know that there are people worse off, that have no choice but to carry on or fold.

In relation to redundancy payment, there is only one staff member, they have been with me since early 07.

When I make people redundant, is it ok to sub contract out work to already existing contractors? I would assume so.

Thanks again for the links and advice.
 

I say it would be ok to subcontract work

can you clrify if you are a sole-trader or a company

In regard to redundancy- You will get a 60% rebate from gov(Takes 8/9 months to get or get it offset against other taxes)

Going forward if re-employing new employee, maybe look for one that is long term jobless( I think 1-2 years) to see about employer exemption for prsi or double deduction against if applicable
 
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