Tax - Working as PAYE and contracting

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yop

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Folks,
I would appreciate your advice.

Currently work 5 days PAYE for a company in Mayo. Cashflow means a couple of months owed.

An offer came to me through a friend of a company who need a guy for 2 days one week and 3 days the next to contract into them, Dublin based company, I am based and working in Mayo. The contract is 6 months and paid a daily rate.

I don't have a company setup so I would either have to set this up or go Sole trader.

The company in Dublin know the setup with company in Mayo.

I have yet to agree 100% with the company in Mayo but they will continue to employee (As PAYE) me on the other days I am not contracting in Dublin.

First off, is this setup legal? :)
Can I claim hotel expenses and some expenses against my car?

Is it worthwhile setting up a company for a 6 month contract?

Anything else I need to consider?
I have to pay and accountant to setup regardless of whether I am sole trader or company. What sort of ball park am I looking?

The daily rate with the company is 250. I am currently earning 180 (salary broke down) a day in the company in Mayo.


I apologise about some of the daft questions in advance
 
Sole trade is fine - just register a TR1 form with Revenue.

Complete a Form 11, pay and file by 31 Oct of the following year in which the income was earned.

You can claim business related expenses i.e. hotel, motor fuel / insurance / tax / service etc.

Get a good accountant and they will minimise your tax bill.

You can go a company route either and become an employee and claim mileage rates. But this is pointless for 6 months as you have all the hassle of wrapping it up.

One thing to note, it the Revenue have a good look at companies and trades that are short lived i.e. < 3 years trading. Is there any possibility that they could deem you an employee as opposed to self employed?
 
Thanks Paddy.

The 6 month salary would be 25k, thats a good salary, BUT I think with the fact I have to travel 500km each week, have to stay in a hotel etc that I might work out better as a sole trader?

Thanks
 
Not necessarily. Do you claim mileage in your current place of employment?

If not, you can claim Sch E expenses (i.e. those expenses incurred as a result of your employment not reimbursed by your employer). You do this on a Form 12. You would have to run the figures to see which is better.
 
Will do Paddy, I havent been paid here now in 13 weeks so all arrows point towards the contract to at least pay my mortgage.

Some people are saying that you can't claim as many expenses as a Sole Trader but i am trying to get an accountants appointment down here to see what I should do.

Thanks for all the advice.
 
That is true. With a company you are classed as an employee so you get to claim mileage and subsistence which could be more than actual receipts which you will get as a sole trade.
 
Paddy
Just an update on this, will be doing a 5 day contract now as a sole trader (Easier and cheaper to maintain).
I also offered to stay on with my current PAYE job, I am still owed (now 15 weeks), but he is trying to get my to contract into him!

What do you make of that? Would I be daft as I might lose out on social welfare/holidays and issues getting my money paid if I "leave" and come back in as a contractor?
 
Yop

Are your employers looking for a way to get out of paying you some entitlement like holidays / redundancy? Its a great deal for them. However for you I worry that when all the dust settles, you will be no better off and you will have nothing but hassle in the meantime i.e. Tax returns and therefore possible Revenue audits in the furture, accountancy fees, bank fees, VAT (if applicable), Are you now a subcontractor? What about Professional service withholding tax obligations?
 
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