Sole trader perhaps ?

JC43

Firstly apologies if this question has been covered before.

I was let go the other day from my company and received an ex gratita payment. This is taxed using the scsb method.
I have been approached by two companies to do work for them on a part time consultancy basis. Neither want to put me on the payroll as it would affect their head count. So both have told me to put in an invoice. I have always been a paye worker and did a return every couple of years so how will this work from a tax point of view.? Should I set myself up as a company or sole trader

Secondly how will I pay prsi and what will I do the weeks I may not have work ? Will this affect my old age pension? Or do I sign on for credits the weeks I'm work. Terribly confused .

Thirdly one of the companies us a startup and I might put some money in. Would I be better off doing it before end of December for tax reasons seeing I got that ex grata payment .

Thanks for your advise and knowledge

mrawkward

As proprietary director or sole trader you have to pay a minimum of €500 in PRSI contributions per annum. In either case you will not be entitled to Jobseeker's Benefit or other PRSI benefits such as dental, medical, optical or audio etc as you will be on the reduced self employed rate. Your contributions essentially just preserve your contributory old age pension entitlement.

What tax allowance are you referring to in respect of investing in a start-up?

JC43

Introduction and Summary of Scheme

Startup Refunds for Entrepreneurs (SURE) is a tax relief incentive scheme.

If you are interested in starting your own company, you may be entitled to an income tax refund[1] of up to 41% of the capital that you invest under SURE. Depending on the size of your investment you may be entitled to a refund of income tax paid over the 6 years prior to year in which you invest.

The following is a basic example of how refunds under SURE are calculated.

John makes a SURE investment of €100,000 in 2015.

The €100,000 investment made by John can be used to reduce his taxable income in one or more of the previous six tax years.

John’s Earnings & Tax Paid for the last 6 years [2009 to 2014], per his Forms P60, and current year, per his Form P45, are as follows:
2009 2010 2011 2012 2013 2014 2015
Earnings 80,000 80,000 100,000 75,000 60,000 30,000 30,000
Tax Paid 21,496 21,496 29,532 20,562 14,412 2,700 2,700
John opts to utilise his SURE investment of €100,000 in 2011. This reduces John’s taxable income and tax payable for 2011 to Nil and results in a SURE refund of €29,532 calculated as follows:

2011 Earnings: €100,000
SURE Investment: €100,000
Taxable Income: €Nil
As John paid tax of €29,532 in the 2011 tax year, and has previously not received a full or partial refund of tax paid in the 2011 tax year, he will receive a SURE refund of the full amount of the tax he paid in the 2011 tax year of €29,532.

mrawkward

Do you/ can you meet the investor criteria? Own minimum 15% of company and be a full time employee or director of it?
http://www.revenue.ie/en/tax/it/leaflets/it15.html#section3

BabySlam

I suggest you continue to seek employment to cover your PRSI contributions for all benefits. You can also register as a sole trader and do tax returns for the combined income (as employee and as part-time self-employed). You can claim some expenses before calculating your self-employed tax.

You do not sound ready for full-time self-employment which is why I suggest the above.

It is unlikely a company/corporate structure would suit you at present, but if the self-employment went well you could consider it in a few years. There is no point incurring the costs of setting up and perhaps dissolving a company if you are not sure it will be viable. This rules out the SURE investment for the moment.

Have you done a business course? There are some free online courses on www.futurelearn and you could do one for knowledge sake rather than a certificate.

JC43

I'll only have 10 percent

mrawkward

This a promoter rather than an investor focussed initiative

JC43

So. What does that mean ? Would I still get a rebate ? ... ie if I put in 50k would it mean only 30ish after rebate?. Thanks

mrawkward

If you only hold 10%...No nor if you are not also a full time employee/director. All the info is in the link I posted above, did you read it?