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Looking to subcontract out some contracted work

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  • 25-03-2017 10:29pm
    #1
    Tadomeku
    Registered Users Posts: 6 ✭


    Hello all,

    I hope I'm in the right forum here.. Not too familiar with boards.ie!

    For anonymity reasons I won't go into too much detail. I'm working with a startup - When I signed on I thought it was only going to take a few hours per week but it has become too much on top of my normal job. It has nearly become a second full-time job. For the last few days I've been toying with the idea of subcontracting out some of the work from the startup to online freelancers..

    Question #1:
    This will be done in secret i.e. I won't be telling my "employer". I use employer loosely because I'm technically not employed by them. They've structured it in such a way that I am a contractor so they pay me for my service. So I would have to file my own taxes etc.. So my question here is how much of a grey area is subcontracting like this? Can there be legal repercussions if my "employer" was to find out?

    Question #2:
    While we try to grow and expand we are offering our service to new clients for a fraction of competitors prices. This in turn means that what I'm getting paid is a relatively small sum per project. This leads me onto filing my tax returns.. Let's say for arguments sake I got 300 for a project and subcontracted it out for 200. Would I be paying income tax on the 300 that or the 100 that's left?

    How would it work if I set up my own company? i.e. Startup company A pays NewCompany B for their service who in turn pays their freelancer. Would this be a better approach tax-wise or would it make a difference?

    ----

    For what it's worth I don't plan on staying with the startup too long. It's just right now is not a good time to start talking about leaving. Once they're on a solid foundation and there is an option to replace me I will bring it up..

    Cheers lads..


Comments

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    #2
    Stheno
    Moderators, Business & Finance Moderators, Science, Health & Environment Moderators, Society & Culture Moderators Posts: 51,688 Mod ✭✭✭✭Stheno


    Moved from work and jobs, new charter applies


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    #3
    CIARAN_BOYLE
    Registered Users Posts: 14,599 ✭✭✭✭CIARAN_BOYLE


    Your tax is on your profit, but you have to declare your income and expenses.

    You are responsible for the quality of the work you subcontract.

    As to whether you can subcontract the work it depends on the contract.


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    #4
    exaisle
    Registered Users Posts: 2,675 ✭✭✭exaisle


    CIARAN_BOYLE wrote: »
    Your tax is on your profit, but you have to declare your income and expenses.

    You are responsible for the quality of the work you subcontract.

    As to whether you can subcontract the work it depends on the contract.

    I think there's a bigger question here. I think there's an issue as to whether the OP is an employee or a contractor. Sounds to me like the "employer" has "structured it in such a way" that they save paying employers' PRSI on OP's salary.

    OP..is it possible for you to say what kind of service you provide?

    Realistically, it's time you saw an accountant.


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    #5
    Tadomeku
    Registered Users Posts: 6 ✭Tadomeku


    I've never asked the reasoning for this structure so I honestly don't know how to answer that question.


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    #6
    CIARAN_BOYLE
    Registered Users Posts: 14,599 ✭✭✭✭CIARAN_BOYLE


    Tadomeku wrote: »
    I've never asked the reasoning for this structure so I honestly don't know how to answer that question.

    Probably a mix of employer prsi and you never getting employee rights with a bit of them being a small start up (with no employees)so they can avoid trying to figure out how to do payroll.


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    #7
    the_syco
    Registered Users Posts: 37,301 ✭✭✭✭the_syco


    Tadomeku wrote: »
    This will be done in secret i.e. I won't be telling my "employer". I use employer loosely because I'm technically not employed by them. They've structured it in such a way that I am a contractor so they pay me for my service. So I would have to file my own taxes etc..
    How much notice do they need to give you, to sack you? I ask, so you don't give your subcontractor any more...


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    #8
    RUDOLF289
    Registered Users Posts: 794 ✭✭✭RUDOLF289


    Tadomeku wrote: »
    I've never asked the reasoning for this structure so I honestly don't know how to answer that question.

    But you do have a contract don't you ? That contract would / should stipulate the terms and conditions. I am in a not dissimilar position and I have the flexibility to subcontract the work, as long as I guarantee the quality of the work I do.

    If you don;t have a contract you may want to review that ..........

    Cheers,
    Rudolf289


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    #9
    ironclaw
    Registered Users Posts: 8,004 ✭✭✭ironclaw


    You mention start up, is in the the IT world? You'd want to check your clauses regarding non-competition and non-disclosure should they exist. You could be in hot water if the person you contracted made off with some IP and it came back to you, especially if your 'employer' is unaware of it.


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