Consultancy

redzerdrog

What is the best option for someone doing consultancy work outside their regular full time employment?

For example their salary is already in the higher tax bracket

Should they be set up as a normal paye employee and divide their tax credits or is there any benefit to setting up a separate company to bill for the consultancy work?

conor1979

What I did for doing accounting work on the side was the following:

• Register a business/trading name
• Register for income tax with the Revenue (if filing personal returns and not through a company)
• Get insurance

The above will keep you out of trouble.

Depending on what the consultancy work is you can set up a company however the costs of keeping and filing company accounts can be expensive so would all depend on how much money you are making through this work. A company can be useful if you want to use it for specific tax reason's such as putting all profits to a directors pension to avoid paying tax in the higher bracket.

This is general advice, the main bit of advice I would give to you is before doing anything is to find a good accountant (who knows tax too) and have a sit down with them. You will need to be able to give them a few details of current and future plans of the consultancy work for them to be able to advise properly.

Paying for an hours consultation with an accountant will save you a lot of time and money going forward

SureYWouldntYa

If paying 52% tax, and it's income you may not need to currently utilise, it can be better to incorporate and put it through a company given the 12.5% tax on profits. The close company surcharge for certain service companies is also a consideration depending on what is being done, this would be an additional 15% on the undistributed profits.

If it's money that is to be used immediately the company setup is not as beneficial as 52% tax is attracted on extraction anyway

It's not a straight forward consideration and as above a meeting with an accountant or tax advisor would be best as it's the sort of thing that is case specific and you're better off meeting in person