What is the best option for you?

If you are starting work as a contractor in Ireland, you’ll need to work within a Limited Company. You may set up your own Private Limited Company. However, there are alternative options.

The main alternative available is to work within an established Umbrella Company. This is a Limited Company that will issue invoices on your behalf and manage your salary payments and associated payroll taxes (PAYE, PRSI and USC). The Umbrella Company handles the administration, tax and salary payments, leaving you free to focus on your assignment.

How does it work?

  • The Umbrella Company issues invoices on your behalf to the company you work for
  • The company you work for sends your payment to the Umbrella Company
  • The Umbrella Company calculates what taxes need to be  paid on your earnings and transfers the net pay to your personal bank account also providing you with a payslip and statement of taxes paid
  • If you incur tax deductible expenses relating to your work, you can give the details to the Umbrella Company. Your tax relief entitlements will be included and granted through the payment process
  • When your assignment ends, you will receive a P45 which you can take with you to your next employment.

Why choose an Umbrella Company?

This is often a preferred option for first-time contractors or for those expecting to contract only for a set period.

This is a flexible arrangement where you can work within a Limited Company structure quickly and easily and without the administrative burdens and responsibilities of running your own Private Limited Company.

Why choose a Private Limited Company?

There are circumstances when it is beneficial for a contractor to set up their own Private Limited Company. Bear in mind that this approach is more involved and there are administrative overheads associated with the running of the Company. You can’t simply walk away from your own Private Limited Company as soon as you stop contracting. However, there are benefits in terms of longer term personal financial management.

Contact one of our specialists to discuss which option is best for you: dublin@itcag.com

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