PAYE worker and Freelance Work - Tax Liability

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theoneill

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Sorry if I am posting in the wrong forum…

I am currently a PAYE worker in full time employment and pay tax on the higher threshold.

My problem is this; I have an opportunity for some freelance work for a client in New York. Potentially this could we worth a good few thousand dollars. But I assume I will have to pay over 50% of whatever I earn from this in tax.

Obviously I wish to limit my tax liability as much as possible but I am not sure how to do this (assuming I can at all).

I was thinking of setting up a limited company as I may have to potential for additional work in the future and at least I could then offset equipment purchases against tax.

I don’t know if this would be the correct approach and I reckon at some point I will have to bite the tax bullet.

Any advice would be most welcome :)
 
Where to begin ..

-Are you aware of VAT implications
-Are you aware you can set off expenses against income, even as a sole-trader
-Do you need a Company-status to win the business
-Are you providing services or goods in America or from Ireland

(In the main as a 'one-man-band' company, setting up as a Co won't save you money/tax)
 
OK, I didn't consider VAT implications.
Essentially in this case I am providing a service in the US from Ireland, could this incur additional tax.

Another reason for wanting to set up a company is because I will likely become an accidental landlord in the foreseeable future and I thought it would be a handy way of handling all my extra curricular business.
 
If all services are to the States, I wouldn't think there would be a VAT liability. You may also get a refund of VAT paid on business expenses.

Are you planning on selling your house to your new company? Will your Bank allow this (assuming you have a mortgage)?
 
There are plenty of threads discussing whether contractors should set up limited companies. I think it's quite clear - you should not do so.

I was thinking of setting up a limited company as I may have to potential for additional work in the future and at least I could then offset equipment purchases against tax.
Click to expand...

A self-employed person has the exact same treatment of expenses as a company, so there is no advantage.

You definitely should not even think about owning property through a limited company.

So, you will just end up paying income tax and levies at just over 50% on your profit, which will be your income less your costs.

Brendan
 
Brendan Burgess said:
There are plenty of threads discussing whether contractors should set up limited companies. I think it's quite clear - you should not do so.
Click to expand...

Thanks Brendan. Do you have a link to a key post on this? I am surprised because as an employer I would be very wary of employing a (long term) contractor who was invoicing me as a sole trader not through a limited company, even if just through an umbrella.

I've heard too many scare stories of companies employing sole traders for long periods who revenue subsequently deemed to be employees and looked for PRSI etc retrospectively (presumably with penalties and interest). I understood contractors can't designate your own tax status, only revenue can do, so if they get it wrong ....
 
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