IT Contracting - Joint Director of Accntnt Administered Co - Fellow directors unknown

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gearoid

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Hi,
I'm considering IT contracting. Some accountants are setting up companies and registering contractors as joint directors.

If you don't know the other directors is this possibly risky due to the legal responsibilities and implications of directorship? It is all administered by the accountant.

I am not sure but I guess this is similar to an umbrella company, or is it?

Any views gratefully accepted.

Gearoid
 
Sounds crazy to me (I am an accountant). If any of the co-directors of the company involves themselves in any sort of reckless trading or incurs a liability through even "innocent" negligence in the course of the company's business, then the company itself and/or all the directors will normally have joint and several liability for debts and/or may be implicated (directly or indirectly) in ODCE or other proceedings against the company or its officers. Steer well clear.
 
Sounds crazy to me too (I am an IT contractor). If you need to, setting up your own limited company only costs a few hundred euro. You must by law have at least two directors and most contractors would just get a family member or spouse to be the other director. In my limited company, my wife and mother are my co-directors. I certainly wouldn't take on directorship of a company when I didn't even know who the other directors are.

I don't understand the logic of the arrangement you describe - how has it been explained to you? What is the purpose of doing it this way?
 
I certainly wouldn't take on directorship of a company when I didn't even know who the other directors are.
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I second that. I understand that a lot of IT contractors usually set up limited companies for tax reasons. Any companies i have set up for IT contractors, they have always put a family member down as the second director. Don't become a director of a company when you don't know the other directors. This will only lead to complications.
 
Re: IT Contracting - Joint Director of Accntnt Administered Co - Fellow directors unk

Thanks all for contributing. I don't want to go into too much detail on the suggested arrangement as I don't want to identify any accountants organising such schemes. I will try to get one of my own family in as a director then and go to a different accountant. I'm in the South Dublin (South Central constituency!) area so any accountants willing to help set up a firm for me and do books please feel free to PM me.
Regards,
Gearoid
 
you don't need an accountant to setup the ltd. company for you - just go to www.companysetup.ie and get them to do the setup for you - employ an accountant later to do your books etc for you (I can recommend my accountant if you like). and I am also an IT contractor and have own ltd company. My only affiliation with companysetup.ie is that I used them when I setup my ltd company and found the whole event very seamless and easy.
my one piece of advice is to get a good accountant as they are invaluable in relation to all of the paperwork (pref one used to IT contractors). a mate used a general accountant who insisted on a whole ream of useless services (eg payslips) which he charged way over the odds for.
 
Re: IT Contracting - Joint Director of Accntnt Administered Co - Fellow directors unk

I'm now looking at creating a Single Member Limited Company with a Single Shareholder. I've been told that I still need a second director. As I will be in as an IT developer is the only liability on the second director related to proper filing of tax returns?

I want to ask my brother to be the second director but he is somewhat worried what he would be getting himself into.

Thanks in advance and thanks for all previous replies.
Gearoid
 
Re: IT Contracting - Joint Director of Accntnt Administered Co - Fellow directors unk

gearoid said:
As I will be in as an IT developer is the only liability on the second director related to proper filing of tax returns?
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No, technically their exposure is much wider than this and can theoretically extend to pretty much any legal or financial default by the company or by you in your capacity as fellow company director. However, once you are trustworthy and honest and make it your business to ensure that your company complies to the letter with tax and other laws, then I don't think your brother has much to worry about. Proper professional advice at the outset (ie before you form your company) is in my opinion the best route towards ensuring that you keep everything in order.
 
On a slight digression, I've been a self-employed contractor for the past few years. Is there a big benefit to being a limited company rather than self-employed?
TIA,
E.
 
yoganmahew said:
On a slight digression, I've been a self-employed contractor for the past few years. Is there a big benefit to being a limited company rather than self-employed?
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The main reason I set up a ltd co was that some companies are unwilling to contract directly with a named individual, in case Revenue deem them to be employing the contractor and hence liable for PAYE & PRSI. Dealing with the contractor's ltd co keeps the relationship more arm's length.
 
If you travel you can claim the civil service standard allowances rather than having to claim based on actual expenditure

If you are earning more than you need to live have the opportunity to shovel all extra company income into a pension fund
 
hi, just in the process of setting up a limited company for our IT and financial services company, with myself and my wife as directors

does anyone have any recommendations for
a) sector-specific and aware accountants (i.e. those who can ensure we claim all that we can and nothing that we shouldn't be!)

b) providers for relevant liability and indemnity insurances (most of the ones I've seen seem to be more shop-related)

c) business banking (I notice Ulster bank offer 3 years' fee-free for startups)

we're in the South East

many thanks
SSE
 
Re: IT Contracting - Joint Director of Accntnt Administered Co - Fellow directors unk

yoganmahew said:
On a slight digression, I've been a self-employed contractor for the past few years. Is there a big benefit to being a limited company rather than self-employed?
TIA,
E.
Click to expand...

Most companies and agents you contract to prefer a limited company structure due to changes in employment law re self employment a few years back. If your self employed you gain certain rights after a period of time.
 
Re: IT Contracting - Joint Director of Accntnt Administered Co - Fellow directors unk

ubiquitous said:
Sounds crazy to me (I am an accountant). If any of the co-directors of the company involves themselves in any sort of reckless trading or incurs a liability through even "innocent" negligence in the course of the company's business, then the company itself and/or all the directors will normally have joint and several liability for debts and/or may be implicated (directly or indirectly) in ODCE or other proceedings against the company or its officers. Steer well clear.
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CXC ([broken link removed]) do things this way. They are a big place and do this all over the world (I came across the in Oz too). No person can involve themselves in a reckless manner as all money is paid into the CXC company A/C which is controlled by CXC. They take there cut, work out your expenses and pay you your expenses and a salary of what's left.

I considered them when I was setting up but didn't like the fee structure. As far as I remember they charge 5% of all the money earned (+ VAT). Accountant fees are €1600 + filing charges (+VAT). It would have worked out dearer for me but if you're not going to be contracting for the full year or are earning lower amounts due to starting out it might work out cheaper. Also, there's only so much an accountant will do, I still have to file bi-monthly VAT and 3-monthly PAYE returns with Revenue (over ROS) which is quite painful (Although I could use an estimate system if my revenue had been more constant). I've spent a large amount of time chasing my accountant to do yearly Company returns and Personal returns. They're a decent size outfit who have a specialist IT person and still I have the pain. I won't name them as I don't recommend them.

Some ramblings that might give you and idea though. I don't believe it's crazy of dodgy though, just a matter of which suits you better.
 
I have been with CxC, there fees are 5% of invoice or 300 per month whichever is lower. no invoice for afew weeks no charge.

I have found them to be great, easily contacted and as 1 of 12 directors in a limited company set up by them. i dont know them or want to .
My tax and PRSI is deduted, i get paid regualrly and my own accountant recommed I stay with them as I save on the fees I would have paid him, as well as having my tax liability deal with to the Revenue satasfaction. His view was , the revenue know CxC keep their contractors on the straight and narrow and therefore attarch less attention than a small ltd business.

just my view as a new to contracting, contractor.
 
CxC willalso do your end of year returns as part of the service if you are with them longer than 6 months.

And I have no connection to CxC other than as a client.
 
Re: IT Contracting - Joint Director of Accntnt Administered Co - Fellow directors unk

Thanks for the recommendations on cXc guys. I've checked them out and they look good if a little expensive. If I stay contracting I may look at setting up my own company and appoint another director, and do my own tax return, but for now cXc looks to be an appropriate solution.

I checked some other managed service companies and was somewhat concerned by their approach to expenses. There seemed to be some sort of "per diem" being applied to expenses, possibly to limit administration for the company. This to me looks non tax-compliant but in the short-term means the contractor ends up with more. If it isn't receipt based I imagine the revenue will come knocking soon enough.
 
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