Sole Trader v Ltd Co with one employee

D

donncha

Registered User
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I do IT consulting, and have no other source of income. Up to recently, I operated as a sole trader, registered for VAT only, and doing a Form 11 for tax.

Now, I have set up a Ltd company (no employees, just me).

From reading the posts here, it seems that, from a tax point of view, I may be better off to just continue as a sole trader, instead of using the company.

As a sole trader, I just do the form 11 every year. For the company, I would need to tax myself under PAYE, pay employer PRSI, and CT also (in the future), as well as CRO returns.

I don't have any need to avail of company advantages such as the limited liability. It's just that some clients may prefer to deal with a company than an individual.

Is it really that clear cut, that I'd be better off to continue as a sole trader, or am I missing something?

Many thanks

D
 
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I never understood this attitude ltd co. v Sole trader

If you deal with or give credit to a limited company you better check out the companies filled accounts first and see if the company has any assets in it which you could pursue if the company folds , most creditors see nothing after revenue get their piece of the pie as many people found out over the last couple of years

While on the other hand if you deal with/ give credit to a sole trader you are able to pursue that person and that persons full personal wealth / property etc using the normal debt procedures.

I know a lot of people who have fallen fowl to the misguided idea that its safer to deal / give credit to a limited company

How ever I do agree that some clients may prefer to deal with a company than an individual , not sure why this preference has prevailed .
 
tax myself under PAYE, pay employer PRSI
Click to expand...

No employer Prsi. Although you would have to tax yourself under Paye admin you would still be considered self-employed, and not allowed a Paye tax credit, if you are proprietary director.

Company is more hassle, definitely.
 
GDUFFY said:
I never understood this attitude ltd co. v Sole trader

If you deal with or give credit to a limited company you better check out the companies filled accounts first and see if the company has any assets in it which you could pursue if the company folds , most creditors see nothing after revenue get their piece of the pie as many people found out over the last couple of years

While on the other hand if you deal with/ give credit to a sole trader you are able to pursue that person and that persons full personal wealth / property etc using the normal debt procedures.

I know a lot of people who have fallen fowl to the misguided idea that its safer to deal / give credit to a limited company

How ever I do agree that some clients may prefer to deal with a company than an individual , not sure why this preference has prevailed .
Click to expand...

GDuffy,
In the case of contractors like the OP, the main consideration for many employers is concern about the distinction between an employee and a self-employed contractor.

Locum doctors are a prime example of an area where Revenue have taken the view that people who were contracting as self-employed, were not in fact contractors, but employees on whose pay PAYE/PRSI should have been operated.

Dealing with a Ltd company legally gets around such grey areas, as it is the Ltd co. who employs and supplies the labour.
 
Thanks for the responses, I was just looking for confirmation that I'm not missing something major. Thank's for the info re Employer PRSI, I was not aware of that. I am a propritory director, so at least that means there is no great differnce on the tax side.

D
 
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