With so many options out there, it can be tricky to know which solution is best suited to your contract role. Whether you’re just starting out or have been contracting for years, making the right choice can save you time, stress, and money. Here’s an easy-to-follow guide to help you find the best accountancy and tax solution for your needs.
The first thing you need to consider when choosing an accounting and tax solution is how long you plan on contracting for. If you’re only planning to contract for a short period or are new to contracting and want a quick and easy way to test the waters, the Umbrella PAYE option might be your best bet. The set up is fast, free and you still maintain your PAYE tax credits as well as your Class A PRSI. With this option, you become an employee of an umbrella company, which handles all tax and payroll matters for you. They invoice your client and pay you a salary after tax and deductions.
An Umbrella Company is already setup, insured, VAT registered, named, and has a bank account in place. It acts as a vehicle that allows you to get paid in a compliant manner when operating as a professional contractor.
If you’re in a medium to long-term contract but don’t want to commit to setting up a Personal Limited Company yet, an Umbrella Director solution may be more suited to you. This solution lets you be the director of an umbrella company and avail of claimable business expenses and tax benefits that are not available in the PAYE solution, allowing you to maximise your take-home pay. Although if building a personal brand or having more flexibility to build and retain wealth is your priority, a Personal Limited Company might be best for you.
If you’re planning to contract long-term and want to take full control of your finances, consider setting up a Personal Limited Company. Owning a Personal Limited Company opens up a realm of possibilities. You have full control over the naming and marketing of your business, how you expand your operations, hiring potential employees, and you gain more flexibility over your salary and have more pension planning options. You have more flexibility claiming business expenses such as company vehicles, you can take advantage of tax reliefs, and strategically manage your income to reduce your overall tax bill.
If your primary goal is to build up your pension pot while contracting, a Personal Limited Company solutions could offer you significant advantages. This solution allows you to make tax-deductible pension contributions directly from your company. This not only reduces your taxable income but also helps you grow your retirement savings in a tax-efficient way. With Retirement Relief, you can even extract up to €750,000 tax free from your company. Have a chat with our experienced pension advisors over at Contracting PLUS Financial to explore the best options for your circumstances with advice delivered to you jargon free.
At Contracting PLUS, we believe in making your contracting journey as smooth as possible. Once you’re registered with us, you’ll get a Dedicated Account Manager who will be your tax and accountancy guide, they will ensure you are tax compliant, they will help you to maximise your take home pay, and they are available by phone or email to answer any questions you may have (and the good news is you are never on the clock, this is all part of our service)! You also receive a free financial review and access to our mortgage services making sure all the bases are always covered.
Choosing the right accountancy and tax solution comes down to understanding your needs and priorities as a contractor. To find the solution that’s right for you, book a consultation call with our expert Solutions team at Contracting PLUS or ring us on (01) 611 0707.
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