If you’ve been Contracting for a while and are thinking about Professional Contracting as part of your longer-term career plan (at least for the next 3 – 5 years), there are considerable benefits to having your own Personal Limited Company.
With your own Personal Limited Company, you can market your business, expand your operation and take on employees, purchase a commercial vehicle and have more flexibility with your salary and pension.
Being a director of your own Company allows you to have more control over your finances and long-term tax benefits such as Retirement Relief (where you can extract up to €750,000 tax free from your company) or Entrepreneur Relief which allows for a Capital Gains Tax rate of just 10% (normally 33%).
Contracting PLUS are Ireland’s experts in the administration of Personal Limited Companies for Contractors. We’ve been helping our clients for over 20 years to set up and maintain companies to ensure Contractor financial success. We support Personal Limited Company owners with their own personal Dedicated Account Manager to assist throughout their company journey.
Your Personal Limited Company invoices the client you work for, and money received is paid into the Company bank account. The Company now owns this money. The Company then uses this money for things such as paying you a salary, making pension contributions on your behalf, purchasing Company vehicles and reimbursing you for business expenses you have incurred. Contracting PLUS makes sure all your accounting and tax is done correctly so you can concentrate on what you do best.
The initial outlay to purchase the vehicle and all related expenses goes through your Limited Company. All expenses that relate to the vehicle are paid by the company which makes owning a company car tax efficient (expenses such as tolls, repairs, insurance, motor tax etc all qualify). We recommend a commercial vehicle or a fully electric car. Commercial vehicles incur a BIK tax (Benefit In Kind tax) of 8% of the original market value. Electric cars have no BIK where the new cost of the car was less than €35,000 for 2023. There are changes to the BIK from 2024 onwards so if you’re considering a purchase next year, be sure to discuss this with your Dedicated Account Manager.
Example of buying a Commercial Vehicle
If you are incurring substantial business mileage (greater than 40,000 kms per year), a regular petrol/diesel/hybrid car may be an option for you also. However, without high business mileage, the BIK tax of up to 30% makes this an unattractive option.
A great brand can help you stand out from the crowd. Creating and marketing your own human capital identity is critical to being viewed as a subject matter expert, which is very useful when looking for new clients.
When you have your own Company, you have complete control over the name of the Company and how you want to market yourself. If you want to create a website, it’s much easier when you have control of these elements.
If you’re supported in your business by your Spouse/Partner, you may decide to pay them a salary. They may be assisting you with administrative, marketing, or general business duties. It is important that their salary is in line with duties they carry out. By employing a family member, you may be able to save up to €6,000 in taxes each year. Your dedicated Account Manager can explain how this works.
If you’re growing your business and have a number of contracts that require other Professional Contractors, you may want to engage Sub-Contractors. You can do this through your own Personal Limited company which is a more tax efficient option than employing people directly. This also protects you from the responsibilities associated with being an Employer such as Holiday Pay, Employers’ PRSI, Bank Holiday Pay, Pension, etc.
In today’s business environment, there are many opportunities available to us all. You may decide to invest in cryptocurrency or increase your capacity to generate another income for your Company by selling products through an e-commerce platform. The administration of other income streams can be easier when you have your own company.
To grow your business, you may need to further your education. You might consider completing a PHD, Masters, or other courses which will allow you to broaden your skills. With your own limited company, you may be able to claim the cost of further education as an expense of the company.
If you are heading towards Retirement in the next few years, you may be in a position where you don’t require your full salary each month. If this is the case, it may be beneficial for you to build up funds in your company and then plan the most tax efficient way to withdraw these at a later date. This may be done through Retirement Relief or Entrepreneur Relief.
With Retirement Relief, if you meet the conditions, you may end up paying taxes of 19.5% as opposed to 52%. With Entrepreneur Relief, you may be able to take a lump sum out of your business.
There are some terms and conditions attached but we’re happy to go through these with you and help you take advantage of these tax saving opportunities.
You’ll receive the help of a Dedicated Account Manager who understands your industry. They’ll advise you every step of the way, ensuring you’re fully compliant with the Revenue authorities and accounting standards. They’ll remind you when it’s time to complete your tax return and make sure that you’re fully aware of all your obligations. They’re your secret weapon when it comes to running your business.
Having your own company isn’t complicated, it’s free to establish and your Dedicated Account Manager will manage the set-up for you. Your account manager will help you understand how to best use your Personal Limited Company to achieve your financial goals. If you think you would like to have your own Company, contact your Account Manager now and they’ll take explain how it all works and take care of everything for you!
As well as the support of your Dedicated Account Manager to assist you throughout your company journey, all Personal Limited Company owners have free access to our bespoke accounting software which can be used to run the accounts of your company, keeping tabs of your expenses and profits so that your end-of-year reporting is simple. Support and guidance comes free-of-charge too!
As always, if you have questions, we’d be delighted to discuss these with you and advise if we believe your personal financial situation could be improved by setting up your own company.
There are some great financial benefits to be had by owning your own company, so why not have a conversation with us and see where you stand? At Contracting PLUS, we want all our Professional Contractors to get the best financial outcome from their Contracting career. We want our Contractors to reach their full financial potential and we’re available any time to help you achieve that.
Contact us to book a free consultation with an expert from our team!
Would you like to be redirected to our Indian website?