Director Umbrella Companies: The Danger
A Director Umbrella Company enables a Contractor to become the Director of a Limited Company, usually a Shelf or Established Company for the purpose of invoicing an agency on their behalf. This is an attractive option as the Contractor incurs no set-up fee, but would enjoy the benefits of a proprietary Director. Such benefits may be inclusive of Executive Pensions and a reduced PRSI.
However, when it comes to Agencies managing these Shelf/Established Director based LTDs, there may be the issues of Tax Compliance, which may be grossly overstated. I capitalised the words, Tax Compliance because it can become a very serious issue for non-proprietary Directors/Contractors. As a Director, regardless of how active in the running of a Company, you may or may not be, YOU ARE LIABLE for compliance, equally alongside other Directors and those managing the Company on your behalf.
Now, there has been advertisements in recent years from managed service providers, stating one could retain 90% of their Gross Pay. This is an immediate red flag and should scream at you to stay away. While it all may be wonderful to bring home so much money, especially when bills must be paid, the probability of Revenue showing up at your door for an audit, landing you with a rather large tax bill.
It is the responsibility of every Contractor to shop around, seek reviews and ensure the compliance of each Company offering managed services. The aim is to protect yourself first and foremost.
Accounting Pro is Ireland’s premier contractor accounting service. We are here to help you, the busy contractor and/or company, with all your accounting and payroll needs. We are both an umbrella company and umbrella corporation and we can create your limited company. We are on your side, always. To learn more about what we do please review https://www.accounting-pro.ie/ and contact us by email: firstname.lastname@example.org or phone us 01 6933370. For the UK see Accounting-Pro UK. “Director Umbrella Companies: The Danger” is an article written by Accounting-Pro Ireland for the benefit of everyone. Feel free to share it but please give attribution on a CC BY-SA license.