Quick answer
- Sole-trader and limited-company structures can change tax timing, admin, accounting costs, legal separation and how money is taken from the business.
- Revenue lists a 12.5% Corporation Tax rate for trading income and 25% for certain non-trading income, but company owners still need to consider how money is extracted personally.
- A sole-trader calculation is usually easier to understand, but it may not match every contractor situation.
- Employment-status rules matter before structure planning: a contract label alone does not decide whether someone is self-employed for tax purposes.
Contractor Day Rate Calculator
Open this Irish calculator to test your own numbers and compare the result with the guide.
On this page
Comparison snapshot
| Area | Sole trader | Limited company |
|---|---|---|
| Setup and admin | Usually simpler | Usually more formal and accounting-heavy |
| Tax calculation | Often linked to personal self-assessment | Company tax plus personal extraction planning |
| Business costs | Tracked against business income | Tracked inside company accounts |
| Liability and separation | Less separation between person and business | More legal separation, subject to company obligations |
| Best checked with | Revenue/accountant | Accountant/company adviser |
Why the calculator uses a planning model
The Contractor Day Rate Calculator is best treated as a pricing and cash-flow planning tool. It can help you understand the rate needed to support costs, billable days and a rough tax set-aside, but structure-specific tax outcomes should be checked separately.
Company tax is not the owner’s take-home rate
Revenue lists 12.5% Corporation Tax for trading income and 25% for certain excepted or non-trading income. A contractor should not describe 12.5% as the final personal tax rate. The company pays tax on its profits, while salary, benefits, dividends, pension contributions and money left in the company can each require separate analysis.
| Money stage | Question to answer |
|---|---|
| Client pays company | Is the invoice correct and is VAT applicable? |
| Company incurs costs | Are costs allowable and properly documented? |
| Company profit | Which Corporation Tax treatment applies? |
| Owner takes money | Salary, dividend, benefit, expense reimbursement or pension? |
| Owner’s personal position | What PAYE, USC, PRSI or other tax follows? |
Employment status comes before structure
Revenue’s five-step framework asks whether there is remuneration for work, whether personal service is required, how control operates, and what the full facts say about the relationship. The framework is applied to each engagement. Using a limited company, sending invoices or calling the agreement a contract does not by itself settle the tax status.
Review status again if the working relationship changes—for example, the client begins controlling hours, location, methods, substitution and integration more closely.
Decision checklist for an accountant meeting
- Expected turnover, profit, contract length and number of clients.
- How much cash you need personally each month.
- Whether profits may be retained for future business needs.
- Pension, benefits, insurance and client requirements.
- Accountancy, payroll, CRO, banking and administration costs.
- Professional liability and contractual risk.
- VAT, overseas clients and place-of-supply issues.
- Exit plans if contracting stops or the company is closed.
Frequently asked questions
Is a limited company always better for contractors?
No. It depends on income level, client requirements, admin cost, risk, extraction plans and accountant advice.
Does corporation tax mean the company owner only pays 12.5%?
No. Corporation Tax is only one part of company planning. Personal extraction through salary, dividends or other routes can have separate tax consequences.
Can I choose self-employed status just by using an invoice?
Not necessarily. Revenue employment-status guidance focuses on the real working relationship, not only the label used in a contract.
What tax does a sole trader pay?
A sole trader generally reports taxable business profit through personal self-assessment, with Income Tax, USC and PRSI considered according to the person’s circumstances.
What tax does a contractor company pay?
The company may pay Corporation Tax on profits, while payments or benefits provided to the owner can create separate personal tax and payroll consequences.
Does a limited company protect me from every liability?
No. Legal separation can help, but directors still have duties and personal guarantees, negligence, tax, regulatory or contractual issues may create personal exposure.
When should I review the structure?
Review before the first contract, after a material increase in profit, when personal cash needs change, when hiring or retaining profit, and before closing or extracting large balances.
Sources & references
Related calculators
Use these tools for the numbers behind this guide.