If the business is a Limited Company or partnership it is a separate legal entity. Employment in such a business is not 'Family Employment'. This is because the employment relationship is with the Limited Company or partnership rather than the individual family member who owns or runs it.
If you work for a Limited Company that is owned by a spouse or a family member, the PRSI you pay is determined by the circumstances of your employment.
- If employed as an employee you are insurable (PRSI Class A or Class J applies).
- If you are not an employee but participate in the running of the company or if you hold a directorship/shareholding position and have control over its operations, you may be treated as a self-employed contributor. PRSI Class S applies if you have reckonable income of at least €5,000 per year from 2011 (previously €3,174) from all sources.
From 1 July 2013 proprietary directors who own or control 50% or more of the shareholding of a company, either directly or indirectly, are classified as self-employed and liabile to pay PRSI at Class S. The classification of proprietary directors who own or control less than 50% of the shareholding of the company will continue to be determined on a case by case basis, taking into consideration the "Code of Practice for determining Employment or Self-Employment status of Individuals"
The key question is whether or not you are employed as an employee. The factors that are taken into account in deciding this matter are quite complex.
A limited company is a separate legal entity.
Two or more family members who operate a business as a Partnership and share the profits may be insurable as self-employed contributors at PRSI Class S, provided each has a reckonable income of at least €5,000 a year from 2011 (previously €3,174 a year) from all sources.
The following points should be noted:
- The Partnership must be genuine and supported by appropriate documentary evidence such as, the existence of joint business accounts with banks,etc. There should also be evidence that business activities are in joint names including invoices, mart, creamery accounts, cash and carry accounts, farm grant applications, herd numbers, business insurance policies, etc.
- The most important indicator of the existence of a business partnership is the sharing of profits (or losses). Income Tax returns of each partner showing their shares of the profits should be available. In the case of married couples making income tax returns under joint or separate assessment, the income of each must be shown.
- The Income Tax returns should be correctly made on a current year basis, applications for the backdating of Partnership status are not accepted.
(Note: PRSI contributions are calculated on the basis of income details contained in Income Tax returns.)