Self-Employed can defer payment for 12 months

Self-Employed can defer payment for 12 months

If you are self-employed you will be aware you are due to complete your annual return for 2019 which is now due by December 10th. You will be required to pay taxes due for 2019 and preliminary taxes for 2020.

Paschal Donohoe announced a range of measures to help small and medium businesses. One of which is extending debt warehousing to the self-employed. If you expect your 2020 income to be at least 25% less than 2019 then you can apply. This means you can defer your 2019 tax payment and your 2020 preliminary tax payment for 12 months. (source)

However, if there is an underpayment of preliminary tax for 2019 then this can not be warehoused. It can however avail of a 3% reduced interest phased payment arrangement. This needs to be agreed with revenue by December 10th. 

Revenue have confirmed applicants have until the 10th of December to avail of the scheme. The scheme is also open to landlords. (source)

Self Employed Ireland

Self-Employed Ireland : Guide to being self-employed in Ireland

Introduction

Being self-employed is a very common legal structure used in Ireland to operate a business. In 2020, self-employed people accounted for 14.75% of all of those employed in Ireland. 

The registration process for being self-employed is very simple and can be done through ROS.ie. There are a number of benefits of being self-employed, particularly if you are already an employee through the PAYE system. One of the biggest is being able to offset your self-employed losses against your employee income. It’s also very easy to stop being self employed. This can be done through ROS.ie. 

How to register as being self employed in Ireland

You do not need to register as being self-employed if your non PAYE income is less than €5,000 and your PAYE income is less than €30,000. 

To register as being self-employed in Ireland you simply register on ROS.ie. For this you will need a PPS number. Go to ROS.ie and click on “Register for ROS” and then “Apply for your RAN”. 

On the next screen select “An individual or company” and from the drop select “Income Tax”. Enter your PPS number in the “Registration Number” field. Complete the rest of the steps as indicated.

Self-Employed Ireland: Benefits

There are a number of benefits of being self-employed in Ireland:

  • Fast to set up
  • Cheaper to setup than a limited company
  • No financial risk due missing submission of returns with the CRO
  • You can expense apportion of your rent, electricity, internet and heating if working from home
  • You can expenses a portion of your motor expenses
  • You can offset your losses against your PAYE income
  • You can expense your home office
Register for tax sole trader Ireland

Allowable Expenses : Self-Employed Ireland

Here is a list (which is not exhaustive) of the expenses you can claim in Ireland if you are self-employed. We’ve tried to focus on some of the more obscure items. In general, any cost which arises as a result of engaging in business can be expensed.

  1. €500 voucher for employees. The voucher must not be redeemable for cash.
  2. Portion of rent, electricity, heat and internet from your private home if working from home
  3. Portion of motor expenses if using your personal car for business use
  4. Allowance for wear & tear of private motor vehicles use in a business. 12.5% apportioned based on the percentage of millage associated with business use.  
  5. Pre Trade expenses. 
  6. Travel, food & accommodation if this travel is outside your normal place of work.
  7. Employee entertainment which is reasonable and available to all employees

There are a few exceptions which are not so obvious.

  1. Client entertainment
  2. Clothing
  3. Your own pay

How to stop being self-employed Ireland

To stop being self-employed is relatively straight forward if you don’t have a complex business. You simply log onto ROS.ie, go to “Other services” and click “Manage Tax Registrations”. From here you can click on “Cease Registration” for Income Tax. 

If you have registered for VAT you’ll also need to cancel this. You will also need to complete any outstanding returns. 

If you don’t have access to ROS.ie you’ll need to complete a TRCN1

Sole trader Ireland

Sole Trader Ireland

Sole trader Ireland : Guide to starting as a sole trader

Introduction

Being a sole trader is a popular option for a lot of entrepreneurs because it is a very easy structure to set up.  A sole trader and being self-employed are essentially the same thing. 

You are not required to produce a set of accounts although you are required to complete a self-assessment each year. 

A sole trader gives you the option to test your business idea without being overburdened with returns or high accounting fees. If your business idea is successful and starts generating revenue you can switch to a limited company at any time.

This article will cover:

  • Should I be a sole trader in Ireland?
  • When should I set up a limited company in Ireland?
  • How do I register as a sole trader in Ireland?
  • What are my filing obligations as a sole trader?
  • What taxes do I pay as a sole trader in Ireland?
  • Can I be an employee and a sole trader?
Sole Trader Ireland

Should I be a sole trader in Ireland?

Firstly, be careful when getting advice on your business structure. Some accountants will tell you to set up a limited company when it isn’t necessary. In some cases it is because accounting fees are higher for a limited than a sole trader. 

You should be a sole trader in the following circumstances:

  1. You are just starting a business and you’re testing your idea
  2. You are making a very low profit
  3. None of the profits will be reinvested in the business 
  4. There is a very low risk of the business defaulting on its debts

We’ve written an article on a limited company vs a sole trader.

When should I set up a limited company in Ireland?

You should set up your business structure as a limited company in the following circumstances:

  1. You are reinvesting profits back into the business
  2. There is a high risk the business will default on its debts
  3. You require multiple founders
  4. You will be seeking funding
  5. You are taking a significant salary from the business
Register for tax sole trader Ireland

How do I register as a sole trader in Ireland?

To register as a sole trader you need a PPS number. You can register on ROS.ie or you can for you can complete a form TR1.

If you want to stop being a sole trader you follow a similar process. You log into ROS.ie and click on “Other Services”. Click on “Manage Tax Registrations” then click on “Cease Registration” for Income tax and complete the form on the next page.

What are my filing obligations as a sole trader?

At a minimum you need to complete a self-assessment form. If you have a simple business you can complete it yourself. However, if it is too complex you will need to hire an accountant who can charge fees of €750 + VAT. 

Depending on your level of sales you may also need to register for VAT. Generally this needs to be completed every 2 months. This can be as low as every 6 months if your VAT liability is less than €3,000.

You need to register for VAT if your sales is above the following:

  • €37,500 if you are supplying services only.
  • €35,000 for distance selling into Ireland
  • €41,000 for persons making acquisitions from other European Union Member States.
  • €75,000 if you are selling goods
tax filing obligations sole trader ireland

What taxes do I pay as a sole trader in Ireland?

As a sole trader you can not expense your salary. The profit that is remaining is taxed at PAYE rates of 20% (€35,300) , 40% (above €35,300) plus PRSI & USC. You are entitled to a tax credit €1,500 for being self-employed (v employee of €1,650). The deadline for filing your self-assessment return is October 31st. 

As mentioned above, if you are registered for VAT you’ll also need to pay that every 2 months. 

Can I be an employee and a sole trader?

In Ireland you can be both an employee and a sole trader. When you complete your self-assessment you enter your income from your employment and your income or losses from your sole trader business. 

The benefit of being a sole trader and an employee is you can offset your losses from being a sole trader against your PAYE income. 

As a sole trader you can expense a percentage of your rent, heating, internet and electricity if you are working from home on your business.



Helping Businesses in Ireland: Collaboration

Collaboration: Co-Founders, Referral Groups and Knowledge Sharing

Express Your Interest

If you are interested in:

  • Finding a co-founder
  • Creating / Joining a Referral Group
  • Knowledge Sharing
  • Connecting with those interested in being involved in startups

[mc4wp_form id=”1279″]

How can collabration help my business?

Marketing for Accountants in Dublin

Co-Founder

Finding a co-founder can often be a critical step in starting your business. As the environment in which business operate become more complex it becomes more challenging to start a business on your own. Having a co-founder can help bridge the gap in your skillset. 

Increase Sales

There are businesses in different industries which have the same target customer as you. As you are not in competition, this is an opportunity to leverage each other’s client base. For example, an accountant and a web developer could work together to recommend each other’s services

Reduce Costs

Knowledge Sharing

This is an opportunity for early stage entrepreneurs to work together to help each other to get the business started. Each entrepreneur has different skills and experience. For example, an accountant can help a web developer with his company legal structure, VAT and startup funding. The web developer can in turn help the accountant with their website.

Volunteering & Internships

There are a number of people who are happy to share their advice and experience to help businesses get started. There advice could save you both time an money. There are also people who are very eager to gain experience for their CV. The experience you give them could be the stepping stone they need to get their career started. 

April Question & Answers

April 20 - Questions & Answers

Introduction

Each month we’ll take 5 questions our audience have and write an article. This month’s 5 questions are:

  1. How can I get a logo for my business?

  2. Are there any grants available to get online?

  3. When is a sole trader a better option over a limited company?

  4. How can I reduce my accountant fees?

  5. Can I switch from a sole trader to a limited company?

How can I get a logo for my business?

The cost of a logo for a small business can vary quite a lot from €75 – €500. When looking for a logo designer it’s important to have some idea of what you are looking for. At a minimum you should know what colours you’ll be using and have examples of 3 logos you like and why. This will help you get a better quote and minimise any rework.

You can find people to design your logo through gumtree.ie or freelancer.ie. If you are a new company my advice would be to keep you costs to a minimum. You can always change your logo in the future. Some of the graphic designers I’ve encountered have had a tendency to overstate the importance of your logo to charge higher fees so be careful.

Getting Online Grant

There is a grant available to get online which is available through the Local Enterprise Offices. They will cover 50% of your costs up to a maximum of €2,500. You can apply here for the grant.

Please note from April 2020 to September 2020 the amount you need to contribute has been reduced to 10% meaning you get a 90% contribution towards your costs.

When is a sole trader a better option than a limited company in Ireland?

changing-from-sole-trader-to-limited-company-ireland

A sole trader is the better option when you are just starting and you have uncertainty about the level of profits you will make. In addition, if the profits you will make in the early years will be very low then you should run your business as a sole trader. We have a more detailed article here on the benefits of a sole trader v a limited company.

How can a small business reduce its accountant fees?

  1. Use an online accountant who is based outside of Dublin city centre or works from home. These accountants will have a lower cost base which 

  2. Ensure you keep proper records, tracking all expenses and being able to provide the back up to support those expenses such as invoices or receipts. At one end of the spectrum you have receipts in a show box approach. The other end is having a folder (hardcopy or on your computer) with backup for all expenses and revenue with the information summarised in excel.

  3. Shop around. Even if you have no intention of switching accountant it can be useful to check if you are being overcharged. If you do decide to switch make sure you check the accountant’s references. Stay away from any accountant who can’t provide references from at least 2 customers.

Can I switch from being a sole trader to a limited company?

Yes you can change from being a sole trader to a limited company at any time. You can claim relief on any assets you transfer to the business. Also, you need to deregister your business name with the CRO and re-register the name under your limited company. We have a more detailed article here on the topic.

Being Employed and Self-Employed at the same time in Ireland

Being Self Employed Part-time and Working as an Employee

Being Employed and Self-Employed at the same time in Ireland

Introduction

In Ireland you can be both employed and self-employed at the same time. To do this you simply register on ROS for income tax. There are a number of benefits of being both employed and self-employed. The biggest being you can offset your self-employed losses against your PAYE income. One of the biggest drawbacks is you need to keep proper records and submit an annual return. Depending on your trade and your income you may need to also register for VAT. You can do this yourself or hire an accountant. The fees for an accountant to complete a self-assessment return can range from €250 – €750 + VAT for a sole trader.

It’s also important to be aware there are a lot of things you can expense when you are self-employed like the rent you pay on your home if you’re working from home. There are other things you can’t expense like client entertainment.

Generally, if you are working part-time self-employed you won’t be earning enough to take advantage of the benefits of a company but in some circumstances it makes more sense to setup a company than to be self-employed in Ireland.

Being Self Employed Part-time and Working as an Employee

Keeping Proper Records

Looking for an Accountant in Ireland?

 

Request a quote from the accountants on Accountant Pages

You have a legal obligation to maintain a set of proper records should Revenue decide to audit you in the future. These records should be able to substantiate the figures included in your annual income tax return. You should keep copies of anything that was included in your income tax return. These include:

  1. Receipts for expenses
  2. Receipts for purchases of equipment or assets
  3. Sales invoices
  4. Bank account statements
  5. Method for apportion mixed expenses ie when you have expenses which were both private and personal, how did you apportion the business expenses.

Being Self-Employed in Ireland

The Advantages of being Self-Employed in Ireland

One of the biggest advantages of being self-employed is the flexibility it offers in terms of what you can expense. If you are working from home you can expense a portion of your rent, internet, electricity and heating costs. If you buy office furniture or new equipment you get a capital allowance of 12.5% each year over 8 years which will reduce the amount of tax you need to pay. You can also expense any training courses or the purchase of educational material. If you are registered for VAT you can also claim the VAT back. You are allowed to use your business equipment for personal use as long as this use is kept to a minimum. For more information please see our article on allowable expenses for the self-employed in Ireland.

The Disadvantages of being Self-Employed in Ireland

The biggest disadvantages of being self employed is your obligation to keep proper records and your filing obligations. You can hire an accountant to complete these for you. The expected fee for an annual return is €250 – €750 + VAT. This can vary depending on a number of factors including: the quality of your records, the number of transactions, if you have employees, if you are registered for VAT and the complexity of your business. Please see our article on reducing your accountant’s fees. Your ideal accountant is someone working from home who you can communicate with remotely. Accountants with staff and an office will have to charge you a higher fee to cover their higher cost base.

Did you find this article useful?

Please leave us a review on Google My Business

 

Allowable expenses for the Self-Employed in Ireland

As mentioned already in the advantages of being self-employed in Ireland you have a lot more flexibility in what you can expenses in comparison to someone who works as an employee. We have already written a detailed article on allowable expenses for the self-employed if you need more detailed information. You can also read the specific guidance issued by revenue. 

General expenses

As a self-employed person in Ireland you can claim the following general expenses:

  • Advertising & Marketing
  • Salaries
  • Professional fees
  • Travel – Transports, food & accommodation
  • Training & Education
  • Interest and other bank fees
  • Insurance 
  • Purchase of assets – through capital allowances

Disallowable expenses for the Self-Employed in Ireland

It is important to note you can not expense certain items when calculating your tax liability. These include:

  • Clothing – Unless protective
  • Food or Travel – Unless you are away from your normal place of work
  • Client Entertainment
  • Staff Entertainment – Must be reasonable
  • Your Salary
  • Structural alterations to your home

Self-Employed Home office

If you are setting up a home office you can expense a portion of your rent, internet, electricity and heating expenses. It is not recommended you try to expense your mortgage as this will be taxed as income. As mentioned previously you get a capital allowance for any equipment you purchase for your home office. You receive a capital allowance of 12.5% over an 8 year period against the cost of these assets. You are allowed to use the assets as long as this use is kept to a minimum and there are no additional charges to the business as a result of you using those assets. 

It is advisable that you use a separate phone for your business as it can be difficult to keep track of costs for business calls. If you do have a separate phone for your business you are allowed to use it as long as that use is kept to a minimum and there are no additional charges to your business as a result of your personal use.

Self-Employed Pre-trading expenses

If you have any pre-trading expenses you can claim these expenses. These expenses must have been incurred in the 3 year immediately to the trade commencing and must ordinarily be an allowable expense if they had been incurred after the trade commenced. Additional information available from Revenue

Self-Employed Motor Expenses

If you are using your car for business use you can expense a portion of the running costs to your business. These costs can included:

  • Insurance
  • NCT
  • Fuel
  • Repairs
  • Servicing
  • Tyres

It is not advisable you use a company car for personal use as the cost of the benefit in kind is very high. If you would like more information on the topic please see this guidance

Questions on being Self-Employed in Ireland

Should I setup a company in Ireland instead of being Self-Employed?​

Generally if you are only self-employed part-time in Ireland you probably will not be earning enough to justify setting up a limited company in Ireland. One of the major benefits of a company is its tax efficiency for reinvesting profits. As a self-employed person your profits are taxed at 20-40%. Whereas with a company profits are taxed at 12.5%. If you are able to survive on your PAYE income and you expect to make significant profits you’d like to reinvest into your business then it makes financial sense to change from a sole trader (self-employed) to a limited company. If your profits are at a certain level there are a number of advantages to having a limited company.

How do I setup my website?

There are a number of low cost options available to you. You can hire a freelancer (affiliate link) to build one for you. Or you can use an application like Wix. Wix is designed for those who have no technical background. No coding is required it’s all online with a graphical interface. It costs roughly €124 (incl. VAT) per year.  If you would like more advice on business tools you can look at a new website we are starting called Softintro.com

Do I need a separate business bank account in Ireland?

Legally you do not need to have a separate bank account. However, there is the added benefit of making your accountant’s life easier which does result in lower fees. There’s also the privacy issue as well to consider. You will need to provide your accountant with your personal bank accountant statements. Also, if you are using your own personal credit card to purchase items for your business these will also need to be shared with your accountant as proof of payment. 

We have more information on business bank accounts for startups in Ireland if you need more information.

Do I need to Register a Business Name in Ireland if I’m Self-Employed?

You will need to register a business name with the CRO if you are trading under a different name to your own. You can do this through core.ie. The process is very straightforward and the cost is €20. There is more information on registering a business name in Ireland here. You need to make sure the name you select is not already registered. The onus is on you to check this not the CRO.

When do I need to register for VAT in Ireland if I’m Self-Employed?

If you haven’t made any sales then you do not need to register for VAT. Only when your turnover exceeds certain thresholds are you expected to register for VAT. The thresholds are:

  • €37,500 for supply of services only
  • €41,000 for making acquisitions from other European member states
  • €75,000 when supplying goods

The content in this article is not financial or tax advice. If you need advice specific to your situation please consult a professional or contact Revenue. 

Allowable Expenses for the Self-Employed in Ireland

Self employed allowable expenses in Ireland

Allowable Expenses for the Self-Employed in Ireland

Introduction

If you are self-employed in Ireland it’s important you are aware of what you can and can’t expense. One of the best ways to lower your tax liability is to ensure you have captured fully all of your business expenses.  In Ireland there are specific things which you can and can’t expense. It’s important that you are aware of both so you can keep your tax liability to a minimum while also adhering to the rules set out by revenue. In this article we will run through what you can expense and how to calculate less straightforward expenses such as your rent if you’re working from home. 

Self employed allowable expenses in Ireland
Self employed allowable expenses in Ireland

Track Expenses & Keep Receipts/Invoices

Firstly, it is incredibly important you keep track of all of your expenses. This is something you need to do regularly. Little and often is key. You do not want to leave it until the last minute before your income tax return is due. It is mostly likely you will miss certain items and this will result in you paying higher taxes.

Also, you need to keep a record of your receipts and invoices as Revenue can ask for proof of expenses under certain circumstances. 

 

Self-Employed General Allowable Expenses in Ireland

Advertising & Marketing

Any expenses related to promoting your business can be expensed. Payments made to Google or facebook to promote you business can be expensed.  Payments made to create your logo or website can be expensed even if the business hasn’t traded yet. More below. There is also direct guidance from revenue on what can be expensed.

Salaries

Any salaries of those working for you can be expenses. But please note your own salary cannot be expensed if you are self-employed or a sole trader.  You also cannot expense any drawings used for to pay for goods or services which are not used by the business.

Professional Fees

Any accounting fees or consultancy fees you have paid can be expensed. Like most pre-trading expenses these can be offset against your future trading income. Please note, certain conditions do apply. More on this below.

Travel

If you travel for business you can expense your travel fees, accommodation and the cost of meals while away from your normal place of work. It is important to note that Revenue will not accept deductions for travel or subsistence expenses of the self employed based on the civil service rates. This is only available to employees.

Training & Education

Any training courses which you undertake can be offset against your total income as long as these courses are relevant to the trade of the business. The cost of educational material can also be expensed. 

Interest and other bank fees

Any interest on loans can be expensed as well as bank charges and other fees. Your bank should be able to provide you with a statement of any fees and charges you’ve paid.

Insurance

Any insurance premiums you pay like any other expenses which arises from you engaging in business activities can be expensed. These include property and indemnity insurance. 

Purchase of Assets

Assets are depreciated over their useful life. You can expense assets through capital allowances. Most assets from a tax perspective are depreciated over 8 years. Meaning, each year you have a capital allowance of 12.5% of the purchase price of the asset.  

If you rent a room on airbnb. If that room is only used by people on airbnb you will have a capital allowance for new beds or televisions. If you buy a new desk and computer for your business so you can work from home, these will have a capital allowance of 12.5% each year for 8 years.

Self-Employed Home Office Expenses in Ireland

If you are working from home there are a number of expense you can claim. It’s important you utilise all of these expenses to minimise your tax bill. Please see our guide on working from home in Ireland.

Rent & Mortgage

If you are working from home you are allowed to expense a portion of your rent to the business. If you have a dedicated room, this will be based on the square meters of the room as a percentage of the total area of your home.

It is recommended you do not try to expense your mortgage. It will be taxed as income so there’s no benefit in doing so. You can try to expenses the interest only portion but make sure this is excluded from your mortgage interest relief which is due to end 31/12/2020. The rent a room scheme does not apply to businesses renting space.

Electricity & Heat

Similar to rent you can expense both of these. If you live alone you would expect the percentage to be much higher than your rent. 

Phone & Internet

Generally, it’s better practice to have a separate phone for business and personal calls. It’s easier to track and calculate what the business expense is.

You are allowed to use your business phone for personal use and you will not be liable for benefit in kind if the use is minimal and it does not result in additional charges to the business.

Furniture & Equipment

As mentioned above you can claim a capital allowance against the cost of office furniture and equipment in your home. These assets are assumed to have a useful life of 8 years which means you can expenses 12.5% of the purchase price each year.

You can also use these assets for personal use as long as this use is minimal and does not result in additional costs to the business.

For more information see Revenue’s guide.

Self-Employed Pre-trading Expenses in Ireland

A deduction is available under  Section 82 TCA 1997 where the expenses can be offset against income generate through the trade or profession when the expenses incurred meet the following two criteria:

  1. The must have been incurred within the three year period immediately before the start date of the trade or profession

     

  2. The expenses would be ordinarily expensed if they had been incurred after the commencement of the trade.
There are some exceptions to this, one being rental property which doesn’t allow a lot of pre-letting expenses. 
self-employed-pre-trading-expenses-ireland

Self-Employed Motor Expenses Ireland

Are you covered by insurance?

If you plan on using your own car for business use make sure you are covered by your insurance. A number of insurance policies specifically exclude using your car for business use. If you have an accident and it is revealed you were using the car for business use you will not be covered.

Personal car for business use

If you are using your own car for business use you can claim a portion of the running expenses of he car which include:

  • Insurance
  • NCT
  • Fuel
  • Repairs
  • Servicing
  • Tyres 

The amount you apportion to business use must be reasonable and justifiable. You cannot expenses journeys to and from your work location. 

Using a business car for personal use

Generally it’s better not to use a company car for private use. The benefit in kind is very expensive. Particularly if you’re driving a second hand car, the benefit in kind is based on the original market value. There is more information on Revenue’s website.

Exemptions - Car Pool

If a car is deemed to be a “pooled car” ie more than one employee has use of the car then there may, under certain circumstances, be no benefit in kind payable.

From Chartered Accountants Ireland: “One or more employees using a car during the course of the tax year, or their employer, may claim that the car is a “pooled” car.”

  • The car must not stay near the residence of any employee regularly overnight 
  • The car is made available for use by more than one employee
  • Any private use is minimal

Self-Employed - Things you Cannot Expense in Ireland

Clothing - Unless protective

This means you cannot expense any business attire. There is a page on the Revenue’s website for dis-allowable expenses but it’s not very detailed.

Food or Travel

Unless you are working away from your normal place of work you cannot claim travel or expenses. 

Client Entertainment

Client entertainment is strictly excluded as an expense. Even though entertaining clients can be classified as a marketing expense, it cannot be included. 

Staff Entertainment - Must be reasonable

You can have seasonal parties, meals and other events for employees. The cost of these events must be reasonable and available to all employees. More information available here.

Your Salary

As a sole trader or being self employed, you can not expenses your salary. Your salary is the net profit.

Structural Alterations to Your Home

If you are setting up an office in your home your can add furniture and equipment as described above. However, you can not make major structural alterations to your home. 

March Question & Answers

March 20 - Questions & Answers

Introduction

Each month we’ll take 5 questions our audience have and write an article. This month’s 5 questions are:

  1. How much does it cost to setup a limited company in Ireland?

  2. What are the pros and cons of setting up a limited company in Ireland?

  3. What are allowable expenses while being self-employed in Ireland?

  4. Can you be employed and self-employed at the same time in Ireland?

  5. How do I unregister as being self-employed?

How much does it cost to setup a limited company in Ireland?​

If you set the company up yourself the total cost is €50. It’s not as difficult as you think to setup your own company. The CRO has streamlined the process by removing the articles and memorandum of association. They have replaced this with a company constitution for which they provide a template. 

If you hire someone they will charge between €200 €300 plus VAT. You may get it for cheaper so do ask around if you are on a tight budget. If you do hire someone make sure they have the relevant experience and ask for at least 2 references from people who have purchased a similar service.

What are the pros and cons of setting up a limited company in Ireland?

Pros

  1. More funds available to reinvest as taxes are lower 12.5% v 20-40% as a sole trader
  2. Greater access to funds as you can have shareholders. Also, some grants require you to have a limited company
  3. You can only lose what you invest, you are not personally liable for the debts of the company
  4. Some employers only deal with companies eg hiring IT contractors
  5. You can expense your salary

Cons

  1. Higher cost to setup
  2. Running costs are higher as you will pay higher accounting fees
  3. You have increased filing obligations
  4. You will be fined if you do not complete your filing on time and will lose your audit exemption.
We have a more detailed article and video on the topic here: “Sole Trader or a Limited Company in Ireland – What is the best option?

What allowable expenses exist for the self-employed in Ireland?

In general any expense arising during the normal course of business can be expensed. If you have incurred a cost which can be linked to your business you can offset that expense against your income. Some expenses which are often overlooked if you are working from home include: rent, electricity, heating and internet. 

Generally, if costs are mixed, i.e. arising from both private and business use you can apportion those costs to your business. That apportionment must be reasonable. 

Can you be employed and self-employed at the same time in Ireland?

You can be both employed through the PAYE system and self employed. You simply register as being self-employed and when completing your tax return you simply state your PAYE income.

 

What is also very useful is you can offset any business expenses against your PAYE income. So if you are in the early stages of a startup make sure you register as being self-employed first before you start selling as you can offset your startup costs against your PAYE income.

 

How do I unregister as self-employed in Ireland?

You can ideally do this through ROS. After you login, scroll down to “Other services” and click “Manage Tax Registrations”. From here you click on “Income Tax”. Make sure you deregister for other services if applicable such as VAT and as being an Employer. 

If you don’t have ROS you can deregister by completing a TRCN1.

Also, if you’ve registered a business name you’ll need to notify the CRO you have ceased trading and deregister the business name.