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.



LoyLap – Marketing to customers made easier

LoyLap - Marketing to customers made easier

About LoyLap

 I recently had the opportunity to interview one of the founders of LoyLap Patrick Garry. LoyLap was founded in 2012 by Patrick and is co-founder Conor O’Toole. They were inspired by the positive response Starbucks had with their initial loyalty app and wanted to make this technology available to businesses which wouldn’t have the resources to create an app by themselves. 

Initially their app was trialled with 20 businesses. Of the 20 which initially tried the first beta 10 wanted to pay to keep using their service. Their services are subscription based and customers can cancel their service when they want. Because of this they closely listened to the needs of the customers and reinvested their profits back into the business to develop the product they offer today.

Services

LoyLap allows businesses to market to their customers in an automated way. They offer:

Cost of using LoyLap

It costs €15 per month for their basic loyalty system. If you would like to give your customers a digital wallet and preordering the cost is €40 per month + 2% of any transactions. They can also build a custom app for your business for €1,950.

Who are LoyLaps customers?

Loylap has an array of customers which include: Bear Market Coffee, Bannatyne Gyms, The Dean Hotel, wagamama, The K Club, Rockets by Eddie Rockets, Sprout & Co., Esquires Coffee, Florence Coffee.

LoyLap was able to provide me with a video of one of their customers who shared his opinion on the app. Stephen Deacy of Bear Market coffee had very positive things to say about their app.

 “The Bear Market app has all our loyal customers in one place. Customers can preorder their products and receive extra loyalty over other customers. It also allows us to interact with our loyal customers through birthday promotions and new store opening promotions. It is a one stop shop for our loyal customers.”

Opinion on LoyLap

I haven’t used the app but I think it’s a very good idea to help businesses to market to their customers. The LoyLap will allow businesses to focus on what they do best and manage a lot of the marketing and promote greater loyalty among existing customers.

The cost of their service is far cheaper than other means of promotion I’ve used such as print or social media. The fact they can link into POS and automatically recommend products to customers based on their past spend is a very useful marketing tool.

I currently work in a bank and being able to order my lunch ahead is a service I wish more companies offered. It would result in less time queuing and for the business it means they can serve more customers.

Customers can load funds onto their digital wallet which the company can then increase spending power of. For example, if you load €100 you get €115 to spend. The benefit for the company is they receive those funds in advance of the customer purchasing a product. I think this will also increase great loyalty among customers.

I think the app is well suited to retailers who have a lot of repeat sales such as Tesco, Spar, Dunnes Stores and Super Value etc. Being able to suggest products based on past spend will be very useful to increase cross selling among existing customers. 

How to setup a company in Ireland as a non EEA resident

How to setup a company in Ireland if you are a non EEA resident

How to setup a company in Ireland if you are a non EEA resident

Introduction

If you are a non EEA resident, under Irish law you can be a director and setup a company in Ireland. There is an additional step of purchasing a non-EEA resident director bond (S137). The other way is by having at least one EEA director your new company.

In this article we will discuss everything you should be aware of when setting up a company in Ireland as a non EEA resident. It will also tell you how you can purchase the director bond.

How to setup a company in Ireland if you are a non EEA resident
Source: https://www.eea.europa.eu/data-and-maps/figures/eea33-coverage-2

Definition of EEA

The map on the left shows all of the countries which are considered member states of the EEA. They include:                               

If you are a resident of any of these countries you can setup a company in Ireland and also be a director. If however you are not a resident of these countries then you will need to take additional steps.

You can be a Non EEA citizen but be an EEA resident

This can happen because of how a residency status is defined in Irish law. If you have spent 183 days or more in Ireland in the previous 12 months you are defined as an Irish resident. Also, if you have spent 280 days or more in the previous 2 years you are defined a resident. If you meet this criteria there is no need for you to take additional steps.


You can be a EEA citizen but not an EEA resident

Because of the definition of a resident under Irish law this can also have another affect. You could have been born in Ireland, lived abroad for a number of years and then return to Ireland. If you live abroad long enough you can be defined as a non EEA resident. As a result, you will not be able to start your own company in Ireland and you will need a non resident bond.

Non EEA citizen, EEA Resident & Visa Status

If you are a non EEA citizen living in Ireland then you are mostly likely here on a visa. Even if you are a EEA resident any restrictions implied by your visa will take precedence. Unfortunately, a lot of student visas do restrict you from engaging in business in Ireland. Source.

Stamp 0

You must not work or engage in any business, trade or profession unless specified in a letter of permission from INIS.

 

Stamp 1

Stamp 1 indicates you have permission to work or to run a business in Ireland, subject to conditions.

 

Stamp 1A

Relates to accounting students training in Ireland. You can not operate a business in Ireland or be self-employed.

Stamp 1G

Indicates you have completed your studies and have permission to engage in full time employment. You can not operate a business in Ireland or be self-employed.

Stamp 2

Indicates permission to study a full time course on the official Interim List of Eligible Programmes (ILEP). You are allowed to engage in casual employment if up to 20 hours per week and 40 hours during holidays. You can not operate a business in Ireland or be self-employed.

Stamp 2A

Indicates permission to study a full time course which is NOT on the official Interim List of Eligible Programmes (ILEP). You are not allowed to work in any capacity on this visa. You can not operate a business in Ireland or be self-employed.

Stamp 3

Indicates permission to stay in Ireland for a period of time. You are not allowed to work in any capacity on this visa. You can not operate a business in Ireland or be self-employed.

Stamp 4

Indicates permission to stay in Ireland for a period of time. You can take up any type of employment you wish. You can establish and operate a business in Ireland. You maybe given Stamp 4 if you have a critical skill, employment permit or as a researcher.

Stamp 5

Stamp 5 indicates permission to stay in Ireland without limits on the time you can remain here. You can establish and operate a business in Ireland.

Stamp 6

Stamp 6 indicates you are an Irish citizen with dual-citizenship. You can establish and operate a business here.

What you need to start a company in Ireland as a non EEA resident

Non Resident Director Bond (S137)

If you are setting up a company in Ireland and you don’t have a director who is an EEA resident then you need to have a director bond in place. The cost of this bond is roughly €1,999 + VAT. The cost can vary and you can buy this bond from most company formation offices or your accountant can help you with it. 

The bond lasts for two years. The bond acts as collateral for the government if the company should incur any penalties or taxes. It insures the company for €25,000. However, the bond does not cover all fines & penalties. 

Irish Director Services

Some company formation offices offer Irish director services. They can provide Irish directors who can sit on the board depending on your business needs. The cost of this service can vary greatly. It’s more likely the bond will be the cheaper option.

Implications of Brexit

With the UK leaving the EU this could result in UK residents being classified as non EEA residents if the UK leaves without a deal in place. If there are companies established in Ireland with only UK residents they will need to have a bond in place as they are no longer deemed to be EEA residents. There is also the option of adding an EEA director to the company.

If a company is in breach of these rules it can be stuck off the register by the CRO. 

What to do next

Make sure you read our two previous articles, Sole trader v a limited company and How to qualify for Ireland 12.5% corporation tax. If you need additional help setting up a company as a non EEA resident you can contact us by email: hello@accountantpages.ie. You can also contact a number of the accountants we recommend operating in Ireland.

Funding for early stage startups in Ireland

People discussing startup funding in Ireland

Ireland is one of the top 10 countries in Europe to start a company. One of the contributing factors are the financial supports available for startups in Ireland. The below focuses just on early stage startups but there are many more available 1.  The source of funding you should use will depend on a number of factors. These include:

  • How much you want to borrow
  • What stage your company is at
  • Preference for debt or equity
  • Preference for public or private funding

Should you need advice feel free to talk to your local accountants.

accountant-startup-funding-ireland

Innovation vouchers (€5,000)


Run by Enterprise Ireland, the aim is to provide stronger links with universities and small businesses. They provide a voucher for €5,000 to assist companies explore potential business opportunities with a registered education institution.

The voucher is open to all small & medium limited companies registered in Ireland. This is defined as having less than 250 employees and a turnover less than €50m and or a balance sheet of less than €43m.



Feasibility study (€15,000)

The feasibility study grants are designed to assist businesses with research the level of demand for the product or service and examining it’s long term potential.  It is funded under the European development fund. You receive the lesser of 50% of you expenditure or €15,000. If you live in the BMW region of Ireland this is increased to 60%

Expenditure may be considered under the following headings:

  • Market Research
  • Consultancy Costs
  • Technical Development/Prototype/Innovation
  • Salary/Own Labour Research
  • Miscellaneous Costs


New Frontiers (Up to €30,000)

The programme’s primary purpose is to accelerate the development of sustainable new businesses that have strong employment and growth potential and contribute to job creation and economic activity in regional locations.

Support available worth up to €30,000 including €15,000 tax free with no equity taken. It is a three phased programme: Test the idea (part time evenings & weekends, Develop the business (Full-time 6 months) and Implement the business plan (full-time 3 months).




1For a more complete list of all funding is available in Ireland see here: http://www.digitaltimes.ie/irelands-top-startup-funds-and-how-to-get-money/

Six Steps to Starting a Business in Ireland

Starting a business in Ireland

If you?re considering starting your own business to supplement your income or to escape your current job now is a good time to start. There are plenty of sources of low cost advice, legislation to reduce bureaucracy, greater access to freelancers and new technology to reduce your start-up costs. 

If you have a new innovative idea or you can improve on an existing business idea there are plenty of resources available to you.  A business is made up of a chain of activities. You may only be missing information on one part of the chain which is preventing you from taking the first step to bring your business idea to the market.

1.      Low cost advice

a.      Before you launch any business please get the right advice from people who know what they are talking about. Often people can have a brilliant idea but lack real world experience in areas critical for their business. It?s better to speak to people who can pass on the lessons they have learned rather than making the same mistakes wasting your money and time.

b.      Government Agencies

There are a number of government agencies setup to help you start your business. One is the Local Enterprise Office (LEO). For a fee of ?20 you can book an appointment with one of their advisors to discuss your business. They will give you useful advice as well as point you to additional resources available to you. They may also be able to introduce you to other entrepreneurs who can provide advice.

If you have a high potential start then enterprise Ireland will want to talk to you. They will want detailed plans on how your business will work including costs and 5 year cash flow projections. If you don?t have a financial background you may need the help of an accountant. They will be keen to offer you support to get your business started.

c.      Networking Events

Ireland, particularly in Dublin, is full of start-ups and small businesses. There are a number of network events which take place each month. These events will give you the opportunity to meet fellow entrepreneurs to get advice. Some of these events are run by incubators which house startups such as Dogpatch. Some are run by volunteers such as Entrepreneurs Anonymous (meetup.com). Others are run by government bodies.

d.      Entrepreneurs on Linkedin

Linkedin is a great resource for meeting other entrepreneurs in Ireland. I?ve emailed several people I have never met before in my life asking for advice over a coffee. I?m not sure if it?s an Irish thing, but most of the  people I contacted were very obliging. If you are not on linkedin please join today and start building your professional network.

2.      Legal: Company Registration & Business Name

a.      One of the first things to consider is your legal business form.  If you are starting on your own a sole trader is probably your best option. Often people rush to set up a limited company wasting money on accountants and company formation fees which is not required to run a business. To operate as a sole trader you only need to register with revenue as being self-employed. 

There are three broad types of legal forms. A sole trader, partnership and a limited company. The main difference between a sole trader and a company is your liability is limited to the amount you have invested into the company. As a sole trader you are personally liability for any debts of the business.  Be careful with partnerships as generally each member has an equal liability. 

In order to set up a company with the Companies Registration Office you need to complete a form A1 and provide your companies constitution (template provided by the CRO) and the ?50 filing fee. You will also need to register with Revenue for corporate tax and employers taxes if you are hiring staff.

Both you and your company do not need to register for VAT until you?ve reached certain thresholds. See this article by Revenue.

b.      When you need to register a business name and how to register

If you are trading under a different name to your own or you company?s legal name you need to register a business name with the CRO. This can be done through core.ie at a fee of ?20.

3.      Accountants: Tax and Company Returns

a.? ? ? You can find a number of local accountants through Google, Linkedin or accountantpages.ie. Please do your research first before selecting an accountant. Get recommendations. Selecting the wrong accountant can be costly if you miss a return. For example, if you miss a CRO return you will lose your audit exemption. If your accounts need to be audited it can cost up to ?2,500.

b.      It?s very important, especially if you set up a limited company you are aware of your filing obligations and what forms need to be submitted. You do need to register for tax with revenue, however until you?ve reached certain sales thresholds you do not need to register for VAT. 

4.      Website and Office Space

Using wordpress will significantly reduce your costs in launching a website. WordPress is a tool which allows you to easily manage your website online. There are many website templates available from websites such as themeforest.net which cost roughly ?45. There is plenty of learning material available to help you get your business started. One of the limitations with wordpress is that it is a standardised solution so customisation will be difficult. 

You can register a .ie domain for ?15-?25 per year (Special offer on register365.ie of ?4.99) and  get your hosting for ?50 per year. 

If your are starting your first business you need to keep your costs as low as possible. If you are starting a business by yourself, generally you don?t need office space working from home is more than sufficient. There are also a number of free options available to you. For example, Bank of Ireland provides a number of free desks: https://businessbanking.bankofireland.com/campaigns/bank-of-ireland-workbench/

5.      Staff & Outsourcing

Starting a business requires a number of broad skills which one individual is unlikely to possess. As a result you are going to need to get the help of others. Particularly if you are also working a full time job, time will be a major constraint. One very useful website is called upwork.com. This allows you to hire anyone around the world. It allows you to take advantage of lower costs of living and oversupply of skills in other countries. For example in Portugal the minimum wage is ?4.38 per hour compared to ?9.80 per hour in Ireland. Just be careful when hiring people for large complex projects. Communication can be an issue as a lot of freelancers are not native English speakers. Also, be very careful when hiring someone to build a complex website. If you do not have detailed specifications then stay away from outsourcing online.

If you would prefer to hire someone locally you can use a classifieds website like gumtree.ie which is free to post an ad.

6.      Sales

The first thing you should do when starting your business is to try to sell before you have a finished product or service. Often people can make this mistake of investing a lot of time and money in building a product. After months or years they finally bring their product or service to the marketplace only find they either can?t sell it or there is no demand for it. Getting people to buy a product or service is often the most difficult stage in the process.  

You can test your product or service by running ads online and measuring the response you are getting. You can also create a template website and see how far users will go in the buying process. You can start creating content your target market would find interesting. Attend networking events and build up your contacts on linkedin. Work on building an audience first before you have a product to sell.

Summary

I hope you found this article useful. It?s aim was to provide very high level ideas aimed at helping you get started in your first business. The main points of the article are not to rush into a business. If you do you?ll end up wasting time and money. Get advice, keep your costs low, get sales experience and try to build an audience to sell to. 

 If you found this article useful or you know someone who might find it useful, I would be grateful if you would please share with your network.