If you want to start your business by selling to a small market, operating as a Sole Trader may be for you.
Setting up as a Sole Trader means no annual files to return, no audits and an easier Startup process. You also have the option to become a Limited Company in the future.
Or, if you prefer, Accountant Online can help you to set up as a Sole Trader.
1. Determine Your Business Strategy
Your business strategy will include how you expect your business to achieve its goals, satisfy customers and sustain a competitive advantage.
This should also include whether your company should operate as a Sole Trader or a Limited Company.
If you’re not sure which business structure is best for you, you can ask our accountants during our next free Startup Webinar.
2. Get A Personal Service Number (PPSN)
When registering as a Sole Trader in Ireland you will need to have a PPSN. A PPSN is a unique reference number which helps you access social welfare benefits, public services and information in Ireland.
If you are not resident in Ireland, you can contact the DEASP’s Client Identity Services (CIS). Remember, even if you get a PPSN, you may also need to live in Ireland in order to operate as a Sole Trader in Ireland.
3. You Are Personally Liable For All The Debts Of The Business
This means that your personal assets, such as a family home, can be seized and used to settle unpaid business debts.
We recommend that you thoroughly consider the risks before deciding on setting up as a Sole Trader.
4. You Are Getting €300 Less Tax Credit Than PAYE Employees.
Employees currently have a PAYE credit of €1,650 versus a tax credit of €1,350 for the self-employed (Budget, 2019).
However, as a Sole Trader in Ireland, any expenses that are wholly and exclusively for the purpose of your trade can be deducted against your income.
Be sure to check your business expenses with an accountant as your idea of expenses may differ from Revenue’s.
5. You Are The Sole Owner Of The Business
6. Be Aware That As A Sole Trader In Ireland, Your Income Is Subject To Tax Up To 52%
To learn more about the taxes you will pay as a Sole Trader, join our next Startup Webinar.
7. Keep Proper Books And Records So You Can File Tax Returns.
As a Sole Trader, you need to file tax returns.So, it is important that you are able to keep organised records of your transactions.
Sole Traders need to keep their books and records for six years, so it is a good idea to store these as digital copies.
8. Register As A ‘Self-Employed Person’ On The Revenue Online Service (ROS).
To become a Sole Trader in Ireland, you need to register on ROS as a ‘self-employed person.’
You can use this service to file and pay your Income Tax (IT), VAT and Employers PAYE returns.
9. ‘Self-Assess’ Your Tax.
A Sole Trader’s income is self-assessed.This means you make your own assessment of the IT, Universal Social Charge (USC), Pay Related Social Insurance (PRSI) and the Capital Gains Tax (CGT) you should pay for a tax year.
You can do this online via ROS, or ‘myAccount’ on Revenue.ie.
It can be a time-consuming task to register for tax, especially in a new startup. You can speed up the process by using a tax agent such as Accountant Online
12. Register For Value Added Tax (VAT) And Submit VAT Returns; If Applicable
14. Register For Relevant Contracts Tax (RCT); If Applicable
16. Set Up Your Business Bank Account
You must consider the following before setting up:
Business Strategy: Is a Sole Trader definitely for you? Limited Company is also one of the most common business types. Consider your target market, business objectives and the risk involved with this type of structure.
You Need A PPSN: A PPSN is a unique reference number which helps you access social welfare benefits, public services and information in Ireland. You need PPSN for tax purposes.
Personally Liable: You are personally liable for all debts of the business. This means that your personal assets, such as your family home, can be taken if your business falls into debt.
Less Tax Credits: Self employed people have a tax credit of €1,150 whereas employees get €1,650.
Sole Responsibility: You are solely responsible for the business and anyone who works for you will be an employee of the business.
Taxable Income: All the money that the business makes is essentially your income. You can deduct any expenses that are directly related to your business against your income.
When Operating As A Sole Trader:
Books and Records: You need to keep organised records of your transactions and invoices. Use a bookkeeping software or Excel. Either way, yo need to keep these records for 6 years.
Using ROS: Create your account on the Revenue Online Service (ROS) and register as a ‘self-employed person’. you can give your accountant access to this and they will use it to file and pay your Income Tax (IT), VAT and Employers PAYE returns.
Registering For Taxes: Tax compliance for Sole Traders include: VAT, employers tax, and/or relevant contract tax.
Self Assessing Your Taxes: You or your accountant assesses how much tax you need to pay in a year. Important date: Income Tax return is due before October 31st.
Bank Account: It’s wise to keep your business income separate from your personal so you can easily track your business’ debits and credits. This is especially important when claiming back expenses.
Business Name: Trading as a different name to your own true name? We can register a business name for you.