Once you have formed your company with the Companies Registration Office, you will need to register your company for tax.
Form TR2 can be used to register for a number of taxes, including Corporation Tax, VAT and Employers PAYE.
Unless a company is exempt from Corporation Tax (e.g. charities), it will need to file a Corporation Tax return each year and pay any liabilities due.
The Corporation Tax return is due 8 months and 23 days after the company’s accounting year end.
A preliminary Corporation Tax must be paid in the month before the company’s year-end date. Larger companies are also required to make an additional preliminary tax payment 6 months into their accounting year. The balance of Corporation Tax must be paid when submitting the Corporation Tax return.
In general, if your business supplies goods over €75,000 per year or services over €37,500, you are obliged to register for VAT. However, there are some businesses, who carry on exempt business activities, who cannot register for VAT such as taxis and crèches. A detailed list of products and services and their particular VAT rates can be found here.
VAT can be complex for those with no experience of it. If you are running a restaurant, making purchases or supplies to other countries, are involved in e-commerce or are unsure about what VAT rate to charge, it may be best to seek professional advice.
VAT returns must be made to Revenue every two months, every four months or every six months depending on the size of the business. VAT returns contain details of the VAT on your sales and the VAT on your purchases as well as details of goods bought from and sold to other EU countries. The difference between VAT on Sales and VAT on Purchases must be paid to Revenue (or refunded to you by Revenue if VAT on Purchases is greater than VAT on Sales.)
It is also possible to file an annual VAT return and to pay your VAT liability by monthly direct debit.
Even if your business is small, filing a VAT return every two months can have its advantages. Firstly the VAT bills are smaller and more frequent so you are less likely to fall behind on your payments or at least are alerted to any problems earlier on. Secondly, filing a VAT return every two months requires that you keep your books up to date. Filing VAT returns every six months may give you an excuse to put bookkeeping on the long finger.
An annual VAT Return of Trading Details return must be filed each year and contains a summary of your sales and purchases for the year at each VAT rate.
As an employer, you will be responsible for deducting the appropriate PAYE tax, Universal Social Charge and PRSI from your employees’ wages as well as filing regular returns throughout the year.
Unlike a sole trader, you cannot take “drawings” from the company. If you are a working director, you will also be registered as an employee of the business and you will need to ensure that you deduct taxes on your salary as appropriate.
P30 returns contain details of the PAYE, Universal Social Charge and PRSI on your employees’ salaries. These returns must be filed and paid either each month or each quarter depending on the size of your business. An annual return, Form P35, must be filed each year detailing the salary, benefit in kind, pension, tax details etc of all employees.
You can also avail of the option to pay by monthly direct debit.
Operating payroll for your business can be complex. It is likely that, if you have a number of employees, you will need to invest in some payroll software. If you have no experience of payroll, it is well worth attending a payroll course or hiring someone to process your payroll, as it may avert costly payroll mistakes.
Revenue Online Service
Unless there are extenuating circumstances, all companies are required to use the Revenue Online Service which allows you to file tax returns and pay tax liabilities online. It also gives extended deadlines (23rd of the month) for filing and paying returns.
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