If you’ve always dreamed of owning and running your own business, you have a number of options available to you including setting up as a limited company or registering as a sole trader. In this article, we focus on how to set up as a sole trader in Ireland. A sole trader is the simplest legal structure for a business in Ireland and it also has a very straight forward registration process.
To register as a sole trader in Ireland, you will need to take the following steps:
1. Register for Income Tax by completing Form TR1
The first thing you need to do is complete a Form TR1 and submit it to your local tax office. Basically, a Form TR1 allows you to register for taxes, including Income Tax, VAT and Employers PAYE. As a sole trader, you will need to file an income tax return and pay your liabilities before 31 October each year.
Simply put, income tax is a tax on the profit made by your business. But it’s important to remember that even if you made a loss or your business had minimal trading, you must submit an income tax.
2. Register for VAT (if applicable)
In general, if your business supplies goods over €75,000 per year or services over €37,500, you are obliged to register for VAT. But there are a number of exceptions such as taxis and crèches who do not charge VAT.
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. If you have more sales than purchases, then you will pay the difference to Revenue.
If you have no experience in VAT, it can become a little overwhelming. 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.
Also, an annual VAT Return of Trading Details return must be filed each year.
3. Register for Employers PAYE (if applicable)
If you are going to have employees, you will have to register 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.
Every time you want to pay your employees, you need to first send a payroll file to Revenue with details of their salaries and taxes. Revenue will send you a monthly statement of how much payroll taxes you owe them based on these uploaded files. Payments to Revenue are made every month or every quarter depending on the size of the business.
Operating payroll for your business can be time consuming and confusing. You will need to invest in some payroll software to make things easier. But if you have no experience in processing payroll, we advise you to attend a payroll course or hire a professional to process your payroll – it can prevent a lot of costly mistakes in the long run.
4. Register for ROS on www.ROS.ie
Don’t forget, businesses are now required to register for ROS and must complete their returns online. The Revenue Online Service (ROS) allows you to file and pay your income tax, VAT and Employers PAYE returns securely online. There are a lot of advantages to using ROS such as extended deadlines and instantaneous notification of receipt of returns.
5. Register Your Business Name
If you trade under a business name, you will also need to register this business name with the CRO. You can do this online at www.core.ie by registering as a user and filling out the business name registration form. This is in addition to filing Form TR1 to register for taxes.
If you are thinking of setting up your dream business or have any questions about getting things started, please call us today on 021 240 9120.
Updated 26/03/19 for PAYE Modernisation