*** Before you start your business check your entitlement to Social Welfare … you can become self employed and retain some Social Welfare for 9 months to 2 years …. These schemes are referred to as the Short Term Enterprise Allowance or Back to Work Enterprise Allowance.
Start Up Businesses. Many agree that now is the best time to set up your own business. Be sure to explore all available finance for your business some of which include:
- Back to work enterprise allowance, payable by the Department of Social Welfare. Effectively you can trade as self employed yet retain 100% of your social welfare payments for year 1 and 75% in year 2.
- County/City Enterprise Boards for capital grants for capital expenditure i.e. equipment, websites etc
- Check out www.fundingpoint.ie and www.j4bgrants.ie for details of grants available to businesses, art projects and many more. Well worth a check out.
- Banks, credit unions etc. You will need a business plan, the more detail and research the better.
- Does your business qualify for seed capital relief – a refund of your PAYE tax paid for the past 6 years (check out Dell employee guide for more details of the conditions)
Steps in Business Start Ups
When starting your own business, it is very important that you are aware upfront of your obligations.
The first steps include:
1. Deciding whether you want to set up as a sole trader
(just yourself, no partner in the business), a partnership (2 or more individuals) or a limited company. There are advantages and disadvantages to all. Ideally this should be explored with a taxation consultant or accountant before putting the correct structure in place.
2. Registering your business name if applicable
(Cost €40/€20 if application completed on line at www.cro.ie). This is not applicable for a limited company unless you may wish to use a trading as name too.
3. Registering for the correct Taxes
- Income Tax – Yes in all circumstances (www.revenue.ie Form TR1 for soletraders and partnerships, Form TR2 for companies)
- VAT – Yes where your sales (not profits) exceed certain thresholds in a 12 month period. If you are supplying services and you anticipate your sales will exceed €37,500, then you should register for VAT. If you are supplying goods, then you should register for VAT if you anticipate that your sales will exceed €75,000 in a 12 month period. The rates of VAT are: Exempt, 0%, 13.5%, 21%. See http://www.revenue.ie/en/tax/vat/rates/index.jsp for a list of over 2,500 products & services and the rate of VAT applicable.
- PAYE/PRSI – Yes where you hire an employee in your business. Employers are obliged to pay Employer’s PRSI at either 8.5% (where gross wages per employee does not exceed €356 per week) or 10.75% on an employee’s gross wages. What about your spouse? – should they be an employee or a partner in the business/company director?
- RCT – Building Industry where you intend to hire sub-contractors. This is very important as there are penalties for not being RCT compliant.
4. Health & Safety Report.
Every new business (sole trader included) is required to have a health and safety statement for their business. Check out guidelines and samples on www.hsa.ie
5. Books & Records
(www.revenue.ie A guide to self assessment IT10)
“You must keep full and accurate records of your business from the start. You need to do this whether you send in a simple summary of your profit/loss, prepare the accounts yourself, or, have an accountant do it. The records you keep must be sufficient to enable you to make a proper return of income for tax purposes and will depend on the nature and size of your trade, business or source of income.
The records kept must include books of account in which:
- All purchases and sales of goods and services, and
- All amounts received and all amounts paid out,
are recorded in a manner that will clearly show the amounts involved and the matters to which they relate. All supporting records such as invoices, bank and building society statements, cheque stubs, receipts, rent books, etc. should also be retained. You must keep your records for six years unless Revenue advises you otherwise”.
5. KNOW your deadlines
Monthly – 14th following month (Jan 2010 P30 due by 14th February 2010)
Bi-monthly – 19th of the following month (i.e. Jan/Feb 2010 – due by 19th March 2010)
*** With effect from the 1 January 2009 where returns and payments are made electronically the return filing and payment deadlines for these taxes will be the 23rd day of a month. This has the effect of extending existing filing deadlines by four days for VAT and nine days for RCT and PAYE.
Concessions have been given to many small business now who now only need file their returns every 3 months. Check with your local tax district which deadlines apply to your business
Paper filing – 31st October (2009 tax return due by 31 October 2010)
Electronic pay & file (www.ros.ie) – 16th November 2010