Sole trader

brav

Hi,

Sorry if this is the wrong area, I could not find a section for startup businesses or the like, must be around somewhere!

Basically I want to know what I have to do to set myself up as a sole trader.
This is my situation and what I know:
* I'm in the position of being offered a contract job to supply a service.
I will have to set up as a sole trader.

* I have no need for a company name so I don't think I have to contact the
CRO or should I anyway? What's the cost?

* I have to fill up some form called a T1(which I can't find on revenue.ie) Is
this the only form I have to fill up to become a sole trader?

* I might have to register for VAT. I believe I do not if I earn under 25,500.
Now the contract is for say 10 months, and I charge them 637(to stay under bracket) a week so
637*4 = 2,548*10 = 25,480
So would this mean I would not have to pay any tax on it?
Also if I did register for tax, would I still not have to pay tax on my income?
If I did not register for tax, I assume I cannot claim for items purchased, i.e. projector etc for work.

As you can see I don't know too much at the moment but have been put in the situation where I am quickly finding out about all this stuff!

Thanks for any help:)


P.S. That 25,500 bracket for Tax, is that 1 year equivalent or can it be say 10 months as in my case
like, will they say my earnings for the year is what I actually earn,(25480) or will they say its 2548*12=30576 and I'll have to pay tax

pwd

I don't see any reason to register a company name
I think you only have to fill in one form.
You don't have to register for VAT.
You have to pay tax on your earnings anyway. You do an annual self-assessment and pay it all in one go.
You can claim expenses anyway. I don't think buying a projector would be an expense - although the depreciation of its value would be.

information

brav wrote:

* I have no need for a company name so I don't think I have to contact the
CRO or should I anyway? What's the cost?

If you trade under your own name so there is no need to use the CRO.
You can register a business name, its a one off process, forget the cost about 30€ check www.cro.ie.

brav wrote:

* I have to fill up some form called a T1(which I can't find on revenue.ie) Is
this the only form I have to fill up to become a sole trader?

Its TR1

brav wrote:

* I might have to register for VAT. I believe I do not if I earn under 25,500.
Now the contract is for say 10 months, and I charge them 637(to stay under bracket) a week so
637*4 = 2,548*10 = 25,480
So would this mean I would not have to pay any tax on it?

You don't understand VAT correctly.
VAT is a TAX you charge your customers, its nothing to do with you.
So it would be 637+VAT and you pay the VAT to the government.

brav wrote:

Also if I did register for tax, would I still not have to pay tax on my income?

When you fill in TR1 you are registering for TAX but VAT is optional.
You have to pay income tax,paye & prsi on all your earnings as a sole trader.

brav wrote:

If I did not register for tax, I assume I cannot claim for items purchased, i.e. projector etc for work.

Like I said you must register for TAX,
a projector is not an expense its a fixed asset.
Expenses are travel,phone bill etc..
Yes you can still claim for these if you don't register for VAT, but you can't claim the VAT back on them.

brav wrote:

P.S. That 25,500 bracket for Tax, is that 1 year equivalent or can it be say 10 months as in my case
like, will they say my earnings for the year is what I actually earn,(25480) or will they say its 2548*12=30576 and I'll have to pay tax

its not the way you have calculated it above

brav

Thanks Lads,

I have been a consumer for too long, completely mixed up VAT and TAX.
The process seems easier than I thought, I only have to fill up parts A1(1-5) and A3(11-14) and thats it?
Are there any restrictions on say applying for a name after I have sent this form off, or even if I have to apply for a VAT no. Do I have to have these done before I fill out the TR1 form?

Also, since it asks when the business commences, can I start tomorrow even though I only just sent the form off today(theoretically speaking).

One more question, If say I charge 700 a week (700*4=2800*10=28,000) does this mean I have to apply for VAT, but if I charge under the 25,500 I don't have to charge VAT.

Thanks

information

brav wrote:

Are there any restrictions on say applying for a name after I have sent this form off, or even if I have to apply for a VAT no. Do I have to have these done before I fill out the TR1 form?

You should have your name before you register,
you can register for vat at a lator date

brav wrote:

Also, since it asks when the business commences, can I start tomorrow even though I only just sent the form off today(theoretically speaking).

yes

brav wrote:

One more question, If say I charge 700 a week (700*4=2800*10=28,000) does this mean I have to apply for VAT, but if I charge under the 25,500 I don't have to charge VAT.

yes
If you are supplying a business, they will probably be vat registered,
so it wouldn't cost them anything extra and the bonus is you can buy stuff
and get the vat back

brav

Oh right, and is there a cost to setting up VAT?
I might as well do it if it doesn't cost them.
Where do I go about applying for VAT, and is just as easy as JR1
What I don't get though is that if it doesn't cost them(they claim it back I assume) and I give it back to the government, what's the point in charging for it in the first place!:P (obviously in case I supply my business to a non registered customer)

information

brav wrote:

Oh right, and is there a cost to setting up VAT?

I might as well do it if it doesn't cost them.

Where do I go about applying for VAT, and is just as easy as JR1
What I don't get though is that if it doesn't cost them(they claim it back I assume) and I give it back to the government, what's the point in charging for it in the first place!:P (obviously in case I supply my business to a non registered customer)

no cost to setting up for vat

VAT is only a tax on consumers not businesses,
businesses act as a tax collector for the government

brav wrote:

Where do I go about applying for VAT, and is just as easy as JR1

read the form

butts

brav, check out this link for more info on VAT:

http://www.revenue.ie/index.htm?/services/bus_start4.htm

If you are supplying a service, then registering for VAT is optional if you expect total revenue for the tax year to be below €35,000.

brav

Thanks,

I don't think ill bother registering for VAT.
Just one more question, what can you claim back?
I know you mentioned phone bills, travel(I heard only diesel fuel not petrol???)

But not fixed assets, does this include all hardware?
I may have to purchase a computer, this is counted as a fixed asset?


P.S. Another quick question since e seem to be full of answers, If I register for VAT, do I have to charge it?
Because lets say over the year I will be earning 25000, and if I register for VAT, do I need to charge them another 21%
Whereas if I don't I don't need to charge them.

pwd

Petrol is an expense too, as are train tickets etc.
a computer is an asset.
The depreciation on its value is an expense.

brav

And how do work out depreciation on a computer?

Not really going to affect me at the moment as I will only be doing this for about 10 months, but nice to know all these things.

Is it true that you can claim for diesel but not unleaded?
I might have to do a bit of driving.

pwd

computer: there's a standard percentage of its value you can claim each year. google to find the figures.
I can't see why you wouldn't be able to claim for unleaded - that is probably untrue.

brav

Thanks Lads, much appreciated

information

pwd wrote:

I can't see why you wouldn't be able to claim for unleaded - that is probably untrue.

I tkink you can only claim the vat back on diesel not petrol.
You can use the "civil service rates" for travel expense

mick.fr

Well for 127 euros a day I would not bother setting up a small business for short term. Too much hassle for little money.

I would recommend you to go with a company like CXCGlobal for example, they have managed Ltds, and can offer you a director position where all the expenses will be optimized. You will not bother doing all the paper work and tax/vat declarations.
They take a small fee (Well depending of your appreciation) that could be up to 5 %, you can negotiate.

Now petrol is not really something you can mess around with the tax office.
In your case I can even tell you you have no right to claim your petrol at all, because you will betravelling from home to the same customer site every single day. This is like a job. Now if you were travelling to different locations every weeks, you could do that without any problem.

Now as a director you can claim, phone, internet, 15% or more of your home-office (15% of your annual rent cost, plus utility bills will be refunded to you), books, taxis....

brav

Never knew Directors had it that easy!

It will be about 160, if not a bit more, a day, I was a bit confused earlier and I thought if I kept it at 130 or below I would not have ot pay tax( I was confusing it with the 25,200 limit on VAT).

Re petrol, I was just curious as I thought it seemed odd that you can only claim back VAT on diesel.
Phone bills is about the only thing that I will claim back as it will be used a lot.