Sole Trader as second job

E. Fudd

Okay, here's the situation.

I am currently in full time employment and have just registered a business name on core.ie with a view to setting up as a sole trader.
This will be in addition to being in full time employment. So here's the questions:

1. How do I tax myself as a soletrader with a full time job?

2. What tax forms need to be filled out in order to be fully tax compliant,
including VAT?

3. What books do I need to keep?

Bearing in mind that this little venture will, for the first good while, have a relatively small turnover, I would like to keep the books myself, I know each and every one of you will say I'm mad, but thats the way I want to do it for the time being.

All advice will be very much appreciated.

Triple A

1. Prepare an annual set of accounts and declare this "Schedule D Case 1 Income" together with your "Schedule E" Salary to the Revenue.

2. VAT - VAT Returns
Income Tax - Form 11 -> due for 2007 year by the 31st of October 2008
(I assume you have no employees, so PAYE will not apply)

3. First thing is to operate out of a seperate, business only use, bank account.
Keep the following books:
- Sales Ledger
- Purchases Ledger
- Cash Receipts Book
- Cash Payments Book
- You should also reconcile your Bank, Debtors and Creditors.


Bear in mind any profit that you earn in this business will be taxed at 41% Tax plus PRSI and Levies (~5%) if your salary is already above your tax cut-off point at the lower rate.

DublinDilbert

Triple A wrote: »

1. Prepare an annual set of accounts and declare this "Schedule D Case 1 Income" together with your "Schedule E" Salary to the Revenue.

2. VAT - VAT Returns
Income Tax - Form 11 -> due for 2007 year by the 31st of October 2008
(I assume you have no employees, so PAYE will not apply)

3. First thing is to operate out of a seperate, business only use, bank account.
Keep the following books:
- Sales Ledger
- Purchases Ledger
- Cash Receipts Book
- Cash Payments Book
- You should also reconcile your Bank, Debtors and Creditors.


Bear in mind any profit that you earn in this business will be taxed at 41% Tax plus PRSI and Levies (~5%) if your salary is already above your tax cut-off point at the lower rate.

Apart from the obvious unlimited liability, what sort of other down sides would there be to operating as a sole trader? ( i know its kinda a big question)

like can you pay your self expenses at the same rate for travel as an employee of a limited company would?

i presume a sole trader can purchase assets for their own company? but then who actually owns the assets as the company as such isn't a legal entity.

can a sole trader employ people on an occasional basis if required?

Could you recommend any accounting software packages geared towards sole traders?

mick.fr

Sole trader is really is for plumber/electricians/freelances and it is sometimes not even the best option for them.

You can set up a LTD. company at your home address for 250 quids.
I would recommend to go that way, if you are already talking about assets, employees etc, will be easier I would say.

DublinDilbert

mick.fr wrote: »

Sole trader is really is for plumber/electricians/freelances and it is sometimes not even the best option for them.

You can set up a LTD. company at your home address for 250 quids.
I would recommend to go that way, if you are already talking about assets, employees etc, will be easier I would say.

my question about employees was just a what if.... the odd time i might have someone doing a little contracting for me, thats about it...

I'm not really worried about the cost of setting up ltd company. One of my problems is that i need 2 directors, or so i believe, but there is no one suitable, also i don't want anyone else (eg a family member) having additional responsibilities cause of me.

I was 1/2 thinking of setting up as a sole trader for the first year, then if i'm going to keep it up set up a ltd company, i know alot of people will say just go straight for the ltd company... i've about 6 / 7 months work lined up, but after that I'm not sure how much work there is out there for what i do, hence my reluctance.

Thanks for the advice, much appreciated...

Triple A

DublinDilbert wrote: »

Apart from the obvious unlimited liability, what sort of other down sides would there be to operating as a sole trader? ( i know its kinda a big question)

like can you pay your self expenses at the same rate for travel as an employee of a limited company would?

i presume a sole trader can purchase assets for their own company? but then who actually owns the assets as the company as such isn't a legal entity.

can a sole trader employ people on an occasional basis if required?

Could you recommend any accounting software packages geared towards sole traders?

I think you should set-up as a sole trader initially. You can always switch over later. This will give you time to see if its what you really want to do and as you suggest you have work lined up for 6 or 7 months but after that?

The main reason people set-up Limited Companies is the reuced tax rate (12.5% CT) but the Company will have to pay PAYE/PRSI on any money you withdraw.
If a sole trader you will pay PAYE & RSI&Levies on your PROFITS. If your profits bring you substantially into the higher rate (41% PAYE) then you should be looking at a Limited Company, as Prelimnary Tax can be a killer.

You can emplu people and pay subsistence as a sole trader. You just need to ensure you are registered for PAYE (for employees) and RCT (for subcontractors).

It should be noted that Limited Liability in a Company is not a freedom to run up debts. If you trade whats deemed recklessly through whatever reasons the veil of incorporation can be lifted and you can become personally liable for the debts of the Company.

I find TAS Books a very good user-friendly accouncy package for non-accountants.

Good luck with your venture!!

edanto

Just wondering what the OP decided - did you go for Limited or Sole?

I'm considering the same options at the moment, and I'm unsure as to the implications re insurance.

Since a sole trader isn't a legal person, how would you purchase insurance (Public Liability and Professional Indemnity in my case)

thanks