Advice: Fulltime Job + Part Time Sole Trader.

Satts

I have a fulltime job with a multinational, and i wish to keep this job for the foreseeable future.
( "Some chance" many would say.)

I am thinking of starting up a small part time service business as well.

Is this possible from a tax/legal point of view ?

Would Sole Trader be the best route for a small part time business ?

Would my tax afairs get very complicated because I have a full time job already ?

Do I need an account, or is it possible to do your own accounts ?

In the first year I estimate I will use 5000 euros or less of products when carrying out my service. Do I need to register for vat to be able to invoice my customers for the products used + labour ?

Lplated

Satts wrote: »

I have a fulltime job with a multinational, and i wish to keep this job for the foreseeable future.
( "Some chance" many would say.)

I am thinking of starting up a small part time service business as well.

1.Is this possible from a tax/legal point of view ?

2.Would Sole Trader be the best route for a small part time business ?

3Would my tax afairs get very complicated because I have a full time job already ?

4Do I need an account, or is it possible to do your own accounts ?

5In the first year I estimate I will use 5000 euros or less of products when carrying out my service. Do I need to register for vat to be able to invoice my customers for the products used + labour ?

1. Yes, nothing wrong with having a job and working for yourself at the same time - unless there is anything in your conract of employment that prevents it.

2. Its certainly the easiest and cheapest. To me the biggest advantage of a limited company is that you can separate business debts from personal property - you can't do that with as a sole trader but if you're not planning on borrowing huge sums of money etc.. this doesn't apply.

3. Don't think they get that complicated - you have to make an annual return to the revenue for your self employment income, thats it.

4. Nothing wrong with doing your own accounts once you are able. Accountant can come in handy for things like tax planning.

5. Requirment to register for VAT is determined by turnover, not clear what 5 grand in costs amounts to in sales - have a look at the revenue's website for details - there may be an advantage to you in registering for vat even if you are under the required limits as you can claim back the cost of vat on purchases.

Good luck.

E&OE

FusionNet

LpLated has hit all nails on the head there. All I'd add to it is, you havent mentioned if your business is going to be dealing with consumers or businesses? This would also help deciding your VAT. Most businesses want VAT receipts, consumers dont. I think the ceiling in 30,000 odd before its complusory to register for VAT.

Also stay away from a limited company. No need unless your turnover is massive. Even if it was massive I'm never going to go limited as you never own your money like you do in a sole trader.

Your only disadvantage with being full time employed is that you will have used up your tax credits. Its not a big deal but just to be aware.

I think a consult with an accountant would be no harm for the sake of the 40 euro it costs.

CapedCrusader

Another thing to consider is corporate tax.

If you plan on taking all profits from the business for yourself, then there is no issue, but, if you intend to reinvest profits back into the business, assuming you are over the standard rate threshold, you'll pay 40% on the profits as a sole trader only to reinvest them. If you were incorporated, you'd only pay 12.5% on anything you don't take as income.

Satts

Thanks for the info guys.

My basic salary before tax is $35000.
I'm married and my wife is getting $10000 disabiliity benefit.
So our combined income is $45000.

Would I be correct in saying the standard rate band (20%) for a married couple is $72800 ?
And would I be correct in saying that I, my wife and the new business can earn up to $72800 combined, before we pay the higher rate of tax ?

For the next 2 years at least, all my customers will be consumers.
I will be buying some equipment at the start ($3000 appro.)and will be buying product on a monthly basis.
If I register for vat, will I have more paper work than just the annual tax return ?
What I'm trying to say is, In the long term would I be better off not registering for vat and forget about getting the tax back on my start up costs and do my own accounts or register for vat and end up having to pay an accountant to do my books, and end up with more than the vat saved going in accountants fees ?

I must look into public liabillity insurance as well.

swanvill

Hi,
The first thing to consider is if your wife starts to earn will she lose her disability income, if not then it would be wise to declare this additional income in her name. As this remove the stumbling block of your employer forbidding any outside business interest, plus it will allow her to use her personal allowances/tax band.
The married person tax band is 45,400 which can be increased by the second spouses income up to 27,400 (totaling 72,800) if your spouse only earns 10,000 taxable income then your 20% band is 54,400.
The VAT question is more related to pricing, will you lose custom if your prices are higher because you have to charge vat? If not then you probably should charge vat. Machinery costs of 3,000 with vat on top of could be 645 reclaimable, 5,000 of annual purchases could be another 1,075 reclaimable, otherwise you would have to absorb this additional VAT cost.
If you are organised and methodical preparing a vat return is easy ( a friend who is an IT contractor does it himself & I do his accounts & tax) and should not deter you from filling a return.
I hope you find this helpful, pm me if your require more info.

Clarissa022

Hi,
Inline with post above-Does anybody have any information on what would happen in the following sinario
I am working full time and am thinking of registering as a sole trader to earn small amount of additional income-How would my status in regards to recieving social welfare be effected if i was to lose my full time job?Income from social trader income will be very small.

fl4pj4ck

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