Setting up a new business as a Sole Trader

God Father

I want to set up a business as a Sole Trader. Nothing fancy, just really want to have something set up and ready to go for when I have more time and ideas.

From what I have gathered, I need to:

1. Register a name with the cro

2. Register for Vat by filling in a TR1 form.


I know I don't have to register for Vat but I want to be able to purchase goods without paying the Vat. I don't know much about tax however as I am a student and am not actually registered personally for income tax.

So if I do the above what happens in terms of income tax paperwork and returns and vat returns?

Do I have to fill in a Vat 3 form Bi-monthly or something similar? What if I just want to sit on it all for a while? Ie. No business or personal income?

What happens with the whole ordering stock exclusive of Vat? Do I just supply my Vat and business details to an example company and I will be invoiced later? Do I need to record this transaction and file it?

Any clarification on these questions would be greatly appreciated.

Cheers, God Father

DoMyBooks

When you fill in the TR1 you can register for income tax aswell as VAT. You cant just register for VAT as either you are trading or not.

Once you register for VAT you must file a VAT return every two months. Once you register for sole trader income tax you must file a form 11 anually (although this can be longer in your first trading year) If your not trading you wont have to prepare accounts.

If are VAT registered and you buy goods or services (wholly and exclusively for the business) you enter the VAT element of the purchases to your VAT return, The VAT you charge on your sales goes in the other box and you either pay what you owe or get a refund.

Personally I wouldnt register until you are trading. Registering is quick and easy theres no point in putting yourself in the position that you 'could' get a fine for a late VAT return when your not even trading.

Hope this helps

God Father

Thanks DoMyBooks.

So if I don't pay Vat when purchasing a Good/Service because I supply a Vat number and I get invoiced excluding Vat, I have nothing to claim back so I don't record it on a vat return?

Also am I able to Claim Vat back on Goods/Services that I purchase While Gradually establishing the business. ie. investing in equipment, buying small amounts of stock, and IT expenses, even if there is no Income? or tax payable?

Cheers, God Father

DoMyBooks

You still record the EU purchases in box E2 on the VAT return. But they wont effect the amount you owe or your refund.

In relation to VAT your either trading or your not. Its fesiable that a VAT return may have no sales on it but I wouldn't exect that to go beyond one or two returns.

Certain pretrading expenses are valid for income tax purposes details here
http://domybooks.ie/Blog/?p=202

bog master

God Father

On the VAT issue, you will pay the VAT on whatever you purchase here in Ireland as long as the seller is VAT registered. If you buy within the EU, supply them with your VAT number and they will not charge you VAT.

And in reverse, you must charge VAT on sales of goods and services.

God Father

Ok thanks again DoMyBooks,

And nice and clear there Bog Master, cheers.

So Perhaps I should hold off on Vat registering as this would increase the cost to the customer?

Cheers, God Father