How much should the tax man get.

JohnnieK

Hey People

Seen as I am not self employed that long, one thing has my brain wrecked.
when I write an invoice, what percentage should I leave aside to cover tax? My accountant says 10 to 15% but other people said 30%.

Any advice from Self Employed plumbers would be helpful.

I put 1/3 away now, I have found having to much money for the tax man is not as scary as not having enough.

exaisle

Why are you disputing what your accountant is telling you? He's the one youre paying for advice.

What on earth are you seeking the advice of amateurs here when you're getting (IMHO good) professional advice already?

Why you're seeking the advice of self employed plumbers is beyond me. You wouldnt ask your accountant how to fix a leak, would you??

Do as your accountant tells you...put about 15% away for Income Tax.

E.

Micky Dolenz

exaisle wrote: »

Why are you disputing what your accountant is telling you? He's the one youre paying for advice.

What on earth are you seeking the advice of amateurs here when you're getting (IMHO good) professional advice already?

Why you're seeking the advice of self employed plumbers is beyond me . You wouldnt ask your accountant how to fix a leak, would you??

Do as your accountant tells you...put about 15% away for Income Tax.

E.

I feel Johnnie wants to establish a sector norm and what better way to do that than by asking people in the sector.

As Gary has said and i agree, pay more and there are no nasty surprises. But Johnnie, my advice is, get into the habit of putting the money away as soon as you can. It's easy let tax matters slip.

JohnnieK

exaisle wrote: »

Why are you disputing what your accountant is telling you? He's the one youre paying for advice.

What on earth are you seeking the advice of amateurs here when you're getting (IMHO good) professional advice already?

Why you're seeking the advice of self employed plumbers is beyond me. You wouldnt ask your accountant how to fix a leak, would you??

Do as your accountant tells you...put about 15% away for Income Tax.

E.

I never said I was disputing what my accountant has told me. He is very good and helpful. I wanted to hear from fellow professionals who have been operating as sole traders for a lot longer than me. And if they are legitimate they too would have accountants. So I dont think amateurs would be able to give me advise. And believe me there are plenty of people on Boards.ie that can tighten a nut and think there plumbers because of it.

slavetothegrind

Your accountant is pretty much bang on i would say in my 7 year experience.
One tip i found out the hard way is to photocopy the diesel reciepts weekly as they fade over time, as can some of your smaller purchases reciepts.
If you are ever audited if you haven't got the reciept it doesn't exist in taxmans eyes.

Keep all those parking slips also, i spend up to 20 euro a week around the city and this adds up! even 10 euro a week x 40 is 400 in a year!

Hope it is going ok for you at the moment, it's tough enough out there:(

exaisle

The difficulty with asking "colleagues" about how much tax they pay, is that there is always a tendency to boast (even a little). It's difficult for people to be objective in such circumstances and the chances are that your accountant acts for more than just one plumber (ie, you).

Secondly, what makes you think that others in the business, who are your competitors, will tell you the truth? ;-)

yoshytoshy

exaisle wrote: »

Secondly, what makes you think that others in the business, who are your competitors, will tell you the truth? ;-)

Speak for yourself in your criticisms of boards users ,our company had at one stage a turnover of 1Million irish pounds.
I don't think that constitutes anything like amaturish trade.

Personally ,I answer any questions by johnnie truthfully. Fair play to him for being so honest ,I hope he gets a lot of work.

yoshytoshy

Micky Dolenz wrote: »

I feel Johnnie wants to establish a sector norm and what better way to do that than by asking people in the sector.

As Gary has said and i agree, pay more and there are no nasty surprises. But Johnnie, my advice is, get into the habit of putting the money away as soon as you can. It's easy let tax matters slip.

Thats spot on micky ,most people who start out on their own and do well ,pay themselves the bare minimum just to survive ,for the first few years.

I actually don't know any plumbers/gas fitters who pay themselves a really high wage ,the money usually sits in the company and if they want to buy a new van or whatever ,the money is there. And it's all tax deductable aswell.

I think if you own your own company ,you can pay yourself an amount at the end of the year aswell. Not too sure about this.

exaisle

yoshytoshy wrote: »

Speak for yourself in your criticisms of boards users ,our company had at one stage a turnover of 1Million irish pounds.
I don't think that constitutes anything like amaturish trade.

I am speaking for myself.

Firstly, a turnover of a million "irish pounds" doesn't imply that you made any profit.

Secondly, I haven't suggested that you are amateurish in your trading activities but you are an amateur in giving taxation advice to others.

E.

exaisle

yoshytoshy wrote: »

I actually don't know any plumbers/gas fitters who pay themselves a really high wage ,the money usually sits in the company and if they want to buy a new van or whatever ,the money is there. And it's all tax deductable aswell.

I think if you own your own company ,you can pay yourself an amount at the end of the year aswell. Not too sure about this.

Given the state of the building trade at the moment, anybody making a weeks wages is doing pretty well.

Strictly speaking, if you or your company buy a new van, it takes eight years to deduct all of the cost against tax.....so although it's "all tax deductable", it takes a long time to get the benefit of the expenditure.

And....if you own your own company and you leave profits in the company you can be charged a surcharge on the profits. I'm not going to go into detail about this, but any tax professional will know what I'm on about.

yoshytoshy

exaisle wrote: »

I am speaking for myself.

Firstly, a turnover of a million "irish pounds" doesn't imply that you made any profit.

Secondly, I haven't suggested that you are amateurish in your trading activities but you are an amateur in giving taxation advice to others.

E.

Did I say a turnover was profit ? ,I was stating a fact that this is the amount of goods we got through one year. Seen as how you were quick to make amature remarks at people here.

This isn't the business section of boards ,so it's all impartial advice.

I don't know anyone who had to wait eight years to claim the vat back on a vehicle.

JohnnieK

exaisle wrote: »

Given the state of the building trade at the moment, anybody making a weeks wages is doing pretty well.

Strictly speaking, if you or your company buy a new van, it takes eight years to deduct all of the cost against tax.....so although it's "all tax deductable", it takes a long time to get the benefit of the expenditure.

And....if you own your own company and you leave profits in the company you can be charged a surcharge on the profits. I'm not going to go into detail about this, but any tax professional will know what I'm on about.

Hi exaisle

If I had a surplus in the account comming up to the end of the year which I dont think I will, would my accountant advise me on what to do to minimise the charge?

exaisle

With all due respect, ask him.

exaisle

yoshytoshy wrote: »

Did I say a turnover was profit ? ,I was stating a fact that this is the amount of goods we got through one year. Seen as how you were quick to make amature remarks at people here.

This isn't the business section of boards ,so it's all impartial advice.

I don't know anyone who had to wait eight years to claim the vat back on a vehicle.

The fact that you had a turnover of a million pounds regardless of whether you made a profit does not change the fact that you are an amateur in the sense that you are not a professional tax advisor.

This is the internet, so all posts should be taken with a large pinch of salt. I don't doubt your sincerity or that you are well intentioned but if anybody wants good, sound, tax advice, they should go to a professional and not take the word of strangers/amateurs. That was my initial point.

As regards VAT....I havent referred to VAT, but to Income Tax. The cost of buying a van can be written off against Income Tax or Corporation Tax over eight years....so it's all tax deductible...just not immediately.

yoshytoshy

exaisle wrote: »

The fact that you had a turnover of a million pounds regardless of whether you made a profit does not change the fact that you are an amateur in the sense that you are not a professional tax advisor.

This is the internet, so all posts should be taken with a large pinch of salt. I don't doubt your sincerity or that you are well intentioned but if anybody wants good, sound, tax advice, they should go to a professional and not take the word of strangers/amateurs. That was my initial point.

As regards VAT....I havent referred to VAT, but to Income Tax. The cost of buying a van can be written off against Income Tax or Corporation Tax over eight years....so it's all tax deductible...just not immediately.

Fair enough .

Aside from the obvious tax issues ,theres other costs that I'd consider important when working out stuff myself ,per annum.
Holiday pay/Pension - Up to 4K
Diesel/Vehicle costs - Up to 1.5K
Phone bills/tools etc - 1.5K

Thats 7000 that needs to be in the company ,just to cover the basics.
Then theres the quiet times that everyone goes through ,you still need to pay yourself a wage:(

Thats why I was saying it's good to keep as much money in the company:(