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A question about sole trader

  • 31-05-2010 12:10pm
    #1
    Canonfan
    Registered Users, Registered Users 2 Posts: 1,023 ✭✭✭


    Dear all,

    A friend of mine asked me this, he is full-time employed but his wife is at home minding the child so he is using all the tax credit.

    Now he wants to open a business as sole trader but still work full time during the day. The question is will the business affect his income tax?

    Thank you very much in advance.


Comments

  • #2
    dbran
    Registered Users, Registered Users 2 Posts: 2,094 ✭✭✭dbran


    Hi

    It will affect your income tax as you pay tax on all the income that you earn.

    You might pay your wife a wage and therefore use up more of her lower rate tax band of 20%.

    Kind Regards

    dbran


  • #3
    Canonfan
    Registered Users, Registered Users 2 Posts: 1,023 ✭✭✭Canonfan


    Thanks for the reply dbran.

    Looks like it's not good news for him. I thought if he pay business tax then personal tax will not be affected.

    Thanks

    Regards

    Canon


  • #4
    antoinolachtnai
    Registered Users, Registered Users 2 Posts: 9,815 ✭✭✭antoinolachtnai


    He will have to make a tax return every year, which he doesn't have to do at the moment. It won't stop him from being employed and probably won't make any difference to the way he is taxed on his job. It might be possible to do as suggested to use up his wife's allowances, if she were involved in the business.


  • #5
    AndyJB
    Closed Accounts Posts: 177 ✭✭AndyJB


    Canonfan wrote: »
    Dear all,

    A friend of mine asked me this, he is full-time employed but his wife is at home minding the child so he is using all the tax credit.

    Now he wants to open a business as sole trader but still work full time during the day. The question is will the business affect his income tax?

    Thank you very much in advance.

    Hi,
    Paying more tax because you have more income, that's a fantastic problem to have!

    The self employed element of the income could be reduced by the various expenses your buddy would incur doing the extra job.

    As long as he makes a profit on the extra work and it doesn't greatly affect his wife and child's home life to hell with the tax bill just do it. Have a chat with an accountant to put a tax plan in place ie employ wife, offset expenses (ESB, phone, mobile etc)

    Best of luck.


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