PAYE & Self Employed Is this Possible

Dublin ACE

I am a PAYE employee in a company working three days a week. I am also Starting up a business on my own which I will be working on for the rest of the week.
· I've registered my new company name with CRO,
· I've taken out Professional Indemnity Insurance,
· The company won't earn over the VAT limit so I won't have to register for VAT, but will have to submit VAT at the end of the year
· My employer has no problem as long as it doesn't impact on my work.
Does anyone have any experience in making something like this work with the revenue?
Will any earnings I take out of my company be subject to the same PAYE, PRSI, Health levy, income levy as in my PAYE job or will they be subject to self employed rules? How does that work?

I want to do everything legitimately so any advice would be appreciated.

Legend100

You say you've set up a business

Did you register a business name or did you actually form a Ltd company?

If you registered a business name and are a sole trader, you will be taxed on the profits you make. You wont take a deduction of any money you draw out of the business. So if you make sale of 10K, have expenses of 1K and withdraw say 7k, you are still staked on the (10-1) 9k profit made in the business

If you have set up a company, you personally will be taxed on the salary you take out of the company and pay PAYE on this salary. Any profit made will be subject to corporation tax but you can take a deduction for your salary as an expense

If you are not going to hit the vat threshold, you dont charge vat and you dont have a liability to vat either. I don't know what you mean when you say you have to pay vat at the year end as this is incorrect.

Dublin ACE

This is all very new to me, I’m learning as I go.

I registered a business name and therefore will be operating as a sole trader, therefore I will pay tax on “profits minus expenses”. That’s great! I was worried that because I’m also a PAYE employee in another company that they would somehow be connected.

As for the VAT threshold (€37,500), unless I have a very good year, which I am not expecting, I will definitely earn below that. But I believed that although I don’t have to register for VAT, I would still have to pay it to Revenue. Again I am just starting out and would appreciate your thoughts.

smcgiff

Dublin ACE wrote: »

But I believed that although I don’t have to register for VAT, I would still have to pay it to Revenue.

No you don't. Although I'd be curious to know how you came to this conclusion.

Legend100

Just remember that we are taxed on total income. So when you go to do your tax return, you add the pay you make in your salary to your taxable profit from your trade and pay tax on the total. If you don't pay tax at the higher rate in your employment, your taxable profit may push you into it. You then take a deduction of the paye paid in your employment( after deducting your tax credits) giving you a net amount of tax to pay plus income levy, prsi and health

Hope that is not too confusing!

Dublin ACE

Legend100, that is exactly the advice I was looking for. I couldn't figure out how the two roles would work together and couldn't find advice anywhere.
Thank you very much.

mathepac

Dublin ACE wrote: »

... But I believed that although I don’t have to register for VAT, I would still have to pay it to Revenue. ...

But if you are not registered, you will not have a VAT registration number so there is no VAT to pay, because :

1. You can't claim back VAT spent on purchases for your sole trader work
2. You can't charge VAT to customers of your sole-trader work.

Dublin ACE

While working a three day week as a PAYE employee, I registered a company name and set up as a sole trader in my spare time.
My expenses were for leaflets and insurance.
By the end of 2010 I finished with a slight loss.
It looks like by the end of 2011 I will finish with a slight profit (few hundred euro).
I am going to build on this for a few years, to see if I can make a name for myself, but in the meantime I need to stay on the right side of the taxman.
How do I notify the Taxman that I made a loss last year and how do I notify the Taxman that I made a profit this year.
Any advise woould be very welcome.

barneystinson

Dublin ACE wrote: »

While working a three day week as a PAYE employee, I registered a company name and set up as a sole trader in my spare time.
My expenses were for leaflets and insurance.
By the end of 2010 I finished with a slight loss.
It looks like by the end of 2011 I will finish with a slight profit (few hundred euro).
I am going to build on this for a few years, to see if I can make a name for myself, but in the meantime I need to stay on the right side of the taxman.
How do I notify the Taxman that I made a loss last year and how do I notify the Taxman that I made a profit this year.
Any advise woould be very welcome.

By sending in a tax return. The one for last year is now almost overdue.