Basic tax question

jeff lebowski

Hi,

Forgive my ignorance of basic accountancy/tax but I was hoping someone in here might be able to assist me.

Let's say I make a net profit of €20,000 and have spent €5000 on hiring some programmers and support staff. Does that €5000 expenditure have any bearing on my tax liability against the net profit, or does it just come under a deducation from gross profit?

Also - I have an online business and have made a good amount of money. Most of this is in online processors accounts. If I don't need to use this money for anything right away, what would be the most tax efficient way of withdrawing it from, say, paypal? Are there any particular govt. schemes or anything to encourage saving etc. that would stop it just being taxed under income tax?

Thanks and again, sorry for the noob questions.

Thanks

hopethisworks

Hi there, you say the €5k was spend on "hiring". If you mean, advertising expenses for example for the new positions then the €5k expense will reduce your net profit and therefore reduce your tax liability on the net profit. If you mean hiring as in the "wages" expense for the new positions. Same thing applies. You just need to decide under what heading your treating that €5k expense.

As for the money received via Paypal. If it is income into your business then it should be treated as such in your records. Revenue dont care whether your income is in cash, credit card, cheque, paypal or other. It is monies received for goods or services you provided. I would talk to your accountant or financial advisor as there may be means for you to earn interest on the money as an investment by the business. You would in theory be liable to tax on the interest earned.

Hope something there may be of help to you.