Declaring for tax

Curiouschris

Hi everyone,

I am a carpenter by trade and recently have been asked to create custome furniture, I have in the past done a few bits and bobs mostly for barter, however I'm currently unemployed so I am thinking of maybe setting up as a sole trader. What is the most efficient way to do this? Are there more straight forward ways than setting up as sole trader, maybe paying a tax on a job by job basis? Currently wouldn't be earning above any thresholds but if I can grow my rep hopefully this will change, but I want to be tax compliant if this happens?

Thanks

Swampy

The threshold for goods is 75k. If you sell over that in the year and haven't registered for VAT they can come looking for it retrospectively from the start of the year.

So if you think you are going to sell over the 75k in year one, you should register.

Curiouschris

Hi swampy,Cheers for the reply. Would you be able to tell me are services included with this? I.e. repairing furniture etc.? Some of the jobs I've done in the past were of this nature but obviously don't make somthingnew just fix broken cabinets and so on?

Thanks

Swampy

Curiouschris wrote: »

Hi swampy,Cheers for the reply. Would you be able to tell me are services included with this? I.e. repairing furniture etc.? Some of the jobs I've done in the past were of this nature but obviously don't make somthingnew just fix broken cabinets and so on?

Thanks

That could be tricky as the threshold for services is €37,500 i think. So to be honest if you are supplying a service and a product i'm not sure where you lie. You could potentially have two businesses. One a service business and one a goods business. I would get a little more advice on it though as I am really not sure about it.

You should have a read here http://www.revenue.ie/en/tax/vat/supplies/index.html

Curiouschris

Thanks Swampy, great help!

Lantus

The thresholds you are refering to are for VAT.

You still need to pay tax on your income IF you register your self as a sole trader via the CRO website. It's like a PAYE system so the usual thresholds plus PSRI. You need to pay this at the end of the tax year so dont spend it all!

Dont try to claim back the VAT on anything you buy to make the goods though if your working below the threshold as you are not registered for Tax. Also you cannot issue VAT receipts as no tax should be added to your goods.

As to whether this is right for you depends on your personal circumstances and the customers/clients you would work with.

dbran

Hi

VAT registration... If 90% of the turnover derives from the sales of goods then the threshold for registration is €75,000. Otherwise it is €37,500 as you are deemed to be supplying a service.

If you are earning more then €3174 then you are obliged to register as self employed and complete a tax return form 11 every October.

If you are earning less then €3174 then you do not have to register as self employed however you are still obliged to declare the additional income and return it on Form 12 every October to revenue.

Hope this helps

dbran