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Self-employed and paying wages

  • 17-03-2012 4:40pm
    #1
    julyjane
    Registered Users, Registered Users 2 Posts: 1,090 ✭✭✭


    Hoping someone can advise me on this. If I'm self employed, my business bank account is separate from my personal bank account. Just starting out so no employees.

    So if I do a job and lodge the money to the business bank account. But instead of just helping myself to money whenever I feel like it, I'd rather pay myself a wage into my personal account so that I can live off my personal account and I know what's left in the business account will cover my business expenses.

    Am I correct in thinking I don't have to deduct any taxes from my wages, seeing as I'll be taxed at the end of the year based on my income anyway?

    Also if I have someone who covers for me on rare occasions and I pay him cash? At what point do I have to register as an employer and return his wages for PAYE? It could literally be €50 an odd time and wouldn't add up to much, is there a threshold up to which I can pay casual wages or should I register him as an employee even if I pay him a total of about €500 in a year?


Comments

  • #2
    srsly78
    Registered Users, Registered Users 2 Posts: 7,157 ✭✭✭srsly78


    Depends if you are a sole trader or operating as a ltd company. If you are a sole trader, then yes your tax is settled at the end of the year. If LTD then you have to operate PAYE.

    As for paying your part-time employee, it would be a lot easier (for both of you probably) if he just sent you a bill (ie he would be self employed himself). Then he can sort out his own tax. Just make sure you file away all the invoices he sends, and note down his PPS number and declare it all. Make sure he knows that this is above-board, and that he is expected to declare this extra income.


  • #3
    smcgiff
    Closed Accounts Posts: 5,943 ✭✭✭smcgiff


    There are rules as to who can be treated as a non employee - you cannot just decide you will take on a contractor and allow them to be self employed.


  • #4
    greendom
    Registered Users, Registered Users 2 Posts: 16,382 ✭✭✭✭greendom


    smcgiff wrote: »
    There are rules as to who can be treated as a non employee - you cannot just decide you will take on a contractor and allow them to be self employed.


    Exactly - things like whether the worker can substitute someone else to do his/her role; do they use their own tools and equipment and choose their own hours; do they bear the financial risk of the enterprise etc; more detail here

    http://www.revenue.ie/en/tax/rct/determining-the-correct-employment-status-of-a-worker.html


  • #5
    srsly78
    Registered Users, Registered Users 2 Posts: 7,157 ✭✭✭srsly78


    If you read that link you will see the rules are extremely vague. Both categories say "if some or all conditions apply", and in the OPs case both categories are indeed semi-satisfied. Thus it falls into the doubt category, and if it's only for e500/year the revenue will likely not have a problem with him being a contractor.

    Get advice from accountant. Actually, as the link above says, in cases of doubt like this one contact your local revenue office.


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