Self Employed Salary

stocktrader

Ok so I own my own company and my accountant suggested paying a salary. I was wondering can I just take the net income amount straight out of the account when I want to instead of paying monthly?

And then I presume you pay PRSI, USC etc in full at end of the tax year?

Thanks

barneystinson

stocktrader wrote: »

Ok so I own my own company and my accountant suggested paying a salary. I was wondering can I just take the net income amount straight out of the account when I want to instead of paying monthly?

And then I presume you pay PRSI, USC etc in full at end of the tax year?

Thanks

You can pay yourself salary as often as you like, but it should always be net of PAYE/PRSI/USC, and this should be returned and paid over to Revenue periodically on a P30 return, how frequently depends on how often you've been asked to submit a P30.

stocktrader

yep so say the salary is 32800 and you work out everything on an online tax calculator:

http://www.hookhead.com/Tools/tax2012.jsp?srt=20.00&trt=41.00&prsi=4.00&pepw=127.00&lusc=2.00&musc=4.00&husc=7.00&lusct=4004.00&musct=10036.00&husct=16016.00&src=32800.00&gross=32800&newgrossmonth=&bik=0.00&ss=0.00&pensionpc=0.00&credits=3300.00

So basically anyday (if you have it) walk into a bank and take out the NET amount in full being €26,877.28 ? or is there some beneficial way or better way in paying yourself like a normal worker e.g. every month?

thanks

barneystinson

stocktrader wrote: »

yep so say the salary is 32800 and you work out everything on an online tax calculator:

http://www.hookhead.com/Tools/tax2012.jsp?srt=20.00&trt=41.00&prsi=4.00&pepw=127.00&lusc=2.00&musc=4.00&husc=7.00&lusct=4004.00&musct=10036.00&husct=16016.00&src=32800.00&gross=32800&newgrossmonth=&bik=0.00&ss=0.00&pensionpc=0.00&credits=3300.00

So basically anyday (if you have it) walk into a bank and take out the NET amount in full being €26,877.28 ? or is there some beneficial way or better way in paying yourself like a normal worker e.g. every month?

thanks

I haven't checked the figure, and I can't without knowing your personal circumstances for credits etc... so we'll assume that figure is the correct net annual salary for you on a gross of 32,800.

You could walk into the bank in the last week/month of the year, and draw that net salary. Because you'd have accrued your full year's tax credits and standard rate cut-off point.

If you draw a net salary of 26,877.28 in January, this would require a much higher gross figure than 32,800, because in the month of January you have only 1/12th of your tax credit and (more significantly) your standard rate cut-off. So to draw 26,877.28 in January would mean that your gross salary in that month was c.€50,000.

stocktrader

I still don't get it really. Can I not just take my full years net pay in one go and sort out all the tax in one go. Why does it need to be spaced out? thanks

barneystinson

stocktrader wrote: »

I still don't get it really. Can I not just take my full years net pay in one go and sort out all the tax in one go. Why does it need to be spaced out? thanks

You can draw it all in one go, but the PAYE system has to be operated. Because your credits etc accumulate over the year, the calculation of PAYE/PRSI to gross up the net salary will differ depending on when you draw the salary.