Working and setting up a business

fitzcoff

Hi

Looking for some guidance for my brother, he is currently in his last phase of apprenticeship and wants to sort himself out that he can work for himself in the evenings/weekends and eventually full time.

I have attached a link I started before about his circumstance in his current employment.

http://www.boards.ie/vbulletin/showthread.php?p=76491611


I am thinking that he should register as a sole trader and for VAT. He has a shed at home and a lot of the tools etc so he shouldn't have too high a start up cost.

Just wondering what else he needs to do, I have told him to have a look at this

any help would be appreciated.

paul71

If it is to be a panel beating business it should be pretty simple.

He needs to register for tax purposes as a sole trader. The form required for this is called a TR1, on that form he can also register for VAT. He should probably register a business name as a soletrader with the company registration office.

In terms of book-keeping he should buy himself a duplication invoice book and write up a VAT invoice for each job he does (He needs to learn what the legal layout of a valid VAT invoice entails - not too complicated), he also needs to be sure he applies the correct VAT rate on his invoices, I assume this will be 13.5% unless he is selling parts or tools which would be 23%. He gives 1 invoice to his customer for each job and the duplicate stays in the invoice book. He should keep receipts for all expenses he his and try ensure that this receipts are valid VAT invoices. He may choose to open a bank account for the purpose of the business only and keep a separate personal account, there is no requirement for a soletrader to do this but it is a little more transparent and easy to manage.

The next part is a little more complex, he can prepare his own VAT returns if he wants or pay a book-keeper to do it. I would advise that he pays someone to train him to do it, should only take a few hours. At the end of each tax year he should take all his records to an Accountant and ask him to prepare a tax return. While it is posible for him to do his own tax returns and book-keeping I would think the best course would be to do the book-keeping himself and have a professional do the accounts and income tax return.

Thats the best I can do in terms of accounting/book-keeping advice, in terms of other advice the only thing I would say is that he should avoid giving credit as far as possible.

DoMyBooks

Just one small point, I would suggest he doesn't register for VAT until it looks like he's going to hit the threshold. If he's dealing with the general public he's just throwing money away by registering early.

Threshold is €37,500

http://www.revenue.ie/en/tax/vat/registration/thresholds.html

fitzcoff

Thanks for the replies.

I thought that any business would have to be registered for VAT.

I can't see him reaching the threshold as he will only be doing evening/weekend work for the time being.

Could someone please help me clarify that the below is correct.

• A form TR1 would have to be filled out.
  
• Would he still need to register the business with the CRO.
  
• He would be buying stuff for the work so if he's not registered for VAT he can't claim this back.
  
• He would have to keep a record of all income/expenditure.
  
• He would be better off having a business account to keep track of money.
  
• If he registered for VAT and did not reach the threshold what happens?

Thanks for the help. Just want to make sure that he starts on the right foot with things.

J.Ryan

fitzcoff wrote: »

Thanks for the replies.

I thought that any business would have to be registered for VAT.

I can't see him reaching the threshold as he will only be doing evening/weekend work for the time being.

Could someone please help me clarify that the below is correct.

• A form TR1 would have to be filled out.
  
• Would he still need to register the business with the CRO.
  
• He would be buying stuff for the work so if he's not registered for VAT he can't claim this back.
  
• He would have to keep a record of all income/expenditure.
  
• He would be better off having a business account to keep track of money.
  
• If he registered for VAT and did not reach the threshold what happens?

Thanks for the help. Just want to make sure that he starts on the right foot with things.

Mostly yes, the CRO would only need to be informed if he was registering a trading name, if he was just to trade as Joe Bloggs, then no need to register.

If he registers for VAT and doesn't reach the threshold, then nothing, you can also register voluntarily, but you must file your returns on time, even if they are Nil.

happyhat

If he registers for VAT and doesn't reach the threshold, then nothing, you can also register voluntarily, but you must file your returns on time, even if they are Nil.

Just a point to note if you register for VAT voluntarily and then wish to de-register the balance of any extra VAT reclaimed in the previous 3 can be clawed back.

He may wish to stay not registered for VAT to allow for more competitive pricing if he is not reaching the threshold any then register when it becomes compulsory. Revenue do not claw back VAT if you subsequently de-register due to falling become the threshold as far as i am aware.....

KevinMcDonald

The best advice i can give to make the process a little easier is to have a look at this http://sage.ie/store/free-software/sage-planning-for-business.aspx

Its free and will give you a program to work with which will help you along the way and get a good plan together.

I hope this helps,

Kevin McDonald
Business Advice Consultant
Sage Ireland

P.S - Sorry for the late reply but I am new to the forum and I only came across this thread today.