Small Ltd company and paying taxes

helenaisabelle

Hello everybody,

I have recently set up a company and am wondering about paying taxes at the end of the year. Before setting up the company, I was part time employed (paying taxes) and part time self employed as a sole trader (only since August 2013 so no taxes filed).

I recently was contracted to a new job and have therefore set up a company. Basically in this company, there is only myself. Through this contract I hope to earn an average amount €36000, after taxes, per year.

I've been looking at hiring an accountant, but to be honest, all the information I've found they look expensive enough for me.

So I stumbled upon sage. They do some online accounts starting at €12 a month. This sounds good to me but I don't know much about them as I'm very new to this!

I'm also keen to get this sorted because I'm hoping to buy a house. Which would have been easier when it was 'employed' but might now be slightly more difficult. I'm wondering is there a way to pay myself so I'm an employee as well as a company director?

Any help or suggestions are appreciated!!

srsly78

Get an accountant, e1000/year or less for a small ltd company. This should cover general advice and end of year returns. Doing the monthly stuff is easy via www.ros.ie. Accountant will save you money, and make sure things are done properly - thus avoiding fines etc.

You don't actually need the accountant to do the accounts, this is what they would charge a fortune for. Just the end of year stuff really. Keep books yourself with a spreadsheet.

As a director you lose out on lots of stuff, some examples:
You pay PAYE but don't get PAYE tax credit
You can't claim various personal credits the normal way on www.ros.ie
You have to file a form 11 every year, invariably this means overpaying tax and then getting refund

I would not bother running a ltd company without having professional advice available. There are lots of obscure rules, like retained profits if you are a service company and so on.

helenaisabelle

Hi srsly78,

Thanks for your advice. I don't suppose you know of any good accountants in the Dublin area? There's a taxassist accountants office near where I live and where I work. I was thinking of checking them out. Does anyone know anything about them? How good they are, etc!

Thanks in advance!

srsly78

What works for me may not work for you. In my case I try to keep a paperless office, all communication with accountant is done via telephone or email. The only annoyance is having to physically sign the end of year returns, can't seem to get this done electronically.

Thus the location of accountant may not be relevant, mine is in Waterford by I am based in Meath.

Shop around, there are plenty of young accountants eager for your business. Make sure they know how to use email And make sure you know how to use spreadsheets!!

helenaisabelle

srsly78 wrote: »

What works for me may not work for you. In my case I try to keep a paperless office, all communication with accountant is done via telephone or email. The only annoyance is having to physically sign the end of year returns, can't seem to get this done electronically.

Thus the location of accountant may not be relevant, mine is in Waterford by I am based in Meath.

Shop around, there are plenty of young accountants eager for your business. Make sure they know how to use email And make sure you know how to use spreadsheets!!

Thanks!!

helenaisabelle

Does anyone know if you can be an employee of your own company?

Citizenpain

helenaisabelle wrote: »

Does anyone know if you can be an employee of your own company?

Yes..

barneystinson

helenaisabelle wrote: »

Hi srsly78,

Thanks for your advice. I don't suppose you know of any good accountants in the Dublin area? There's a taxassist accountants office near where I live and where I work. I was thinking of checking them out. Does anyone know anything about them? How good they are, etc!

Thanks in advance!

Personally I'd be a bit wary of taxassist, they are a franchise operation - the McDonalds of the accountancy business. That may come across as snobby, but in a professional environment, you'd expect that the best people will be capable of building a practice for themselves, without needing to sign up to a franchise to do so...

topcatcbr

barneystinson wrote: »

you'd expect that the best people will be capable of building a practice for themselves, without needing to sign up to a franchise to do so...

I don't know. People always quote Mc Ds when talking about franchises.

Never Rolls Royce.

I'm not saying their good or bad. I don't know but I wouldn't knock them just because they're a franchise.

Mr. Incognito

Setting up a company to employ yourself is very inefficient.

Proud will have to paye employers and employee prsi, corporate taxes and then income tax on any income.

Very expensive structure and should be avoided unless income is circa 100k

Dixie Chick

Mr. Incognito wrote: »

Setting up a company to employ yourself is very inefficient.

Proud will have to paye employers and employee prsi, corporate taxes and then income tax on any income.

Very expensive structure and should be avoided unless income is circa 100k

That is actually incorrect, a director employed by his own company does not pay employers prsi. In fact to remain a sole trader to income levels up to 100k is actually ridiculous

The individual may not have a choice in setting up a company as it may have been needed to procure his contract

As a company director, you can pay an accelerated level of pension which is an expense which will both lower your profit for corporation tax at the end of the year, and also lower the amount of tax at 41% that you pay as well.

Mr. Incognito

Dixie Chick wrote: »

That is actually incorrect, a director employed by his own company does not pay employers prsi. In fact to remain a sole trader to income levels up to 100k is actually ridiculous

The individual may not have a choice in setting up a company as it may have been needed to procure his contract

As a company director, you can pay an accelerated level of pension which is an expense which will both lower your profit for corporation tax at the end of the year, and also lower the amount of tax at 41% that you pay as well.

He still pays corp tax and income tax and must file for both. Very few people have funds to pay accelerated pension in a start up. Every cent is needed for cash flow.

I know of no situations where a company is more efficient or practical for small one man bands. Added filings, hassle and almost always end up breaching the companies acts. File an incorrect form 12 cro return and you could end up in the high court getting it fixed. I used to advise 50k for thinking about incorporation. These days with all the screw ups I have seen from start ups I advise 100k unless you know what you are at or taking on staff.

As to contracts requiring it? What contracts?

Dixie Chick

Mr. Incognito wrote: »

He still pays corp tax and income tax and must file for both. Very few people have funds to pay accelerated pension in a start up. Every cent is needed for cash flow.

I know of no situations where a company is more efficient or practical for small one man bands. Added filings, hassle and almost always end up breaching the companies acts. File an incorrect form 12 cro return and you could end up in the high court getting it fixed. I used to advise 50k for thinking about incorporation. These days with all the screw ups I have seen from start ups I advise 100k unless you know what you are at or taking on staff.

As to contracts requiring it? What contracts?

Every cent is needed for cash flow, but by keeping a person a sole trader, they are liable to pay up to 100% preliminary tax.

As for ending up in the high court for filing an incorrect form 12 (you still have to file a form 11 as a director or a soletrader) that completely incorrect unless it was deliberately defrauded.

I'm not trying to be an ass pain, I just think its not as simple as to saying NO. Tax planning is crucial, and its mad to say there is no one case where it is more efficient.

Mr. Incognito

Dixie Chick wrote: »

Every cent is needed for cash flow, but by keeping a person a sole trader, they are liable to pay up to 100% preliminary tax.

As for ending up in the high court for filing an incorrect form 12 (you still have to file a form 11 as a director or a soletrader) that completely incorrect unless it was deliberately defrauded.

I'm not trying to be an ass pain, I just think its not as simple as to saying NO. Tax planning is crucial, and its mad to say there is no one case where it is more efficient.

You are getting confused between tax returns and company filings.income tax returns are form 11 and form 12s. Cro filing form 12 s are entirely different

Here are cro form 12s

http://www.cro.ie/en/business-termination-members.aspx

Accountants do not in my experience know anything about company legal statutory requirements. It's not just a matter of banging in a memo and arts. The filings must be correct. The statutory books must be in order. I have had accountants issue fractional shares ( not possible legally)

Companies are a legal mess and tax inefficient unless you have turnover that warrants it. You never clarified what contracts require an incorporation?

As for preliminary tax, most start ups make a loss and the return does not have to be filed year one. Companies must file and pay and get no such flexibility, and also pay preliminary tax so your point is moot

Dixie Chick

Mr. Incognito wrote: »

You are getting confused between tax returns and company filings.income tax returns are form 11 and form 12s. Cro filing form 12 s are entirely different

Here are cro form 12s

http://www.cro.ie/en/business-termination-members.aspx

Accountants do not in my experience know anything about company legal statutory requirements. It's not just a matter of banging in a memo and arts. The filings must be correct. The statutory books must be in order. I have had accountants issue fractional shares ( not possible legally)

Companies are a legal mess and tax inefficient unless you have turnover that warrants it. You never clarified what contracts require an incorporation?

As for preliminary tax, most start ups make a loss and the return does not have to be filed year one. Companies must file and pay and get no such flexibility, and also pay preliminary tax so your point is moot

You misread. I meant preliminary tax payable as a soletradrer. Never mind