Sole Trader - Register for VAT from Sep 1st 2016

kneilmac

Hey,

This may seem like a really stupid question, but I can't seem to find a correct answer.

I own a website and i'm selling a service for which i'm over the threshold (€37,500) and registered to pay 23% VAT on all my sales.

On top of the 23% VAT I must pay what other taxes would be due?

Am I required to pay PRSI, USC, and Income tax on top of this?

I'm new to all this and just want to know how many different types of taxes I'm subject to.

srsly78

Don't think about it that way. You don't pay VAT on your sales, you apply vat to it which the customer pays and you pass it along to taxman.

For everything else, this is all the usual tax that everyone pays on their income. In your case I think that means profit (rather than your gross sales) - talk to accountant about it. VAT shouldn't affect your profit, and thus won't affect income tax etc.

kneilmac

This is my first year, and so it's all very much new to me.

My site had €60,000 in sales in the 1st year (I personally took home about €30,000)

Is my Income tax, PRSI, and USC, based off what I take home (money that actually hits my bank account) or the total sales of my site.

I've been a bit naive and now find myself in a massive hole for which I can't afford to get out of. by my calculations I owe the taxman about €30,000 from the €60,000 the site took in.

Not looking for sympathy, but if i've got this wrong please let me know.

srsly78

Time to get an accountant. Also see other VAT thread right below this one.

scwazrh

So assuming you're a sole trader and have not set up a limited company

for €60k in sales inclusive of vat you have to pay to the revenue €60k/123*23 less any vat claimable expenses you have had such as vat portion of web fees , postage , advertising , phones etc.

Once you have your profit , i.e. sales less cost of sales and business expenses , the amount left is subject to tax and prsi. A rule of thumb for personal tax for budgeting is 25% up to 30k and 35% up to 50k and 40% after that.

MFS2

VAT and Income Tax are two different taxes.

Basically, in relation to VAT, you are a collecting agent for the government. Its not your money and shouldn't be viewed as such. You are allowed to deduct any VAT that you incur wholly and exclusively for the purpose of your business against the VAT you collect. VAT is one of the taxes that Revenue keep a keen eye on so make sure you get it right!

Re Income Tax, this is charged on your profits i.e. your net of VAT sales less expenses incurred wholly and exclusively for the purposes of your business less capital allowances available. The rate depends on the level of profits made and you need to factor in PRSI and USC.

If you trade through a company, that's different.

Best of luck.