Small business baking cakes

cmat

Just a small query, a friend of mine bakes cakes from her home and registered with Revenue. She must submit her income for taxing. Does she total all lodges for cake sales less any purchases (ingredients, cooking utensils, boxes) and balance figure goes on form. Is it a Form 12.
I don't know if she's registered for vat and if she is, do I deduct 23% from her sales to get figure for Tax Return and same for her purchases
Thanks

Irish Praetorian

cmat wrote: »

Just a small query, a friend of mine bakes cakes from her home and registered with Revenue. She must submit her income for taxing. Does she total all lodges for cake sales less any purchases (ingredients, cooking utensils, boxes) and balance figure goes on form. Is it a Form 12.
I don't know if she's registered for vat and if she is, do I deduct 23% from her sales to get figure for Tax Return and same for her purchases
Thanks

When you say she is registered with Revenue, do you mean she's signed up on MyAccount and declaring this as extra income, or is she properly registered as self-employed and set-up to pay Income Tax?


Furthermore, where is she operating, when did she start trading and does she not have an accountant already?

Darc19

Tell her to get an accountant. Not expensive and can save a lot of headaches and money.

She can also deduct a cost for electricity, use of kitchen, and many other things.

Unless she is selling over €75,000 of cakes a year, she is unlikely to be registered for vat

cmat

Thanks for reply, shes registered as self employed and working from home. Its her only means of Income. She's at it since 2018 and definitely not earning over e75k. Her expenses to deduct - will she be deducting cost including vat and is it the revenue who says how much she can use as business expenses meaning electricity. She feels no need for an accountant as she hasn't many receipts during the year to hire one she said

Irish Praetorian

cmat wrote: »

Thanks for reply, shes registered as self employed and working from home. Its her only means of Income. She's at it since 2018 and definitely not earning over e75k. Her expenses to deduct - will she be deducting cost including vat and is it the revenue who says how much she can use as business expenses meaning electricity. She feels no need for an accountant as she hasn't many receipts during the year to hire one she said

Fair enough, if she is not VAT registered she should not be charging VAT on her sales and as such, you shouldn't need to worry about accounting for it. Nor do you need to worry about calculating the different VAT rates on her purchases. You might just want to be a little careful about her expenses if she is operating from home - giving her full electricity bill or phone bill from a private residence looks odd, it might be best just to allow a reasonable portion of those.

DankeyKang

As mentioned above she needs to hire an accountant for a number of reasons.

Darc19

If it's a small business, then yes, it's as simple as as adding up all the costs (incl vat), apply a reasonable cost for electricity and use of kitchen and appliances.

Remember travel expenses if delivering.

Deduct all these from the income and you have the net income.


Electricity cost is simple. Get 3 bills from before she started and 3 bills after.
Work out the average difference and that's your reference cost for electricity

€250/month for kitchen and appliances would be reasonable.