Claimable Expenses Sole Trader

dartboardio

Hi, I have had a read of this section on Revenue where it says what I can claim when filling out my tax return each year but just wanted to ask a few more questions.

Is it possible to claim for business premises rent expenses? What percentage of the full amount? Do I just keep all the receipts/amounts and attach?



If I was to buy a new computer for the premises for solely work purposes, can I claim back 12.5%? as wear and tear? or is there another option

I read somewhere I can claim for goods I am reselling, surely this is not a thing?

I sell electric scooters, so surely I cannot claim expenses on each scooter, am I reading it wrong?

Also what are other handy expenses that I can claim for when the time comes around?

I know I should speak to an accountant, and I will eventually, just would like some advice here!:)

Stratvs

Rent of premises used wholly and exclusively for the purposes of the trade is allowable. The amount would be whatever the landlord is charging you.

Laptop W/T is 12.5% pa x 8.

The cost of the goods you are reselling is a deduction from the sale proceeds of said goods, it's purchases for resale.

Generally any expenses wholly and exclusively incurred are allowable. e.g. advertising, light & heat, phone, trade insurance, bank charges, repairs to the shop that you, as the tenant are responsible for etc.

dartboardio

Stratvs wrote: »

Rent of premises used wholly and exclusively for the purposes of the trade is allowable. The amount would be whatever the landlord is charging you.

Laptop W/T is 12.5% pa x 8.

The cost of the goods you are reselling is a deduction from the sale proceeds of said goods, it's purchases for resale.

Generally any expenses wholly and exclusively incurred are allowable. e.g. advertising, light & heat, phone, trade insurance, bank charges, repairs to the shop that you, as the tenant are responsible for etc.

Great, thanks for that.. so for example, I am just looking into premises at the moment, for example the one I may consider is around €1200 per month, so this full amount can be deducted from my tax bill?:eek:

and yes the premises would be just for the business..

thanks, thats very good, didn't realise it.

Stratvs

dartboardio wrote: »

Great, thanks for that.. so for example, I am just looking into premises at the moment, for example the one I may consider is around €1200 per month, so this full amount can be deducted from my tax bill?:eek:

and yes the premises would be just for the business..

thanks, thats very good, didn't realise it.

Yes rent is expensed in the year it happens so it the full amount reduces profit by that amount. If you're a 40% marginal rate of tax + USC & PRSI then it effectively halves the cost for a sole trader.

Now just to be clear, it's not €1,200pm off your actual tax bill. It's €1,200 off your profit before tax so the tax saving is €1,200 x (rate of tax+PRSI+USC).

I'd suggest making that "eventually" meeting with an accountant to be a "sooner eventually" rather than a "later eventually". Helps to know before you do something what the implications are rather than backpeddling after.

Best of luck with it.

jimmycrackcorm

Stratvs wrote: »

Yes rent is expensed in the year it happens so it the full amount reduces profit by that amount. If you're a 40% marginal rate of tax + USC & PRSI then it effectively halves the cost for a sole trader.

Now just to be clear, it's not €1,200pm off your actual tax bill. It's €1,200 off your profit before tax so the tax saving is €1,200 x (rate of tax+PRSI+USC).

I'd suggest making that "eventually" meeting with an accountant to be a "sooner eventually" rather than a "later eventually". Helps to know before you do something what the implications are rather than backpeddling after.

Best of luck with it.

This makes it sound confusing. Profit is what's left after all the expenses are accounted for. You pay tax on the profit after that.

Stratvs

jimmycrackcorm wrote: »

This makes it sound confusing. Profit is what's left after all the expenses are accounted for. You pay tax on the profit after that.

I may have explained it badly but many times on here I’ve seen comments where people think that say a €1,000 expense will save them €1,000 in tax which is not the case. That’s what I was trying to get across.

dartboardio

Stratvs wrote: »

I may have explained it badly but many times on here I’ve seen comments where people think that say a €1,000 expense will save them €1,000 in tax which is not the case. That’s what I was trying to get across.

So what way does it exactly work then? sorry, I'm naive and thought I would be saving €1000 off my tax bill

Geuze

dartboardio wrote: »

So what way does it exactly work then? sorry, I'm naive and thought I would be saving €1000 off my tax bill

Jesus Wept.



Revenue

less Cost of Goods Sold

= gross profit

less expenses

= net profit




You pay tax on the net profit.

Geuze

dartboardio wrote: »

So what way does it exactly work then? sorry, I'm naive and thought I would be saving €1000 off my tax bill

Are you the lad thinking of going into business importing and selling scooters, etc?

This is Junior Cert business level we are talking about here.

dartboardio

Geuze wrote: »

Are you the lad thinking of going into business importing and selling scooters, etc?

This is Junior Cert business level we are talking about here.

Thinking?

Firstly, I'm a woman, secondly, I'm not thinking about it, I'm already trading online, 9k sales so far


anyyyyyhow, besides the point, I wasn't being rude by saying 'how exactly does it work then'

I'm simply asking what way does it work, with Form 11/Self assessment at the end of the year? I am asking specifically in relation to claiming for rent expenses throughout the year.

This is supposed to be a forum where we can ask questions, god forgive me for not remembering 'junior cert business' :pac:

Although everyone seems fair narky nowadays!

John_Rambo

If you're like me, a sole trader that's unsure & lacking the skills and knowledge of taxation I'd get an accountant. For a small yearly fee I've saved a lot more than the fee on tax. They know every legal avenue that's available to make savings, you're less likely to be audited and they know what costs can be offset. It's certainly not junior cert business level accounting for me! taking everything in to account including payroll, seasonal employees, pensions, partners income, health spending, car, kids, equipment, at what point you actually need to register for VAT etc...

This isn't a dig at you Geuze, respectfully, what maybe junior cert accounting to you may be complicated for others!! As a fresh start-up we've plenty of challenges and hiring an accountant has eased a bit of pressure on that unfamiliar front with no nasty surprises at year end.

thegills

And I think you can expense the accountant fees so its really only half price!

jimmycrackcorm

dartboardio wrote: »

So what way does it exactly work then? sorry, I'm naive and thought I would be saving €1000 off my tax bill

It would be well worth your time to get an accountant. Not only to explain this stuff properly but to minimize your tax bill by pointing out what you can expense.

It'll pay for itself.

relax carry on

I'm sorry but these are the sort of questions you ask yourself before you start up trading along with can I make a living from this, are there any licenses/regulations I need to adhere to be compliant etc

sydthebeat

dartboardio wrote: »

So what way does it exactly work then? sorry, I'm naive and thought I would be saving €1000 off my tax bill

The easiest way to understand it is that your tax bill of an expense will reduce by roughly the tax percentage of that expense.

For a very simple example:
Your income is 10,000
Your tax is at 20%
You owe 2,000

Say you have an expense of 2,000
Then your tax bill is 10k - 2k = 8k @ 20% = 1,600

So due to that expense, your tax bill has fallen from 2k to 1.6k = €400
Which is 20% of your expense.

You tax bill doesn't drop by the amount of the expense, it drops by roughly the percentage of the expense

dartboardio

sydthebeat wrote: »

The easiest way to understand it is that your tax bill of an expense will reduce by roughly the tax percentage of that expense.

For a very simple example:
Your income is 10,000
Your tax is at 20%
You owe 2,000

Say you have an expense of 2,000
Then your tax bill is 10k - 2k = 8k @ 20% = 1,600

So due to that expense, your tax bill has fallen from 2k to 1.6k = €400
Which is 20% of your expense.

You tax bill doesn't drop by the amount of the expense, it drops by roughly the percentage of the expense

I can understand that, the way you have explained it makes much more sense. Thanks!:)

dartboardio

relax carry on wrote: »

I'm sorry but these are the sort of questions you ask yourself before you start up trading along with can I make a living from this, are there any licenses/regulations I need to adhere to be compliant etc

I'm aware of that but I was specifically asking in relation to rent expenses re Form 11 something like that isn't gonna be a dealbreaker .

Geuze

dartboardio wrote: »

Thinking?

Firstly, I'm a woman, secondly, I'm not thinking about it, I'm already trading online, 9k sales so far


anyyyyyhow, besides the point, I wasn't being rude by saying 'how exactly does it work then'

I'm simply asking what way does it work, with Form 11/Self assessment at the end of the year? I am asking specifically in relation to claiming for rent expenses throughout the year.

This is supposed to be a forum where we can ask questions, god forgive me for not remembering 'junior cert business' :pac:

Although everyone seems fair narky nowadays!

I was a bit sharp with you, sorry.

I wish you well with your business.

I sort of presumed that anybody even thinking of starting a business would know these basics.

Surely everybody in business, or even thinking about it, would know that any rent paid on your premises is a deductable expense??

Geuze

dartboardio wrote: »

I'm simply asking what way does it work, with Form 11/Self assessment at the end of the year? I am asking specifically in relation to claiming for rent expenses throughout the year.

The challenge is sometimes knowing which expense can be deducted from gross profit.

Rent of your premises is fairly clearcut - it is a legitimate business expense.

There are other expenses where the answer may not be 100% obvious or clear.

For example, if you use a personal phone and/or broadband, or if you use your personal vehicle in the line of business - then it may be a case of allocating some of these costs as a business expense.

That is where an accountant can advise.

Mrs OBumble

dartboardio wrote: »

Firstly, I'm a woman, secondly, I'm not thinking about it, I'm already trading online, 9k sales so far

9k in sales or 9k in profit after you paid for the scooters which you re-sold.

If it's profit then you NEED an accountant ASAP, because you may be somewhere near the VAT threshold.


Either way, the entrepreneurship and businesses management forum may be of interest to you.

dartboardio

Mrs OBumble wrote: »

9k in sales or 9k in profit after you paid for the scooters which you re-sold.

If it's profit then you NEED an accountant ASAP, because you may be somewhere near the VAT threshold.


Either way, the entrepreneurship and businesses management forum may be of interest to you.

9k in sales.

Not near the 35 / 75k threshold for goods/products sales just yet

Marcusm

dartboardio wrote: »

Great, thanks for that.. so for example, I am just looking into premises at the moment, for example the one I may consider is around €1200 per month, so this full amount can be deducted from my tax bill?:eek:

and yes the premises would be just for the business..

thanks, thats very good, didn't realise it.

Commercial rent will usually include VAT. If you are paying 1200 pcm you might want to look into an early VAT registration.

pnecilcaser

Nothing junior cert about 9k a year.

Geuze wrote: »

Are you the lad thinking of going into business importing and selling scooters, etc?

This is Junior Cert business level we are talking about here.

Will Yam

Geuze wrote: »

Jesus Wept.



Revenue

less Cost of Goods Sold

= gross profit

less expenses

= net profit




You pay tax on the net profit.

You pay tax on the tax adjusted net profit. Different thing to net profit.