PAYE & Sole Trader

BlackEdelweiss

I am full time employed with a salary in the private sector.

I want to set up a small consulting business as a side hustle with the potential for it to eventually take over a much larger part of my employment portfolio.

For the next year I reckon I could earn about €5,000 max from it. As the years go on I would hope to be earning much more from it.

What do I need to do regarding tax for this side money. I read that tax is not applicable if it is for <€5,000 but I dont know if my salary is the base point and the €5,000 would be on top of that.

I am married, 4 kids, 2 under 18 and my current salary would be over €75,000. With my wife we would be about €110,000 ish.

amacca

You dont have to use self assessment if the non-paye income is below 5k as I understand it

Revenue still has to be informed of this income however.

Form 12 is what you need to fill out i its below 5k, it will still be taxed afaik.

relax carry on

Not sure where you've read that tax doesn't apply to non PAYE income of its less than 5000 euro. The only thing I can think of is somehow you are mixing up what tax return to use. That's what the 5000 limit refers to.

https://www.revenue.ie/en/additional-incomes/is-your-extra-income-taxable/index.aspx

The amount of people who seem to think there is a tax free threshold of €5,000 on non paye income is crazy.

It's taxable income mate. Because of your paye salary you're going to pay 52% tax on the profits of your sole trade business.

Mrs OBumble

Make sure you differentiate between revenue and profit. All profit is taxable.

If you have 5k in profit and aim to grow, consult an accountant with experience in the field to work out the right setup for you.

Also, if you own a house (or more) make sure you have adequate professional indemnity insurance.

BlackEdelweiss

If I knew about it I wouldn't be asking on here. This is a forum for questions about taxation. Give a helpful answer of stay out of the discussion. This is where I got the €5k figure. I gave my salary and our combined income so someone who knew about this could give me a simple answer because I dont know anything about tax.

relax carry on

https://www.boards.ie/discussion/comment/122153216#Comment_122153216

Thats just telling you what type of tax return to use to declare your non PAYE income if your taxable non PAYE income is over €5k and that you'll be self assessed. It doest say any non PAYE income under €5k is non taxable or doesn't have to be declared.

If you read the next paragraph under that snip you shared, you'll see that.

Before you start down this road, maybe have a chat with an accountant.

Mrs OBumble

https://www.boards.ie/discussion/comment/122153216#Comment_122153216

Based on that interpretation, I strongly suggest an accountant.

BlackEdelweiss

What interpretation?

mickdw

To be fair, your average paye worker doesn't know anything of.the terminology around self.employed taxes and to such a person, that revenue doc as uploaded could easily be read as revenue only needing to be notified if profit is over 5k.

Geuze

https://www.boards.ie/discussion/comment/122154707#Comment_122154707

Are you clear now on when to use Form 12 MyAccount and when to use Form 11 ROS?

BlackEdelweiss

https://www.boards.ie/discussion/comment/122155149#Comment_122155149

No. Not clear on anything.

Basically I just want to know if or how do I pay tax if I earn €600 (daily rate) this month, then maybe €600 2 months down the line and maybe 1 or 2 more €600's before the end of the year.

Next year I would hope to ramp it up and have it set up properly. Just not sure about this year when it will be just an odd client here and there.

bobcatboo123

If your annual profit from the sole trader business is under 5 k, you don't need to fill in a form 11 through ROS. If it's under 5k I believe you fill in a form 12 which is much shorter and doesn't require you to register for ROS. Either way all the profit will be taxed at the top rate of tax as its additional to your paye income.

bobcatboo123

The usual way is to figure out what you owe after the end of the tax year and then make a payment to revenue the following year

Furze99

The general principle of income tax is that it's levied on the basis of your total income, doesn't matter what sources it's from e.g. PAYE, self employed income, bank interest, investments and so on.

So if OP you're earning €75K a year in a PAYE employment, other income is also liable.

Geuze

https://www.boards.ie/discussion/comment/122155670#Comment_122155670

Here are the rules:

You must register on ROS, and fill in Form 11 on ROS if either of the following happen:

net profit more than 5,000

revenues greater than 30k

Geuze

You work away, week by week, and then at the end of the year, you will know whether you complete the normal (easier) Form 12 on Revenue MyAccount, or if you need to register for income tax and complete the Form 11 on ROS.