New Company

honeymonster

I posted here before and a lot of you seem to know your stuff, I was impressed. I was wondering if you business heads would be able to answer a few more questions about forming a new company:

1. If the director of a company is getting a weekly wage does the company have to registered for paye/prsi or is that just for employees who have no senior position?

2. Can employees be paid on a project by project basis ie freelance workers, would you need to be paye/prsi registered?

3. You don’t have to register for vat unless your company earns more than €25,000 or so pa. If you don’t register for vat does that mean you cant claim it back on purchases?

4. If you registered office also happens to be your private residence, how would the cost of renovations be distributed? Could they be placed as costs on the company accounts?

MG

honeymonster wrote:

I posted here before and a lot of you seem to know your stuff, I was impressed. I was wondering if you business heads would be able to answer a few more questions about forming a new company:

1. If the director of a company is getting a weekly wage does the company have to registered for paye/prsi or is that just for employees who have no senior position?


2. Can employees be paid on a project by project basis ie freelance workers, would you need to be paye/prsi registered?

3. You don’t have to register for vat unless your company earns more than €25,000 or so pa. If you don’t register for vat does that mean you cant claim it back on purchases?

4. If you registered office also happens to be your private residence, how would the cost of renovations be distributed? Could they be placed as costs on the company accounts?

If i have understood correctly then and as far as I understand:

1. Yes, the company has to register for PAYE/PRSI for any employees receiving remuneration.
From www.revenue.ie

Must I register as an employer for PAYE/PRSI if I employ staff? YES. You must register for PAYE/PRSI if you pay:
€7.62 per week (€33 a month) or more, to an employee who has only one employment
€1.27 per week (€5.71 a month) or more, to an employee who has more than one employment.
A company must register as an employer and operate PAYE/PRSI on the pay of directors even if there are no other employees.

2. If they are employed by the co and receive a remuneration, then you must register for PAYE/PRSI. If they are freelancers working on a project by project basis, then they will give you an invoice for their services and are not employees.
3.Correct. Can't claim VAT back.
4. Generally be on a reasonable basis, I think. I know that's a wide definition but I think a sensible apportionment of costs would be acceptable.

kluivert

1. Directors must be registered by the company for Paye and Prsi (Class S)
2. Free liance - Do you mean Sub Contractors. If so Sub Contractors must give you an Invoice for work undertaken, if they do not have a C2 Tax Cert (Like a Driving Licence) then you must withhold 35% of the payment which was on the invoice.
E.g. Joe Boggs Ltd. paints a house you are building, he raises and invoice for 3000e+405e (Vat @ 13.5%) = 3405.00e. You must pay the Joe Bloggs 65% of that which is 2213.25e and the 35% you withheld (1191.75e) is paid to the revenue. When you pay Joe Boogs the 65% you must also issue him with a C45 showing the amount you withheld, he will send this C45 Cert to the Revenue and re-claim the 35% from the revenue that you withheld.

If the Subcontractor has a Current C2 then there is no need to withhold the 35%

If the workers are sub contractors then you must register them as employees of the company and obtain a tax deduction card for each employee and you will record there wages on this.

3. To be Vat registered you must for:
Services (Construction etc) reach a limit of 25,000.00e net sales
Products reach a limit of 51,000.00 net sales. These figures maybe updated since i last checked.

4. On the last issue, as a trainee accoutant i believe the trick here is for the company to pay you rent each month for office space in your house. You must raise a rent invoice for each month for the company. Check this out with your accountant for further details.

antoinolachtnai

On the last point, again, the accounting point kluivert is quite correct. You would normally factor the cost of the renovation into the rent.

However, there is likely to be a tax implication here. If your company pays you rent for commercial use of the house, there is likely to be some degree of capital gains tax liability when you sell the home. (Normally, there would be no CGT on sale of a primary residence.)

Also, you would have to pay tax on the rent generated.

Like kluivert says, worth talking to the accountant to see what he says.

What do driving licences have to do with C2 tax certs?

honeymonster

Jesus, i have to say i am impressed. Thought i was goin to have to spend a fortune on consultants. Another few questions poped into my head, wondering if you can answer them for me:

1. When you register a company you have to pay stamp duty of 1% i think it is on the authorised share capital. If you have an authorised share capital of €2 pre registration, can you (as MD) just give yourself the outstanding bal post reg??

2. When the company starts making money, and you fully own the company, whats the best way to get your money back out of the company? Through income (think they call it director renumeration??), dividends, drawings etc

MG

antoinolachtnai wrote:

What do driving licences have to do with C2 tax certs?

I think the C2 looks like a driving licence (or rather it looks like a driving licence should look like - credit card shaped with a picture that makes you look like a criminal with a hangover!)

kluivert

Thats what i ment it looks like a driving license.

Getting money out of the company is a tax planning issue. I will give you details later on have accounting stuff to do. Basicly you will face a surcharge if you leave distributual profits within the company. Surcharge at 20%. There is tax effeicent means of doing this, details later.

I dont understand the first point to clearly.

Again i always advise you to seek professional advise, if you find a very good accountant double as a tax specialist well then its worth paying for the advice since he or she will advise tax saving plans for you.

honeymonster

when you register a company you have to pay 0.5% stamp duty on issued share capital, and the min that can be issued is 2 shares. After you reg the company, if you transfer the outstanding bal of share (ie the authorised - issued) is there any charges or tax imposed??

Nuttzz

your shares are classes in value rather than numbers, i.e. you have an authorised share capital of 100,000 euro but a issued share capital of 2 euro, normally shares are 1 euro in value. if in 12 months you issue more shares then you will have to pay stamp duty on them, this is determined by profitability if i remember correctly

JackieChan

If you want to take the money from the company as cash then pay a salary,bonuses, etc. Don't take it as dividends though as i believe the company can't get relief from the payments.

If you want to pay in to a pension, companies can pay huge amounts in to your pension, for example over 30s can contribute up to 20% of their salary in to a fund and claim tax relief for a company its over 120%!!

Don't forget to get a bonusbond or similar bonus, its only 250quid /year but at lease you get tax relief for it.

LoneGunM@n

What type of business are you involved in, as the deduction of 35% from sub-contractors only relates to the construction/forestry and meat processing industries (see http://www.revenue.ie/revguide/relevantcontractstax.htm)!!

If you are involved in these types of business, you have to be careful of treating people who work for you as sub-contractors as the Revenue Commissioners are cracking down on the treatment of sub-contractors. This is due to the fact that the Revenue Commissioners are of the opinion that most sub-contractors are indeed employees (see http://www.revenue.ie/pdf/rev_dsw.pdf) for the difference between employed & self-employed] and the treatment of most "employees" as self employed contractors is no more than tax evasion.

lomb

honeymonster wrote:

when you register a company you have to pay 0.5% stamp duty on issued share capital, and the min that can be issued is 2 shares. After you reg the company, if you transfer the outstanding bal of share (ie the authorised - issued) is there any charges or tax imposed??

interesting question, i think u can sell the shares to urself at whatever u want? so basically if there is an autorised share capital of 100 then u can sell them for 40000 if u want?

its an interesting point how u put money into a company because say u put in 10 grand, can u take it out again without paying tax? i suppose u could loan the company the money, normally if u take out money u basically get hit at ur top rate of tax by thje time the company has paid dividend witholding tax, and u have paid ur extra tax on it.

Nuttzz

lomb wrote:

its an interesting point how u put money into a company because say u put in 10 grand, can u take it out again without paying tax? i suppose u could loan the company the money, normally if u take out money u basically get hit at ur top rate of tax by thje time the company has paid dividend witholding tax, and u have paid ur extra tax on it.

yeah, put it in as a directors loan, and have the company repay you, you have to be able to show that you put the 10k in in the first place though