End of Year Tax Returns?

ButtermilkJack

Hey, just looking for a quick answer really. I working 9-5 for a company but also registered as a sole trader since March.

I want my tax year to end on December 31 and was wondering what the deal is with this.

Also, do I need an accountant to do my tax returns or can I do them myself. The amounts involved are small. Roughly €3,000 gross income and €2,000 expenditure/expenses.

karangka

If you want your acounts to end at 31/12/04, then submit a tax returns together with the accounts and pay the liabilities. Have you registered for income tax?

kluivert

As in the above post, you should get accounts made up the "period end 31st December 2004". This will be the basis for your 2005 tax return.

In order to produce accounts you will need to get an accountant to SIGN the accounts off. If you have all the info ready for the accountant it will be able to prepare the accounts cheap for me.

Meaning anaylsis your cheque payments, Direct Debits and Lodgements.
Analysis VAT, PAYE and Additions to Fixed Assets eg Computers etc.

ButtermilkJack

Thanks guys, I presume I am registered for income tax cos I pay paye on my 9-5 job. Does that sound right? Also, I have everything extremely organised (that's why I wondered if I could do it myself) so hopefully it won't cost much to get them 'signed-off' as you say.

kluivert

You are registered for income tax as a paye person but not as self employed, you need to fill out a TR1 in order to do this... Ring your local tax office by the way for additional help.

For the amount of money involved here i would recommend that you do an "Income and Expenditure" Account instead of a full set of accounts, do you intend to take this self employed position further in the future or will it always be a part time basis venture.

Income and expenditure is as it states - a statement of income and expenditure - the profit and loss account in a set of accounts without the balance sheet. The profit from this should be adequate for the basis of your tax return and will be signed by yourself and not the accountant but nevertheless it is advised that you get an accountant to check it over.

If you wish PM me with the final draft and ill have a look at it for you.

Income and Expenditure Account for the Year Ended 31/12/2004
Income:

Expenditure:
Motor and Travel
Telephone
Light and Heat
Insurance
Postage, Print & Stationery
Bank Charges
Bank Interest Paid.
(Add Categories relevant to expenditure
but not capital items e.g. computers etc)

Profit as per Income and Expenditure.

You can include Depreciation as an expense
but it is to be added back to the profit in your
tax computation. The revenue will give you a Capital
Allowance instead of the Depreciation ok.

Please do not hestiate to contact me should you have any
questions

Kluivert.

ButtermilkJack

That's excellent kluivert! Cheers.

Is the TR1 form you mention above the same as the TR1 I filled out when registering for VAT at the beginning?

Also, in reference to your query on future plans, at the moment it is strictly part-time, and will be for the next 3 or 4 years or so at least? My ambition is to develop it into a full business later on.

Let's say I did an Income/Expenditure a/c and found my 'net profit' to be for example €1,000. Do I just write a check to the revenue for €420 and that's it? Or is there more? What if I was out by €100 or so. Would they come after me?

Apologies for all the q's (you're probably ready to send a bill at this stage )

Again, thanks!

kluivert

To find out what the TAX "Net Profit" figure is you have to make adjustments to this figure.

Case 1 Tax Adjusted Profits:

Net profits per Accounts

Less: (Expenses not allowed by the revenue but included in your accounts)

Deprecaition
Client Entertainment Expenses
Donations
Light and Heat (Personal Element)
Telephone (Personal Element)

Case 1 adjusted profits =

When filling out your return, remember you will also need to include details of your PAYE Income - P60 - Include any Rental Income - Include Service Charges (Bin Collection if not already included as an expense in the accounts, same with water rates as well).

Include any Interest earned from banks or the credit union. Include any dividends received from the credit union as well.

If you are using ROS then the final liability will be automatically calcaluated for you. Remember your tax liability is made up of paye/income tax AND prsi.

If you intend to continue this trade whether on a part time basis or not you will have to pay preliminary tax on account for next years return. The rules are 90% of the next year taxable profit liability (2005 Accounts) or instead you can pay 100% of this years liability in order to avoid any penalties and surcharges that the revenue can charge you. Id go with the later. 100% of this years liability - its the safer option.

I dont charge for my services....yet!!

ChicoMendez

Hi Lads

mind if i jump in here with a question.
I have to do my returns online shortly also.

about this

If you intend to continue this trade whether on a part time basis or not you will have to pay preliminary tax on account for next years return. The rules are 90% of the next year taxable profit liability (2005 Accounts) or instead you can pay 100% of this years liability in order to avoid any penalties and surcharges that the revenue can charge you. Id go with the later. 100% of this years liability - its the safer option.

when i go onto ROS I only get the option to do my returns for Jan-Dec 04... however how and when do i do my returns for 05 (this is the preliminary tax i assume?)
- when you say 100% do you mean 100% todate obviously?

Tnx

karangka

The put in the figure you wish to pay for Preliminary Tax 2005 on the payment page options. Just stick in the figure of the tax estimated in 2005. As what Kluivert said, it is safer to go with 100% 2004 tax liability. Mind you, the figure is the liability before deducting any Preliminary Tax paid in 2004.

Hope this clarifies.

ChicoMendez

karangka wrote:

The put in the figure you wish to pay for Preliminary Tax 2005 on the payment page options. Just stick in the figure of the tax estimated in 2005. As what Kluivert said, it is safer to go with 100% 2004 tax liability. Mind you, the figure is the liability before deducting any Preliminary Tax paid in 2004.

Hope this clarifies.

But if i made almost a loss last year paying 100% of that would not be great.
In this instance (becuase this year has been better) would it be be better to pay 90% of this years?

kluivert

If you made a lost in 2004 then your Income Tax Liability should be nil unless you have other sources of income to include.

If for 2005 Income Tax Liability is NIL then you can pay 100% of that which is NIL as your preliminary tax for 2006 return.

However like you said - this year has been better then 90% based on your 2005 year end accounts. IMO its better to have payment on account otherwise it could hit your cash flow next year.

Another point on Preliminary Tax - Just in case your not aware of this month the Revenue will allow you to pay the Preliminary in Monthly installments over a period of one year (12 Months) by setting up a direct debit.

Say you work out your preliminary tax for 2006 to be €1200. You fill out the relevant form and sign it send it to your local tax office and then instead of paying prelimiary tax on 17 Nov 05, monthly payments are debited from your account on 1st Jan 2006 - 1st Dec 2006 (12 months x €120). This was introduced to aid people who would have a tight cash flow and i personally recommend it.

Kinetic^

kluivert wrote:

In order to produce accounts you will need to get an accountant to SIGN the accounts off. If you have all the info ready for the accountant it will be able to prepare the accounts cheap for me.

The figures that he's talking about you don't need accounts done up.

You can just do a simple income & expenditure account and then tax the excess if its a profit. If its a loss you can offset it against other income or carry it forward against any future taxable profits.

ChicoMendez

Ok

im doing my end of year accounts as i speak

ive calculated Net profit taken off capatial allowances
an calculated tax (as its under 28,000 am i right in saying calculation is x20% ?)

However im at the tax credit part.
As im single what is this ... i see from the revenue doc im following that its calculated as 7600 x 20%
is this the same for me?

Tnx alot

Kinetic^

Ok say you've got profit of €20,000.

So you're tax on that is going to be €4,000.

Take away you're credits, say €2,000.

Then you take 3% for PRSI & 2% for levies so €1,000 in total.

Tax due = €3,000.

ChicoMendez

Keyser Soze 69 wrote:

Take away you're credits, say €2,000.

ok the only bit that is unclear is the calculation of tax credits... why do you say 2000 ?

Kinetic^

ChicoMendez wrote:

ok the only bit that is unclear is the calculation of tax credits... why do you say 2000 ?

It was just an example, thats why i said "say €2,000"

ChicoMendez

Keyser Soze 69 wrote:

It was just an example, thats why i said "say €2,000"

i realise that - that i unserstand
But what i dont is how that calculation is made !!!
my credits

ButtermilkJack

****, am I supposed to have my prelim tax for 2005 in by Oct 31. Completely looked over this as it's my first year! :eek:

Kinetic^

ChicoMendez wrote:

i realise that - that i unserstand
But what i dont is how that calculation is made !!!
my credits

Your tax credits depend on a couple of things. Did you not receive your tax credit certificate at the start of the year??

ButtermilkJack wrote:

****, am I supposed to have my prelim tax for 2005 in by Oct 31. Completely looked over this as it's my first year!

Yes you are.

ButtermilkJack

Keyser Soze 69 wrote:

Yes you are.

Ok, I just checked revenue website and I have til Nov 17 (I think) cos I'm registered for ROS.

I'll have to get my ass in gear. Keyser, I may PM you to acquire your services if that's ok. I will let you know.

ChicoMendez

Keyser Soze 69 wrote:

Your tax credits depend on a couple of things. Did you not receive your tax credit certificate at the start of the year??

Nope!

wont it calculate it automatically on ROS anyhow?

karangka

Nope. It won't be automatically calculated on ROS. However, the basic personal tax credit for a single person is 1520 for year 2004 for a single person. It will increase depends of you claimed for other relief. Ring your tax office and ask them how much is your tax credit.

ChicoMendez

kluivert wrote:

Another point on Preliminary Tax - Just in case your not aware of this month the Revenue will allow you to pay the Preliminary in Monthly installments over a period of one year (12 Months) by setting up a direct debit.

Say you work out your preliminary tax for 2006 to be €1200. You fill out the relevant form and sign it send it to your local tax office and then instead of paying prelimiary tax on 17 Nov 05, monthly payments are debited from your account on 1st Jan 2006 - 1st Dec 2006 (12 months x €120). This was introduced to aid people who would have a tight cash flow and i personally recommend it.

ANYONE know if this form is available online ? or can be filled in online?
ive looked but i cannot find??

ALSO how do i make my preliminary tax return on ROS... as im filling out my return for 04 but i cant seem to find where i make the return for the prelinimary for 05... hmmmmm

Tnx 4 any help

twochances

A number of years ago I was self-employed (sole trader) and had an accountant doing my accounts & tax returns, which were very simple really. I'm now self-employed again and am doing them myself this time (using the old ones as a rough guide).

On my old accounts my accountant used to deduct expenses such as motor, telephone, accounting, etc. totalling up to £1000 or so (and each a nice "round" figure), even though I had no invoices for these(!), presumably on the basis that they wouldn't be questioned since they were relatively small?

Was this "legit" and should I do something similar on my new accounts?


Another question... After a number of years paying PAYE I resumed self-employed work in 2004, but didn't pay any preliminary tax in Oct 2004 as it was my "first year" of operation and therefore had no previous year's non-PAYE income to base it on.

Was this acceptable, or am I in line for interest & penalties?!?

patr1ck84

hi guys i have just done a tax return for this year can someone tell me who i make the cheque payable to unfortunatly i owe them some money

Heisenberg.

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