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Starting a small trading business?

runswithascript

I would prefer to not pay 33% CGT going forward and it seems some kind of private limited company is the most tax efficient option.

The company is for personal use only, and some kind of privacy through a nominee service is required.

I would like to learn to do as much as reasonably possible myself or with software, even if not from the beginning.

If you have done this, or can recommend some resources, or tell me what to look for when choosing a financial advisor/company setup service please reach out.

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daheff

how do you plan on extracting funds from the company?

If you are issuing dividends, these are taxed at marginal rate, so could be higher than 33%.

Jim2007

How is being doubly taxed an efficient option - once in the company and once when you take it out? And furthermore if your company is purely a tax avoidance exercise how will you defend it against such a claim when the Revenue officers come calling?

In answer to you question, yes I have been involved in setting up such schemes, they are very expensive to set up properly with no comeback and are not worth it unless you have a portfolio of several million Euros to protect.

runswithascript

https://www.boards.ie/discussion/comment/120803163#Comment_120803163

In whatever manner is the most efficient through there will be no urgency to extract funds and happy for profits to mostly increase capital.

https://www.boards.ie/discussion/comment/120803263#Comment_120803263

How does this double tax option you describe compare to 33%, and if it is worse there must be a better option within the law, perhaps using dividends and a salary etc.?

I purposely am using the term tax efficiency, not tax avoidance, as although legal it has negative connotations and is often confused with tax evasion which is not my intention.

It seems incredible that small individual traders in Ireland must pay either 33% CGT with no option to benefit from setting up a small company.

daheff

So at some point you would be looking to extract funds from the company. You would have paid Corporation Taxed on the profits by the business (can be anything from 12.5% to 25% depending).

Any dividends are then at marginal rate of tax.

Assume you made 100 EUR. Company pays 12.5%. That leaves you with 87.5%.

You issue a dividend. Marginal rate is 52%. That leaves you with net 42 EUR into your hand. 58% overall tax rather than just 52% outside the company. Plus all the costs associated with the company (and time). Understanding you can offset costs against profits as a business and reduce your tax bill.

I'd still think you would end up paying more tax.

runswithascript

https://www.boards.ie/discussion/comment/120865365#Comment_120865365

I think it is also possible to write off trading losses against profits going the PAYE and CGT route, which makes that more appealing. Would paying myself a salary affect your calculations much?

daheff

https://www.boards.ie/discussion/comment/120885579#Comment_120885579

you can offset trading losses against CGT.

Paying yourself a salary would mean income tax, prsi, usc, employer taxes etc.