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Second Income - Should I set up limited company to minimise tax

  • 28-07-2020 6:25pm
    #1
    kala85
    Registered Users, Registered Users 2 Posts: 1,907 ✭✭✭


    I have a full time PAYE job on which I am paying the higher rate of tax.

    I have a second source of income from which I have made 25k so far this year.

    Would I be better off setting up a limited company for this second income and saving the money for retirement and to put it into a pension scheme.
    I was also thinking of using the money in the company to lease an electric car as the Benefit in kind to me would be zero.

    How much would it cost to set up a company and what would the annual costs be?


Comments

  • #2
    y0ssar1an22
    Registered Users, Registered Users 2 Posts: 17,243 ✭✭✭✭y0ssar1an22


    to incorporate you're looking at 300-500 roughly.

    annual accounts, with ~25k turnover ~1000-1500.

    if you are going to put all the profit into a pension, then incorporation makes sense as its alot more tax efficient. you could also do the lease + BIK.


  • #3
    kala85
    Registered Users, Registered Users 2 Posts: 1,907 ✭✭✭kala85


    I hope to leave all the money in the company and lease an electric car from it.

    would I have to pay any prsi on this ? as I would be getting the use of this car as a director or employee.

    If I have no trading next year, how much would the accountancy fees be then.


  • #4
    The J Stands for Jay
    Registered Users, Registered Users 2 Posts: 5,807 ✭✭✭The J Stands for Jay


    kala85 wrote: »
    I hope to leave all the money in the company and lease an electric car from it.

    would I have to pay any prsi on this ? as I would be getting the use of this car as a director or employee.

    If I have no trading next year, how much would the accountancy fees be then.

    If you leave the money in the company, there's an additional tax via the close company surcharge. Getting it into a pension, or possibly some other type of investment would avoid this. To pay into a pension, you'll need to pay yourself some sort of salary. Best to get advice from an accountant.


  • #5
    kala85
    Registered Users, Registered Users 2 Posts: 1,907 ✭✭✭kala85


    Is there any good website where I can find out all about this, with all this information.

    Is there any other grants that are available for company set ups?


  • #6
    PhilipJ
    Registered Users, Registered Users 2 Posts: 84 ✭✭PhilipJ


    kala85 wrote: »
    Is there any good website where I can find out all about this, with all this information.

    Is there any other grants that are available for company set ups?

    Your best to make an appointment with a reputable accountant, by reading from a website your not availing of the years of experience they have to maximise your gains for the sake of a couple of hundred euros that I assume can be claimed as an expense with your current set up.


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