Yes, being your own BOSS-Babe has it’s benefits like flexible hours, not having to bag for holidays and work with the products and technique YOU want to. <3
But it definitely has it’s downside and responsibilities too. Are you wondering what can possibly be the downside of being INDEPENDENT? Well…. First of all, NO MORE PAID HOLIDAYS. 🙁 I know… It’s a cruel World… You are responsible for your own work, clientele, marketing, payments, bills, tax and accountancy and so on….
Yes, it’s wonderful to be SELF EMPLOYED. But you have to make sure you understand everything.
I’m telling you, it’s so much FUN and there is a lot to learn about business, marketing and MOST IMPORTANTLY ABOUT YOURSELF when you take this journey! 🙂 And we are here to help each other! 🙂
I have made a little summary for you what steps you need to take in Ireland when you feel ready to CHANGE YOUR LIFE!!! <3
PLEASE DON’T FORGET, THE BELOW INFORMATION APPLIES TO IRELAND!
When you start a business you can do so either as a sole trader, partnership or limited company. (I’m not getting into the details of the limited company today.)
Here we look at setting up as a sole trader. It means that you set up a business on your own. Being a sole trader is relatively straightforward to set up.
Much of the process of preparing for self-employment is about starting a business. This is the same whether you are a sole trader or a partnership or company.
If you want a fancy name to your business and not only using your own name, you need to register a business name. It is part of your branding and if you have it from the start, people will recognize your BRAND. They will know who you are, what you offer and how amazing quality service they will get when they see your name and sign.
If you wish to use a business name you must register your business name with the Companies Registration Office using Form RBN1 (download pdf here) or visit CRO website here. You will get Certificate of Business Name which you must display prominently at your place of business. It’s nice having it on your wall in a lovely frame, so your clients can see it too. It gives a nice and professional impression.
You will need to have a business account with your bank. This allows you to keep your business income separate from your personal income. You will need your Certificate of Business Name to open a business bank account.
What do you have to pay?
You must register for income tax with Revenue as a self-employed sole trader. You can register on paper using the tax registration form TR1 (download the pdf here) and you can find information about them here.. This form can be also be used to register for VAT. You will receive a “Notice of Registration” confirming that you are registered for income tax and, if applicable, for VAT.
As a self-employed individual you pay 20% tax (up to €33,800) and 40% (for income above €33,800).
You pay Preliminary Tax, due on or before 31 October each year and make a tax return not later than 31 October following the end of the tax year. So, you pay your TAX RETURN of 2016 by the 31st of October 2017.
You must keep proper records to allow you to fill out your annual tax return. You pay the Universal Social Charge directly to Revenue when you make your annual tax return. You pay the USC if your gross income is more than €13,000 per year.
|0.5%||Up to €12,012|
|2.5%||From €12,012.01 to €18,772|
|5%||From €18,772.01 to €70,044|
|8%||From €70,044.01 to €100,000|
You must register for Value Added Tax (VAT) if your annual turnover exceeds or is likely to exceed €37,500 in respect of the supply of services.
It means, that you are likely to make MORE than €37,500 / year. (that means you constantly, every single week have more than €700)
At the beginning, I don’t think it’s gonna happen so don’t register for VAT just yet.
If you are self-employed you pay Class S PRSI contributions at a rate of 4% on all income or €500 whichever is the greater. If you earn less than €5,000 from self-employment in a year you are exempt from paying Class S PRSI but you may pay €500 as a voluntary contributor.
You also have some TAX CREDIT:
Earned Income tax credit:
In 2017, as a self-employed trader you can claim an Earned Income tax credit of €950. However, if you also qualify for the PAYE tax credit, the combined value of these 2 tax credits cannot exceed €1,650.
You must keep accounts which record:
- All purchases and sales of goods and services and
- All amounts received and all amounts paid out
So, let’s sum it up:
Income Tax – 20% (up to €33,800) and 40% (for income above €33,800)
PRSI – 4%
USC – 0,5%, 2,5%, 5%, depending on the income
I recommend you to put 20% of your weekly income aside.
I know, you must think 20% + 4% + 0,5% or 2,5% or 5% is more than that…
But remember, that you will have expenses too. Keep every receipt of every purchase and it will lower the PROFIT. You only pay TAX after PROFIT.
Total income – expenditures = PROFIT
I keep the receipt of everything or at least I try – (I have had to write this in case of my accountant will read this post and ends up in stitches laughing)…. 😀 Stock, cleaning product, milk and coffee for my clients, uniforms, working shoes, paper towel… Literally everything…. I’m not saying everything can be used, but you accountant will help you and it’s easier for him/her to do it if you are keeping your records! 🙂
Ohhhh, yes. My main and most important advice:
PAY AN ACCOUNTANT TO SORT OUT YOUR PAPERWORK!!!!! -trust me, it’s worth it! 😀