Getting Started !
Once you have taken the plunge and decided to go into business for yourself as a sole trader, there’s a number of steps to follow to
1. You must register with the Revenue Commissioners. This is simply a matter of filling in a TR1 form (get it from the Revenue Office or else download it at http://www.revenue.ie/forms/formtr1.pdf.
You have the choice of registering for Income Tax, VAT and PAYE/PRSI if you’re an employer.
2. You will need to set up a new bank account to keep your personal finance and business finance separate. Most banks are offering good deals for new business accounts and the likes of Bank of Ireland and Ulster bank offer 3 years no fees on business accounts. Loans are also being offered at very reasonable interest rates. As usual shop around for the best deal.
3. You will need to keep proper records to ensure you can complete your annual return each year. This can be done by using a cheap finance package such as Tas Books or Sage, or else you use manual records. This could be spreadsheets or even hard copy ledgers etc.
Employing a book keeper part time is an option here. In a nut shell you have to record all transactions effecting your business – money coming in and money going out. It’s in your own interest to be in control of this so as you can determine what is making you a profit and what’s not.
4. The annual return is due to Revenue on the 31st October each year. A business which has a year ending 31st December 2007, must have their return submitted and filed by the 31st October 2008. Also payable is what is known as preliminary tax for the current year. This is an estimate you make of what tax is payable for that year. In other words if your tax bill was €1,200 for 2007 and you think your tax bill for 2008 is roughly the same you need to pay €2,400 in total. Remember though, you would have paid preliminary tax for 2007 so this will be offset against this total.
The Annual return itself is known as the Form 11. Here is an example http://www.ros.ie/PublisherServlet/downloads.
Alternatively you can file the return on line at www.ros.ie
5. Completing the return is done by using your business accounts. These have been determined through your book keeping records. Once you have the profit, you can reduce your tax bill by the various tax reliefs available to sole traders.
Here is the link.
http://www.revenue.ie/index.htm?/leaflets/it1.htm
6. Remember, reducing your tax bill is not just about using these reliefs/credits.
You must also make sure you are manage all the costs associated with your business and use these costs to their full tax advantage. In this situation a good accountant is worth the cost, but make sure he understands your business fully, and takes the time to look at your business. After all, it’s exactly that – your business and its down to you to get real value for money.