Owning a business gives you a sense of independence and control. As exciting as it is to run your own business and become your own boss, it comes with a lot of responsibility and can be very arduous and extremely demanding. Becoming a sole trader can be taxing, both financially and time-wise
A sole trader entity is wholly owned and run by a single individual—the individual and the business are legally considered to be one thing. Therefore, when it comes to liability amortization, asset distribution and other related business endeavors, the individual's assets are consolidated into the business, exposing the individual to risk from creditors. Sole trading gives room for the owner to run the business as they see fit. You can work as both the employer and the employee.
Setting up a sole trader entity is fairly simple and probably the least complicated when compared to the incorporation of other types of entities such as a private limited company.
Business Name registry
A business can carry the proprietor's name, however, some individuals prefer issuing a business name which is subject to registry with the Companies Registration Office. The business Name registration process involves the use of the RBN1 pdf form or the Companies Online Registration Environment which is an active online tool that simplifies the registration process.
After the process of registering the business name has been successfully completed, a certificate is issued to the entity and it's imperative that the certificate is displayed at all times at the place of business operation. The second step in setting up a business would be to apply for a business bank account in order to facilitate the business' revenue streams, enabling the entity to make payments through the bank.
Tax and Pay related social insurance
Sole traders, like any other entities, are required by the statutory business law to comply with the regulations of the income tax which in this case is a subscription of sole trading annual revenue. The revenue online service and the TR1 pdf form are the two tools that facilitate tax registration. The TR1 is a multi-purpose form which also facilitates for VAT registration. A notice of registration is sent to the proprietor following a successful application of income tax.
Individuals who are self-employed submit tax dues under the self-assessment system. It is advisable for sole traders to submit tax dues on or before the 31st of October of each business year. Every business is required to have up to date and authentic business ledger records in order to facilitate the calculation of income tax returns. These records include (however not limited to) bank account transaction records and all documentation on goods bought or sold. All records and documentation supporting existing transactions must be available.
Business operation expenses and pension contributions can be deducted from tax returns. PAYE income tax is also refundable after 6 years if the business has been in existence with plausible operation. This is facilitated under a programme known as SURE (Start-up Refunds for Entrepreneurs)
All business entities whose profits exceed €75000 from goods being sold and 37500 in services provided are subject to the Value Added Tax.
Pay Related Social Insurance (PRSI) and Business Insurance
If you are self-employed you are required to comply with the payment of class S PRSI. The class S PRSI is a limited range of payments made at a rate of 4% of the total business income. Some family members employed to assist in the day to day running of the business are not covered under this Insurance.
When starting a business we often have an optimistic premonition relating to the future of the business, however, sometimes things go wrong and when they do it would be wise to have Insurance covering the delicate parts of the business.
Funding and Credit
Business expansion and growth are directly dependant on external funding and investment, hence it is of essence to acquire credit lines and funding facilities. Micro businesses and start-ups are legible for funding by micro-finance Ireland. The facility offers loans ranging from €200 to €25 000.
Several regulations governing small and medium business financing have been put to place. This assists businesses to acquire suitable credit lines with ease. In the case of a funding application rejection businesses can now apply for a credit review.
For more details and assistance regarding self-employment in Ireland, you can reach out to our expert consultants. Our highly experienced and well-informed team is ready to answer all your questions and give you all the help you might need.