This document provides an overview of business structures, taxation, and accounting requirements for small businesses in Ireland. It discusses the key considerations and requirements for operating as a sole trader versus a limited company. It outlines income tax, VAT, and corporation tax registration thresholds and obligations. The document also covers record keeping requirements and common pitfalls for small business owners.

1. Marie Doody
TaxAssist Accountants
48 John Street
Waterford

2. This is what I am going to talk
about
This is what I am going to talk about
 Deciding on the correct legal structure
 Operating as a Sole Trader, Partnership or Limited
Company
 Income Tax Registration
 VAT
 What are allowable business expenses
 What records do I need to keep
 Keeping on top of your book keeping.

3. Sole Trader
Advantages of operating as a Sole Trader
Not required to file accounts which would be available for
inspection by the public.
 Fewer legal formalities compared to other structures.
 The income from the business is personal income and
expenses which are incurred "wholly and exclusively" in the
course of the trade are allowable deductions.
 Closure of the business requires less formality.

4. Sole Trader
Disadvantages
 The owner is personally liable for all debts of the
business.
 Raising capital can be more difficult.
 The life of the business depends entirely on the owner.

5. Limited Company
 A limited company is a separate legal entity. The
owners are shareholders and its directors make
decisions on behalf of the company.
 As a separate entity it has sole responsibility for its
debts. Its liabilities are limited to the paid-up share
capital, therefore the company is said to have "limited
liability". There are a number of exceptions to this,
where company debts become personal debts.

6. Limited Company
 Advantages of a Limited Company
 Limited liability - in general, shareholders are only
liable to lose the share capital they subscribe.
 Pension contributions can be made at the Company's
expense.
 Raising finance can be less difficult.
 There can be many owners of the business.

7. Limited Company
 Disadvantages of a Limited Company
 Limited liability may be neutralised as lenders, in
practice may seek personal guarantees.
 Legislative requirements may be costly and time
consuming.
 The need to prepare and file accounts with the
Companies Registration Office.
 There are surcharges on undistributed investment
incomes.

8. Income Tax Vs PAYE
 Tax paid annually v tax deducted weekly or monthly
 Accounts required v no accounts required
 You’re responsible v employer responsible
 Class S PRSI v Class A PRSI (usually)
 No PAYE tax credit v PAYE tax credit €1,650
 Less entitlements when cease self employment

9. Income Tax
 Who does this apply to?
 Deadlines
 Taxes due – IT, PRSI, USC
 Accounts and tax returns
 Rates
 Tax credit and reliefs
 Allowable expenses

10. Accounts
 Income & expenditure statement
 Sole trader financial statements
 Partnership financial statements
 Form 1 (partnership return)
 Form 11 (sole trader return)

11. Allowable Expenses
 ‘Wholly and exclusively’ test
 Reasonable expenses
 Pre – trading expenses
 Normal everyday expenses
 Capital expenses
 Personal expenses / drawings
 Not allowed

12. Penalties
 Late return
 Late payment
 Surcharge
 Restrictions
 Interest and penalties
 Publication in defaulters list

13. Corporation Tax Returns
 Who does this apply to?
 Deadlines
 Accounts and tax returns
 Annual company returns
 Rates
 Allowable expenses

14. Record Keeping
 Legal requirement
 Keep it simple
 Main records:
 Bank and credit card statements
 Cheque and lodgement books
 Sales and purchases invoices
 Cash expenses
 Legal agreements

15. Common Pitfalls
 Using the wrong business structure
 Not preparing a business plan
 Failing to register for tax(es) on time
 Failing to make returns on time
 Poor / no record keeping
 Not seeking advice

16. VAT
 Registration limits
 How does it work?
 Deadline and returns
 Rates
 Cash basis v invoice basis
 Deductible expenses
 Non deductible
 Bad debts

17.  What is the turnover threshold for VAT registration?
 The principal thresholds applicable are as follows:
 (a) €37,500 in the case of persons supplying services,
 (b) €37,500 for persons supplying goods liable at the reduced or standard rates which they have
manufactured or produced from zero rated materials,
 (c) €37,500 for persons making mail-order or distance sales into the State,
 (d) €41,000 for persons making intra-Community acquisitions,
 (e) €75,000 for persons supplying goods,
 (f) €75,000 for persons supplying both goods and services where 90% or more of the turnover is
derived from supplies of goods (other than of the kind referred to at (b) above) and
 (g) A non-established person supplying taxable goods or services in the State is obliged to register
and account for VAT irrespective of the level of turnover.
 A taxable person established in the State is not required to register for VAT if his or her turnover
does not reach the appropriate threshold above. However, they may opt to register for VAT.

18. Recommendations
 Get registered!
 Know key filing dates
 File returns on time
 Get invoices for everything (receipts no good for
VAT)
 Pay staff gross
 Use direct debits to pay Revenue
 If you are unsure get advice

19. TaxAssist Accountants
Our core services:
 Business accountancy
 Tax returns and advice
 Bookkeeping services
 Payroll
 Business plans and financial projections
 Company formation