Starting in Business from a Revenue Perspective

1
Starting in Business from a Revenue Perspective

• Mary Kelly

2
Registering for Tax
3
How do I Register for Tax?

• Form TR1 Sole Traders, Partnerships
• Income Tax
• VAT
• Employers PAYE/PRSI
• Relevant Contracts Tax (as a Principal
  Contractor)
• Form TR2 Companies
• Corporation Tax
• Employers PAYE/PRSI
• VAT
• Relevant Contracts Tax (as a Principal
  Contractor)

4
What Tax Number will I use?

• Before registering for tax you must have a
  Personal Public Service Number (PPSN)
• If you do not have a PPS Number you must register
  with the Department of Social Family Affairs.

5
What if I decide to employ someone?

• You must register as an employer for PAYE/PRSI
• If you set up a company, the company must
  register for PAYE/PRSI on the pay of directors
  even if there are no other employees.

6
When am I obliged to register for VAT?

• If you are a taxable person and your annual
  turnover is likely to exceed
• 70,000 in respect of supply of goods
• 35,000 in respect of supply of services
• You receive certain taxable services from abroad
  e.g. advertising services, services of
  consultants, engineers, accountants etc.
• You are a foreign trader doing business in the
  State

7
What is Relevant Contracts Tax (RCT)?

• Relevant Contracts Tax (RCT) is a tax
  deduction system whereby a Principal Contractor
  in the construction, forestry or meat processing
  industries
• deducts tax at 35 from payments to
  Subontractors for whom he/she does not hold a
  Relevant Payments Card
• maintains a record of payments to all
  Subcontractors regardless of whether he/she
  holds a Relevant Payments Card for them

8
Should I Register for RCT?

• If you intend operating as a Principal Contractor
  you must register with Revenue.
• Registration is made on one of the appropriate
  Registration Forms i.e.
• TR1 for individuals
• TR2 for companies
• Form P33 if already registered
  for IT, CT or VAT

9
What if I intend to operate as a Subcontractor?

• You should be registered as selfemployed with
  Revenue
• If employing workers you will need to register
  for PAYE/PRSI
• If your turnover exceeds the limits you will need
  to register for VAT
• If you intend to further subcontract any part of
  your contracts you will have to register as a
  Principal Contractor

10
What is a C2?

• A C2 is a certificate of authorisation issued by
  Revenue to a subcontractor
• An individual, partnership or a company may
  qualify for a C2
• It is a personalised card similar to a credit
  card with full face photo and signature
• In the case of a partnership or company a
  nominated user would generally be a partner or a
  director

11
What happens if my business is set up as a
Partnership?

• The total profit of the Partnership is calculated
• The profits are then divided between the partners
  in accordance with their profit sharing agreement
• Each partner is assessed on their own share of
  the profits
• The Partnership will register for VAT if above
  the limits
• The Partnership will register for PAYE/PRSI if it
  has employees

12
How do I go about setting up a Company?

• Before setting up a company you should consider
  talking to an accountant and/or solicitor first
• Companies must be registered with the Companies
  Registration Office, 14 Parnell Square, Dublin 1
• Once a company is registered it is a separate
  legal entity from the persons who formed it

13
How is a Company taxed?

• Corporation Tax is charged on the companies
  profits which include both income and chargeable
  gains
• An accounting period of a company cannot exceed
  12 months
• Companies pay Corporation Tax (CT)
• A companies income for tax purposes is calculated
  in accordance with Income tax rules
• A companies chargeable gains for tax purposes are
  calculated in accordance with capital gains tax
  rules
• Companies are taxed under Self Assessment System

14
If I set up as a company, how will I be taxed as
a director?

• The company will be obliged to register for
  PAYE/PRSI and to operate PAYE/PRSI on your
  salary, fees and benefits as a director

15
What is Self-Assessment?

• Self assessment is a system which gives you
  greater control and responsibility over your tax
  affairs.
• It applies to people chargeable to Income Tax who
  are in receipt of income from sources which are
  not chargeable to tax under the PAYE system
• It also applies to companies

16
What is Preliminary Tax?

• Preliminary Tax is your estimate of Income Tax
  including PRSI and Health Contribution payable
  for the year
• It must be paid by the 31st October
• In the case of a company Preliminary Tax for an
  accounting period is due one month before the
  accounting period end date but no later than day
  21 of that month

17
How much Preliminary Tax must I pay to avoid
interest?

• To avoid interest charges you must pay the lower
  of
• 90of the final liability for tax for the current
  year, or
• 100 of your final liability for the immediately
  previous year, or
• 105 of the final liability for the year
  preceding the immediately previous year if paying
  by Direct Debit. (The 105 rule does not apply if
  the tax payable for the pre-preceding year is
  nil)
• In the case of a company 90 of the final
  liability for the accounting period or 100 of
  the liability of the previous accounting period
  must be paid. The balance is due 9 months after
  the accounting period end date but no later than
  day 21.

18
Tax ReturnsWhen must I make my Tax Return?

• Under Self Assessment you have a legal duty to
  make a tax return every year
• The Revenue On-Line Service (ROS) offers the
  quickest, easiest and most convenient way to file
  your tax return
• The earlier you file your tax return the sooner
  you will know your final liability for the tax
  year
• Income Tax Returns are due on or before 31st
  October in the year following the year to which
  the return relates.
• Corporation Tax Returns are due no later than 9
  months from the end of the accounting period to
  which the return relates but no later than day
  21 of the 9th month

19
What is Pay and File?

• The Pay and File system provides the facility
  for you, on a single date - 31st October, to
• file your tax return for the previous tax
  year for Income Tax and Capital Gains Tax
• pay your Preliminary tax for the current
  year
• pay the balance of Income Tax due for the
  previous year, and
• Pay in full the Capital Gains Tax due on
  disposals between 1st January and 30th
  September of the current tax year

20
Single Debit Authority

• Single Debit Authority enables you to make
  once-off
• payments directly from your bank account by
  completing your bank details and a debit amount
  on payslips attached to
• Income Tax Pay and File notices
• Corporation Tax Pay and File notices
• Capital Gains Tax Pay and File notices
• Return of Income Form 11 (Income Tax)
• Return of Income Form 11E (Income Tax)
• Return of Income CT1 (Corporation Tax)
• Relevant Contracts Tax Form RCT 30
• Payments through Single Debit Authority are
  never deducted by Revenue in advance of the due
  date

21
ROS Debit Instruction (RDI)

• Revenue On-Line Service (ROS) has a debit
  instruction method which requires completion of a
  Ros Debit Instruction (RDI) in order to make
  payments for any of the taxes available on ROS.
• Any payments made by this method are never
  deducted by Revenue in advance of the due dates.

22
Keeping Books and Records

• Am I obliged to keep records for tax purposes?
  
• You must keep full and accurate records of your
  business from the start
• The records you keep must be sufficient to
  enable you make a proper return for tax purposes

23
What records must I keep?

• The type of records you will need to keep will
  depend on the nature and size of your business.
• The records kept must include books of
  account in which
• all purchases and sales of goods and
  services, and
• all amounts received and all amounts paid
  out
• are recorded in a manner that will clearly
  show the amounts involved and the matters to
  which they relate.
• All supporting records such as invoices,
  cheque stubs, receipts, bank statements, etc.
  should be retained.

24
Taxable Profits

• Taxable profits are calculated by deducting
  allowable business expenses from your turnover

25
What expenses can I claim?

• You can claim any business expenses, which
  you have incurred in order to earn your profits.
• Revenue expenditure is your day to day
  running costs and includes such items as
• Purchases of goods for resale
• Wages, rent, rates, repairs, lighting and
  heating etc.
• Accountancy fees
• Interest paid on money borrowed to finance
  business expenses
• If you are registered for VAT the expenses
  claimed should be exclusive of VAT.

26
What expenses can I not claim?

• You cannot claim for any private expenses
  i.e.
• Any expense not wholly and exclusively paid for
  the purposes of the trade or profession
• Any private domestic expenditure e.g. own wages,
  food, clothing etc.
• Business entertainment expenditure
• You cannot deduct capital expenditure in
  calculating your taxable profits, however, you
  can claim capital allowances on certain
  expenditure.

27
Capital Allowances

• You can claim capital allowances on capital
  expenditure incurred on items such as
• Plant and Machinery
• Motor Vehicles
• Office Equipment
• Capital allowances take account of wear and
  tear on these items and are deducted from your
  profit figure before you are taxed on it.

28
What is Revenue On- Line Service?

• ROS is an interactive internet based system
  that enables Revenues customers and their agents
  to
• File returns and make payments
• Obtain details of their Revenue Account
• Calculate their tax
• Conduct their business electronically

29
Benefits for Customers

• Instant acknowledgement
• Effective and efficient use of time no
  duplication
• Elimination of clerical error
• Secure 24 x 7 x 365 access
• On-Line calculation facility
• Simpler user friendly return forms
• Environmentally friendly
• Prompt Repayments

30
Registration Process

• www.ros.ie
• Simple 3 step registration process
• Apply for a ROS access number (RAN)
• Apply for a digital certificate
• Download your digital certificate

31
(No Transcript)
32
ROS Confidentiality Security

• ROS uses the latest technologies
• to ensure a confidential secure channel for
  electronic filing of returns

33
ROS Filing Payments for

• VAT (VAT 3 RTD)
• Employers PAYE (P30, P35 P45/P46)
• Self Assessed Income Tax (Form 11 Form
  1(Firms)
• Corporation Tax Form CT1
• Financial Witholding Taxes
• Environmental Levy Return
• On-Line Vehicle Registrations
• Relevant Contracts Tax (RCT 30 RCT 35)
• Gift Inheritance Tax (IT 38)
• Intrastat/Vies Returns

34
Payment using ROS

• Currently three methods of making Payments
  through ROS
• ROS Debit Instruction (RDI)
• Laser Card
• On-line Banking Facility

35
Revenue Website

• The Revenue Website can be accessed on
  www.revenue.ie
• It is easy to navigate
• Contains information for individuals
• Contains information for businesses
• Contains leaflets and guides
• Can download Forms

36
Thank You