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Register as Self-employed
In order to set up as a sole trader you must register as self-employed with the Revenue. To register with the Revenue as a self-employed sole trader you must complete what is known as the Tax Registration Form ('TR1').
The taxes that may be relevant when setting up as a sole trader are as follows:
- Income Tax
- Income Levy
- Pay Related Social Insurance ('PRSI')
- Health Contributions
- Value Added Tax ('VAT')
- Relevant Contract Tax ('RCT')
INCOME TAX
For self employed people, and individuals with income which is not collected through the PAYE system, income tax must be paid under the self assessment system.
For Example:
- Self-employed persons i.e. people carrying on their own business including farming, professions, vocations etc.
- Persons receiving income from sources where some or all of the tax cannot be collected under the PAYE system, for example:
- profits from rents,
- investment income,
- foreign income and foreign pension
INCOME LEVY
The income levy, which came into effect on 1 January 2009, is a levy payable on gross income, including notional pay, before any relief for any capital allowances, losses or pension contributions. All individuals are liable to pay the income levy if their gross income exceeds the threshold of €15,028 per year. Certain exemptions do apply.
PAY RELATED SOCIAL INSURANCE 'PRSI'
If you are self-employed you pay PRSI contributions under Class S. Class S PRSI contributions are paid at a current rate of 3% on all income. When you register with the Revenue you should be automatically registered for Class S.
HEALTH CONTRIBUTIONS
If an individuals' income is above €26,000 annualy you also pay a Health Contribution on all the income. PRSI and Health Contribution are paid directly to the Revenue when you make your annual tax return.
VALUE ADDED TAX ('VAT')
A self employed individual must register for VAT if their annual turnover exceeds or is likely to exceed the following current annual limits: €70,000 in respect of the supply of goods or €35,500 in respect of the supply of service.
RELEVANT CONTRACT TAX ('RCT')
If you are a self-employed subcontractor working in construction, forestry or meat processing you may apply for a C2 Certificate. This will allow you to receive payments from a contractor without RCT being deducted.
BUSINESS NAME
At this point you may wish to register a business name. In order to register a business name you need to apply to the Companies Registration Office (‘CRO’) using Form RBN1 or online using Companies Online Registration Environment (‘CORE’).
Irishtaxback.ie will be happy to assist you in reviewing your business and determining if the above taxes are relevant for your business.