Starting Small business on the side

roughan

I have a full time job and in my spare time i sell IT (computers & laptops) on ebay and in the Buyandsell

it kinda taken off lately and while its not enough to go full time ,it is enough to register it and pay some Tax

my question is as im only making 800 P/m -1000 from it per month
the money goung through my bank account is quite high ie
buy 20 laptops for 5 k sell them for 6 k , would i pay tax at 42 % on the profit or how would it work ,and would i be charged extra tax in my 9-5 job
cheers

bubblebean

I'm only new into this myself and also in the IT side of things but the rate of tax you pay will depend on your PAYE income. If your dayjob pays 32000 then you will pay 42% on all your small biz profites, however if your dayjob salary is 20000 and your profite from sidebiz is 12,000 then your 12k will be taxed be also taxed on the lower rate of tax. When you say 'make' you are taking end profit right?

roughan

Yes only making 800 a month doing it
i already pay 42% in work
so thouse that mean i pay 42% of 800 a month aswell?

antoinolachtnai

yes, basically.

PRman

You could set up a limited company. This will enable you to right off expenses against tax. You could for example, charge your broadband to the company, admin expenses, milage, etc. The only problem is that there is a bit of red tape ie. Annual Returns, etc. If you need any assistence theres a company called Company Bureau www.companyformations.ie who are very helpful. Good luck with it!

slave1

you need some good basic accounting advice, there appears to be a lot more accountants posting over on AAM so try a thread there for starters

http://www.askaboutmoney.com/forumdisplay.php?f=12

mckers

Hi Roughan

You won't need to go as far as a limited liability company to cut your tax bill. Any person can operate a businees in their own right. There are however a couple of tax issues to check out.

1) Income tax

Strictly speaking, you will pay tax at 42% on your 800 -1000 earnings through ebay/buy & sell. However, you are perfectly entitled to claim expenses of your business against this. It would be fair to assume that the majority of your use of your broadband is for your businees, claim the full expense. You can also claim a portion of your light and heat in your apartment (set a reasonable apportionment). You can claim a wear and tear allowance on the cost of your own computer, computer desk, chair etc. This is claimed at 12.5% of the cost of the assets (per annum), although this would depend on when you bought the items. Any other reasonable costs you may have could also be tax deductible i.e. bank charges, charges on your pay pal account, telephone calls and so on.

Any profits will be taxes at 42%.

2) VAT

Your IT business is below the VAT registration limit - seem ok here, but if your sales figures increase, you might want to revisit this requirement.

As far as your current job is concerned, they do not need to know anything about your IT business. As far as they are concerned, they are provided with a cert of tax credits at the beginning of the year and they will tax you according to that certificate.

A company is not necessarilly a good idea. Taking your example, if you leave all your profits in the company and over the course of the year that amounts to 12,500, then that is taxed at 12.5%. Then you decide that you want to take out the profits net of corporation tax (10,938), then that will be taxed at your marginal rate of tax (i.e. 42%) and would only get 6,343 in cash out of the company.

If you take the example at point one above and assuming no expenses, the net amount of cash you would have after income tax would be 12,500 - (12,500*42%) = 7,250.

Based on your level of income, you would more than likely be filing a Form 11 tax return, resulting in a social security charge....PRSI and the health levy.

tech

cash is King for small amounts per month you should be ok,