Self Employed - Tax?

contentking

Hopefully someone can answer this.

I setup a business last week and got an accountant as I am absolutely brutal at that side of things, but I still have a few questions...

Say if i earn €20,000 from now until my tax return (next year) -What tax bracket am i in? - How much do I have to actually pay the revenue.

So I guess how much should I set aside from that potential 20k?

Rulmeq

That's a question you should ask your accountant.

Here's some stuff you should keep in mind as well:
http://www.citizensinformation.ie/categories/employment/types-of-employment/self-employment/self-employment-as-an-individual
And revenue's site:
http://www.revenue.ie/en/tax/it/leaflets/it10.html

Good luck with the venture.

Lorelei

If you earn € 20,000.00 (I assume this to be your gross) deduct all expenses which are purely to do with the business.
(This may also include a percentage of expenses which are partially private e.g. use of car for both private and business allocate for example 80% of all these costs to the business).

Having deducted business expenses you will pay the standard lower tax rate.
With earnings of 20k after deductions you probably won't have any tax liablity.

contentking

Thanks Lorelei,

Yes gross.

Can you explain this bit:

With earnings of 20k after deductions you probably won't have any tax liablity.

Lorelei

If your total earnings are € 20,000.00 and you have business expenses of say € 5,000.00 (not knowing the type of business you are in can't say) plus capital allowances (vehicle value, once again a percentage of value then divided over 5 years) giving another say € 6,000.00. Your earnings are in the lower tax bracket and due tax is 1.830.00 minus € 2,200.00 (20% of the business expenses and depreciation on capita) minus your personal tax credit (€ 1,830.00 if single) then the tax due is minus € 2,200.00 - no tax payable.

In fact on € 20,000 earnings your tax credit without any business expernses would cover the tax payable.
As a rule of thumb put 20% of your earning to one side to cover any eventual tax due.
This will cover you and should also leave a a few quid at the end of the year,

The most heplful people for advice I have found are the Reveue themselves.
I see you have an accountant rather suprised that he/she didnt answer this question or tell you at your first meeting with him/her.
Although thats another issue.

Good luck

Rulmeq

You will have to pay 5% PRSI (assuming class S) on your gross income, less any pension payments.
I believe you can also optionally pay PRSI at class A if you want the benefits that would give you.