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Working two jobs and want to start a business: should I be LTD or Sole Trader?

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  • 27-01-2013 6:11pm
    #1
    ykc08
    Registered Users Posts: 12 ✭


    Hi all,

    I have a full-time job, work part-time in a bar and now have a business idea which I now want to pursue.

    My question to you is should I register a company or as a Sole Trader?

    Having spoken to a couple of fairly knowledgable people, they said go for the Sole Trader option to keep costs down, see if the business will work and register a company if it does at a later stage. This will save a lot headaches and expenses in the beginning.

    While I agree with what they say, the dillema I have is that all the money I will potentially earn from the venture will be taxed at the higher rate as my two jobs eat up my tax credits. The other issue is customer perceptions of a Sole Trader versus a company may make potential clients wary of working with me.

    What are your thoughts? If I register as a Sole Trader, will my business expenses be deductable across my entire income or only from the business? WHich option will be better for me?


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    #2
    Alan Shore
    Registered Users Posts: 735 ✭✭✭Alan Shore


    Two ways of looking at this:
    You go as a sole trader and make a loss, the loss can be deducted from your other income and a tax refund generated.
    You go as a sole trader and make a profit and end up paying 52% tax and due to the nature of the business don't have the cashflow to pay the tax because of stock or debtors.

    A company may get an exemption from CT if you employ someone, or pay tax at 12.5% so that you at least you can manage your cashflow. What is the nature of the business.


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    #3
    ykc08
    Registered Users Posts: 12 ✭ykc08


    Alan Shore wrote: »
    Two ways of looking at this:
    You go as a sole trader and make a loss, the loss can be deducted from your other income and a tax refund generated.
    You go as a sole trader and make a profit and end up paying 52% tax and due to the nature of the business don't have the cashflow to pay the tax because of stock or debtors.

    A company may get an exemption from CT if you employ someone, or pay tax at 12.5% so that you at least you can manage your cashflow. What is the nature of the business.

    The business would be a sort of consultancy. It would have relatively low running costs but I don't envision many customers in the first couple of years.

    If I spend 5k in the first year on setting it up, how and when can those expenses be deducted from my income? Is there anywhere I can find information like this without speaking to an accountant? I really want to keep costs as low as possible during the startup phase.


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    #4
    leonidas83
    Banned (with Prison Access) Posts: 1,065 ✭✭✭leonidas83


    ykc08 wrote: »
    The business would be a sort of consultancy. It would have relatively low running costs but I don't envision many customers in the first couple of years.

    If I spend 5k in the first year on setting it up, how and when can those expenses be deducted from my income? Is there anywhere I can find information like this without speaking to an accountant? I really want to keep costs as low as possible during the startup phase.

    In this sort of situation speaking to an accountant will be worth its weight in gold for the fee they would charge in relation to the money you could save.

    You could write alot off as expenses & make considerable savings that way. Also its my understanding that those expenses can be deducted from your income when you file income tax returns Oct 2014 although I'm not 100% sure of this


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