How to Choose the Right Accounting Firm?

tanit

Deleted User wrote: »

I honestly didn't even think about it.

I thought VAT applied to physical goods, rather than online information products/courses.

How does VAT significantly impact my taxation?

Okay you not only have a complicated tax situation but there is a great likelihood that you may need to make disclosures depending on the level of turnover you had in Ireland and outside Ireland and whether any of the Vat exemptions might apply to the services you provide.

Vat applies in Ireland on Services for turnover in Ireland of over 37,500, you may or may not qualify for the exemptions for Education services depending on the kind of courses you are providing. Courses for recreational purposes DO need to charge Vat as they do not qualify for instance. I do not know the situation about these services outside Ireland in other EU countries and in other EU countries you would need to register once you go over the thresholds most of them 35,000 Euros, Germany, Luxembourg and the Netherlands 100,000. Below that you have the One Stop Shop and the rules for the One Stop Shop are changing this year in July again so your situation may be affected again depending on the thresholds and if the services you sell online qualify for exemptions or not.

VAT Treatment of Education and Vocational Training

You really need to have a long talk with full details about your sales in and out of Ireland and the EU to see where you stand and if it is just a question of extra paperwork that needs to be done or a full disclosure and the sooner the better. Seriously get an accountant with specialist tax knowledge.

tanit

Pawwed Rig wrote: »

I don't know enough about your case and we are probably (hopefully) jumping the gun here but your case is sounding more and more complicated so again there is not much that we can do for you here without the full facts.

I totally agree with this

gudede

I viewed the first page and then gave up.

I can see a couple of things;
1) you don’t trust your accountant,
2) the conversation between yourself and accountant wasn’t great,
2) you’re defo the type of client, thats on the phone once a week but don’t want to pay the fees. “C” grade client.

Yes, some fees might seem expensive and others can do the work for cheaper, but remember you get what you pay for.

Incorporating just to save on taxes might not be the best idea. What’s your exit plan? Keep trading till your pension age? Build business and sell in 5-10 years. Are you married, kids etc. All these things + others should be considered.

Ps - you’re also in Dublin. I.e you must pay Dublin tax. You could get an accountant down South.

Jim2007

Deleted User wrote: »

What is the usual strategy for someone earning 125k +?

Surely giving 49pc to the government just seems awful. Obviously, a high tax must be paid, but surely there is a way to take advantage of existing tax laws to some degree?

I don't know!

For the company idea; I'm thinking...

If I don't take out too much, it means I won't attract the higher standard rate - at least compared to if I were a sole trader. I'll be honest and admit I haven't done this calculation, nor has the accountant who I have spoken with. It just seems right...

Look, this thread is going off in all kinds of tangents because you seem to have no clear objective. Forgot about creating a company etc and trying to figure it out yourself or jumping to conclusions. You do not have the knowledge or skills necessary.

Any time you set out to avoid taxes, it will not be simple. The Revenue are not stupid, the are fully aware that people will try to dodge their taxes and there are a raft of provisions in place to make it difficult.

A company is very rarely a good structure for a self employed person to solely avoid taxes, there are usually ofter considerations in play. Sure you can reduce your income by paying a lower salary, but the money you leave in the company will have to come out sometime time and there is a good chance it will be double taxed.

My suggestion is to keep it simple, go ask the professionals to make you a proposal as to how to minimize your tax burden and leave it to them to figure out the mechanics and costs.

gudede

gudede wrote: »

I viewed the first page and then gave up.

I can see a couple of things;
1) you don’t trust your accountant,
2) the conversation between yourself and accountant wasn’t great,
2) you’re defo the type of client, thats on the phone once a week but don’t want to pay the fees. “C” grade client.

Yes, some fees might seem expensive and others can do the work for cheaper, but remember you get what you pay for.

Incorporating just to save on taxes might not be the best idea. What’s your exit plan? Keep trading till your pension age? Build business and sell in 5-10 years. Are you married, kids etc. All these things + others should be considered.

Ps - you’re also in Dublin. I.e you must pay Dublin tax. You could get an accountant down South.

I think this is overly hostile.

I have already admitted, several times in fact, that I appreciate the cost of professional services but that I'm trying to gauge, as someone new to this arena, what is reasonable. That question has already been answered - as the overwhelming conclusion from posters here is that the costs are more than fair for the services that I require.

Look at what happens if I do not incorporate:

Generate around 10,000 euros per month.

49pc or so must go to Revenue, so that must be set aside.

= 5,100 remaining.

Minus rent @ 2,200 euros = 2,900 euros.

Then, there are other fees / bills / charges that must be accounted for.

This is a very small amount of money, counter to the lifestyle I would wish to live.

Also, can I also ask about preliminary tax.

Let's assume that I'm a sole trader from April 1 onwards - and make approx. 10k a month; what preliminary tax bill can I expect in November?

relevanc

[Deleted User] wrote: »

Also, can I also ask about preliminary tax.

Let's assume that I'm a sole trader from April 1 onwards - and make approx. 10k a month; what preliminary tax bill can I expect in November?

Again engage an accountant and ask him/her all of these things. Your accountant will go through all of this with you. Only he will know the particulars of your business.

You are expecting some amount of (free) advice on an Internet forum.

mrslancaster

Deleted User wrote: »

I think this is overly hostile.

I have already admitted, several times in fact, that I appreciate the cost of professional services but that I'm trying to gauge, as someone new to this arena, what is reasonable. That question has already been answered - as the overwhelming conclusion from posters here is that the costs are more than fair for the services that I require.

Look at what happens if I do not incorporate:

Generate around 10,000 euros per month.

49pc or so must go to Revenue, so that must be set aside.

= 5,100 remaining.

Minus rent @ 2,200 euros = 2,900 euros.

Then, there are other fees / bills / charges that must be accounted for.

This is a very small amount of money, counter to the lifestyle I would wish to live.

Sorry what rent? Are you renting a business premises

mrslancaster

mrslancaster wrote: »

Sorry what rent? Are you renting a business premises

No, apartment / home.

mrslancaster

Deleted User wrote: »

No, apartment / home.

Op from reading your posts it seems things are a bit up in the air for you now.
Maybe I'm reading this wrong but if you have been self employed from home and didn't make any returns for vat or tax yet then you need to engage an accountant to get things back on track with Revenue & best to get that done asap imo.
After that you can decide if you want to continue as a sole trader or if you want to incorporate the business. best of luck.

You might get some more information here:
https://www.citizensinformation.ie/en/employment/types_of_employment/self_employment/

The problem of VAT keeps coming up.

On the one hand, one accountant says I am liable. Another says that due to my international customers and the relatively passive nature of the income and type of digital resource on sale, that VAT is not applicable.

A third accountant argues in favour of VAT distance sales.

Nobody has a clue what the correct answer is!

And this is important, too, because this has grave implications. If I am not liable for VAT, that is considerably more advantageous. Given my digital resource on sale is educational in nature, I also hoped that it would not be subject to any form of VAT.

But when I reach out to accountants who are all given the same set of information, nobody has a clue. How is this possible?

antoinolachtnai

If you are uncertain and feel there are issues that are beyond the accountants you have consulted them you need to bring in a tax professional who has specialised knowledge of VAT. They will work in conjunction with your accountants to find an answer.

Pawwed Rig

If they don't have a clue goto someone who does. Look at the firm website. Look at the people link. Find the VAT partner and contact them. VAT can be complicated but it is not that difficult. Many smaller firms wouldn't have the necessary expertise to properly advise on non standard VAT so best goto a specialist where there is doubt. Ignore the big 4 firms as they would be too expensive but any of the next 7 or 8 largest would have a VAT partner that could give you written advice on the matter.

If you want to pay bargain basement fees you get bargain basement advice

Pawwed Rig

Pawwed Rig wrote: »

If they don't have a clue goto someone who does. Look at the firm website. Look at the people link. Find the VAT partner and contact them. VAT can be complicated but it is not that difficult. Many smaller firms wouldn't have the necessary expertise to properly advise on non standard VAT so best goto a specialist where there is doubt. Ignore the big 4 firms as they would be too expensive but any of the next 7 or 8 largest would have a VAT partner that could give you written advice on the matter.

If you want to pay bargain basement fees you get bargain basement advice

It's quite incredible.

As a sole trader, you lose 49pc or so via tax.

Now, I'm learning that 23.5% extra per transaction may need to be added on (though hopefully not) - which will further deter future sales as the price of the product increases.

This is clearly anti-business. How the hell are people expected to grow businesses with this kind of obscene levels of tax burden.

It's a total disgrace.

antoinolachtnai

[Deleted User] wrote: »

It's quite incredible.

As a sole trader, you lose 49pc or so via tax.

Now, I'm learning that 23.5% extra per transaction may need to be added on (though hopefully not) - which will further deter future sales as the price of the product increases.

This is clearly anti-business. How the hell are people expected to grow businesses with this kind of obscene levels of tax burden.

It's a total disgrace.

VAT is a tax on consumption, not on production.

The VAT rates are set by the individual states. If you don’t want to do business in States with high rates then you don’t have to, or you can just charge more.

Personal tax has little enough to do with reinvesting to grow businesses. From your posts it seemed that you wanted to withdraw money to support your lifestyle rather than to grow the business. If you want to reinvest profits then the tax situation is very different.

Well let's throw the argument out there.

I own various education websites. For example: someone can register to one of my sites, pay a flat fee, and are then redirected to a membership portal where they can access online tools such as practice MCQs, digital flashcards, theory summaries. They have access for perhaps 6-months or 1-year depending on which package they purchase. There is no formal tutor or anything like that. People register as and when they choose; hence the more passive nature of it.

These users come from all over the world.

So, the question becomes: is this VAT-able, and does it mean that each user, no matter which country they are registering from, are all subject to the same Irish 23.5% rate?

That's the matter in a nutshell, and it's the same information I provided the accountants.

antoinolachtnai

The answers to your questions are yes and no.

How to calculate the VAT correctly and account for it with the various authorities is what it sounds like you need the advice on. This will depend on your circumstances.

antoinolachtnai

antoinolachtnai wrote: »

The answers to your questions are yes and no.

How to calculate the VAT correctly and account for it with the various authorities is what it sounds like you need the advice on. This will depend on your circumstances.

So there could be 150 VAT bills because customers happen to come from 150 countries?

Pawwed Rig

[Deleted User] wrote: »

So there could be 150 VAT bills because customers happen to come from 150 countries?

Again it depends. I am assuming you are B2C so Irish VAT will apply in many situations.
I would warn you though that there are changes coming on June 30th so anything you figure out now could be out the window then.

Pawwed Rig

Pawwed Rig wrote: »

Again it depends. I am assuming you are B2C so Irish VAT will apply in many situations.
I would warn you though that there are changes coming on June 30th so anything you figure out now could be out the window then.

If that's the case, then presumably I'll have to retrospectively pay VAT on my transactions when I was living in two different EU jurisdictions over the past 4-years.

Furthermore, many of these transactions (perhaps 40%) are through PayPal but having just reviewed PayPal payments now, they do not give you a function to learn from where the purchase was made. Yet another disaster.

Christ almighty.

antoinolachtnai

The VAT has to do with where the customers are located more than where the supplier is located.

Your advisors should be able to help you estimate your historic liability where the records kept are not sufficiently comprehensive.

davindub

Look VAT on services is complicated and there has been changes over the last 10 years (and this year, last year). I think you do need to give the persons you are seeking advice from a chance to determine exactly what it is you do and the rules that apply, which means an engagement to fully examine your business and the specific rules.

Based on the information given and a little guess work as to what you do, there are specific e-services rules. The place of supply is where the customer is located.

You use MOSS (OSS coming later this year) to deal with EU VAT.

Outside of EU charge Irish VAT, unless you can verify (eg credit card and IP checks) & you may have a liability where you supply the e-service as well. Watch the UK, the situation is developing.

There are circumstances where the standard B2C rules apply even if delivering services online so they will also need to be ruled out.

But you need to register for VAT if you supply e services outside the state to EU in excess of 10k. But if supplying non e services, the same threshold will apply from July anyway.

You should be able to find a firm specialising in e-services.

davindub

davindub wrote: »

Look VAT on services is complicated and there has been changes over the last 10 years (and this year, last year). I think you do need to give the persons you are seeking advice from a chance to determine exactly what it is you do and the rules that apply, which means an engagement to fully examine your business and the specific rules.

Based on the information given and a little guess work as to what you do, there are specific e-services rules. The place of supply is where the customer is located.

You use MOSS (OSS coming later this year) to deal with EU VAT.

Outside of EU charge Irish VAT, you may have a liability where you supply the e-service as well. Watch the UK, the situation is developing.

There are circumstances where the standard B2C rules apply even if delivering services online so they will also need to be ruled out.

But you need to register for VAT if you supply e services outside the state to EU in excess of 10k. But if supplying non e services, the same threshold will apply from July anyway.

You should be able to find a firm specialising in e-services.

Okay I see, thanks for that.

Just one question. How does this mean I charge customers VAT in future?

Can I charge them all 23.5% VAT on checkout anyway? Or does this involve a system where the charge must be per country / EU state or something like that?

I'm unsure what the standard convention is regarding this.

davindub

[Deleted User] wrote: »

Okay I see, thanks for that.

Just one question. How does this mean I charge customers VAT in future?

Can I charge them all 23.5% VAT on checkout anyway? Or does this involve a system where the charge must be per country / EU state or something like that?

I'm unsure what the standard convention is regarding this.

Sorry I'm not clear on your question regarding the future?

I made an edit to the post above, I deleted something I shouldn't have, e-services outside the EU are not in scope for EU VAT, but the onus is on you to verify this.

You must charge VAT at the correct rate per state (Ireland is 23%) and be able to report on sales

tanit

Deleted User wrote: »

Okay I see, thanks for that.

Just one question. How does this mean I charge customers VAT in future?

Can I charge them all 23.5% VAT on checkout anyway? Or does this involve a system where the charge must be per country / EU state or something like that?

I'm unsure what the standard convention is regarding this.

I am not sure if this a problem of you not knowing enough about the subject or the advice not being good enough.

First, there is no 23.5% Vat rate in either Ireland or the EU right now (I have checked the EU rates and no country has that exact rate).

Second depending on the type of service/online you have different reporting requirements. Also the reporting requirements are changing in June at EU level and you might be affected by them. So I highly recommend you to follow the advice given previously in this thread and talk with Chartered Tax Advisor or directly made the query to Revenue. If you make the query to Revenue be aware that that might need to disclosures you might need to make and timing for those disclosures can become tight if you are trying to do it on your own, so I recommend you to go to an advisor with expertise in this area.

I was told by my accountant that to fully resolve the VAT issue, it would cost 1,200 euros + VAT for researching the question (6 hours) to learn what applies to my case and what doesn't.

This came as quite a shock, I was not expecting a 1,200 euros + VAT bill for researching a VAT-related question (1,476 euros in total).

Is this a normal rate?

I find it unbelievably high!!! :eek:

Shocked, to say the least.

Pawwed Rig

From reading this thread I would be charging you that much or more as it sounds like an absolute mess to figure out and will be labour intensive.

Professional fees are expensive. You might get it cheaper elsewhere but equally there are places you will pay more.

Pawwed Rig

Pawwed Rig wrote: »

From reading this thread I would be charging you that much or more as it sounds like an absolute mess to figure out and will be labour intensive.

Professional fees are expensive. You might get it cheaper elsewhere but equally there are places you will pay more.

True, but how can one be certain of finding an answer within a defined time frame?

Surely it's possible that at the end, there is still uncertainty and so I could be given another 6-hour bill + VAT?

I don't know how certainty is built into this.

Tow

Deleted User wrote: »

I don't know how certainty is built into this.

Probably none. Just as they will probably not indemnify you if Revenue decide their advice was wrong, several years later etc.

capefear

Deleted User wrote: »

I was told by my accountant that to fully resolve the VAT issue, it would cost 1,200 euros + VAT for researching the question (6 hours) to learn what applies to my case and what doesn't.

This came as quite a shock, I was not expecting a 1,200 euros + VAT bill for researching a VAT-related question (1,476 euros in total).

Is this a normal rate?

I find it unbelievably high!!! :eek:

Shocked, to say the least.

A tax consultant we use charges 175+vat an hour. To be honest yes its alot but its worth spending the money for peace of mind as if you get vat wrong it will cost you alot more than 1200 to fix. The 1200 will include a written report specific for your situation and if you are giving the wrong advice at least you would have some recourse as the tax consultant will have PII insurance. This advice would only be applicable to the current vat law as it might change over the years.

Tow

Tow wrote: »

Probably none. Just as they will probably not indemnify you if Revenue decide their advice was wrong, several years later etc.

capefear wrote: »

A tax consultant we use charges 175+vat an hour. To be honest yes its alot but its worth spending the money for peace of mind as if you get vat wrong it will cost you alot more than 1200 to fix. The 1200 will include a written report specific for your situation and if you are giving the wrong advice at least you would have some recourse as the tax consultant will have PII insurance.

I hate to have to ask this question, but what Tow said is on my mind. As I will be spending a vast sum of money on this, it seems only reasonable to ask the question: what if the advice is wrong?

Tow says that I will not be indemnified - meaning I would be liable for any error.

However, CapeFear argues that I would have "some recourse as the tax consultant will have PII insurance".

So, which is it?

And second, should I even bring this insurance / error, issue up with the accountant - or is this considered extremely bad manners?

I don't want to come across as offensive to his intelligence and expertise but, at the same time, I need to think about these matters and their potential long-term implications.

Also, not sure if it helps but this is my accountant doing the research. It hasn't been outsourced to a specialist tax consultant on VAT.

hold my beer

mrslancaster wrote: »

You could always speak to Revenue directly - they have a whole section that deals with VAT. Then you'd be sure of getting the correct advice and you won't incur professional fees.

Revenue won't give out such advice. If they were to start doing it they'd be completely swamped within months with endless requests for advice. They'll answer simple questions via MyEnquiries. And will answer specific technical queries, such as interpretation of laws and such, via the Revenue Technical Service. Other than that, they expect Officers of companies and businesses to make sure they know the rules and follow them. And if they don't, pay someone else to do it.

OP, you need to look at this as a cost of doing business. You will hopefully only have to do it once, and you can then follow that advice unless you hear of something new or your business changes.