Do I owe tax

poulton39

Hey,

Set up business as a sole trader in December 2022.

Was told by a friend I trusted that because I'd have been in business for under a year for the tax date of 2023 that I wouldn't have to pay income tax until the tax date for 2024, which another friend has told me is false and actually I'm behind nearly three months.

There's confusing advice online so just looking for clarity here.

Cheers.

StringerBell

It's not straightforward from the info provided so is always good to get advice prior to setting up.

If you want send me a DM and I'll have a quick chat with you tomorrow for me to understand a couple of specifics and it might simply be easier to explain on the phone than try to write it down.

relax carry on

https://www.boards.ie/discussion/2058331285/do-i-owe-tax

I'm assuming you didn't consult an accountant before starting down the self employed route? If you did, then go back to them now. If you didn't, then find an accountant now. This is for your peace of mind and is good practice to stay on top of your obligations.

https://www.revenue.ie/en/starting-a-business/index.aspx

https://www.revenue.ie/en/starting-a-business/paying-your-tax/index.aspx

Furze99

https://www.boards.ie/discussion/2058331285/do-i-owe-tax

You should set up an account on ros.ie if you haven't already done so. And then use the Enquiries section there to ask the question. You'll have to (should) set up an account there anyway, so nothing to lose.

Ordinarily you would have sorted out your tax liability for 2022 back in October 2023 and also paid preliminary tax for your earnings of 2023 at same time.

Lenar3556

https://www.boards.ie/discussion/2058331285/do-i-owe-tax

If you carried on business in 2022 (albeit you say for only a few weeks if the business started in December), any income tax arising out of this should be paid by 31/10/2023. You can still file a return now, and pay a 10% surcharge.

Was there significant business/income in December 2022?

Taxes

A late filing surcharge of 10% on a tax liability of €0 equates to €0. No preliminary tax is due as your tax liability for the prior year was €0.

Madd002

https://www.boards.ie/discussion/2058331285/do-i-owe-tax

Your first friend was right, my husbands year end for July 2021 -June 2022 was submitted in Oct 23. Its a year behind. Your 1st submission will be this Oct 2024 for your year end Dec 22 - Nov 23 a full year's accounting.

Taxes

https://www.boards.ie/discussion/comment/121649948#Comment_121649948

This is incorrect. She was obliged to file an income tax return mid November 2023. for the one month accounting period ended 31 Dec 2022. Special basis of assessment rules apply to individuals commencing a trade. As I outlined above, given it’s her first month trading it’s likely she was not in a tax payable position anyway so she does not have to worry about late filing surcharges etc.

Madd002

So is our accountant doing our accounts wrong.?

Madd002

So is our accountant doing our accounts wrong.?

Taxes

if your husband just commenced his trade, then yes. If not, then no.

if your husband commenced his trade on 1 July 2021, the first tax period would be 1July- 31 Dec 2021. Tax payable the following October/November. His second tax year would be the 12 months ending 30 June 2022, tax payable the following October/November.