Working full-time, but have evening work

zag

I will be starting work in a new company in two weeks. I am a graphic designer.
The company I work for now, wants me to work as a consultant in the evenings.
Everything will be going 'through the books', so how will that work for me? I will be paying PAYE in my new company, so, what options do I have?

MrPudding

Put all your credits into your fulltime job. Get the revenue people to send your evening employers a new tax allowance cert showing 0 credits.

MrP

ButtermilkJack

Hey,

I just set-up as a sole trader, trading under a registered business name. It's easy. Once-off €30 fee to register your business name (www.cro.ie) and free to register yourself for VAT*.

(*If you register as a sole trader/business name, you can earn up to apprx €28k extra per year doing your consulting without having to register for VAT. You're obliged to register by law if you earn anything over that. If you're not going to bother registering as a sole trader and just take a second wage, you'll be taxed as normal; ie: both salaries added together - first €30k taxed @ 20% (minus TFA) then remainder @ 42%. More info at www.revenue.ie).

Not sure which way is more of a benefit. I'm also a graphic/web designer. I also work 9-5 but set-up a business on the side in order to put all my nixors through the books (reason being you can claim VAT back on purchases, laptops, printers etc. and put travel expenses etc. through the books to reduce the amount you pay 42% on. You are only taxed PAYE on the 'profit' so to speak. If you are just working on 2 wages you're taxed on the lot!

Hope this helps and is not too confusing!

zag

I'm a wee bit confused. So, if I register a company name, lets say, Blah Ltd. for 30 euro, I can operate as a sole trader and work 9-5 with my employer. You said I could earn 28K without paying VAT, but what tax do I pay?

ButtermilkJack

zag wrote:

I'm a wee bit confused. So, if I register a company name, lets say, Blah Ltd. for 30 euro, I can operate as a sole trader and work 9-5 with my employer. You said I could earn 28K without paying VAT, but what tax do I pay?

For €30 its just a 'trading as' business name. In other words, you will not be registering a company as such, just registering the fact that you, 'Joe Bloggs' are conducting business under the name 'Blah' (no Ltd. at the end!).

I should mention that this is completely seperate from your day job. Your 9-5 is not affected so you keep getting the same paycheck from Employer 1 at the end of each month and pay the same Income Tax/PAYE, PRSI as normal, which is taken from you each month as usual.

With your 'business', you give an invoice to Employer 2 for your evening hours each month. He gives you a cheque which you lodge in your bank a/c. You pay nothing until the end of the year when you hire an accountant to calculate how much Income Tax you pay.

This where it gets creative! Your Income Tax/PAYE for everything earned working as 'Blah' is going to be 42% of all your 'business' earnings (ie: 12 paychecks from Employer 2). However, it is only calculated on all your earnings minus your expenses. So you'll only pay 42% on a portion of your income and not all of it, which can only be a good thing! Claiming as much expenses as you can (legal of course!) will reduce the amount of Income Tax you pay.

Eg: You earn €15,000 extra per year doing evening work. You claim €5,000 as expenses (travel to location of work, lunch?, mobile phone?, etc...). So, you only pay 42% of €10,000 which works out as €4,200.

If you don't register a business name and go the ordinary route of tax credits and PAYE and just have it as a second job, you pay 42% on all €15,000 which is €6,300.

You can see the savings!

zag

Thanks for the help. Btw how much do you need to pay an accountant? Is it not easy to work out for yourself?

ButtermilkJack

I'm not quite sure. My accountant just said "a couple of hundred euro". I'll probably be screwed later!!

Seriously though, I've heard it costs somewhere between €300 - €500 depending on amount of work to be done, but don't hold me to that. I suppose you could do it yourself but I preferred to get it right for the first year just in case I missed anything and ended up with a large fine.

I do the VAT returns every 2 months myself. That's the easy part, you'll do that with your eyes closed (That's if you are going to register for VAT.)

All you're doing is adding your expenses and subtracting this from your income, then calculating 42% of the remainder and giving it to the taxman. Sounds easy enough I suppose!

Kinetic^

zag wrote:

Thanks for the help. Btw how much do you need to pay an accountant? Is it not easy to work out for yourself?

Hey Zag, i'll do it for €150 for you.