1. Be organised, be ready and don’t be late

Under self-assessment there is a common date for the payment of tax and filing of tax returns – the 31^st of October each year. With all the demands of starting a new business, this date can often sneak up on you. It is absolutely vital that you are ready for this date each year and have everything you need optimally organised to make the process as easy, quick and pain-free as possible. You can file your return in advance of this date once you are ready. Do not leave it until the last minute to file your return. Not only are there fees for missing the deadline, if you rush there is more chance that you make a mistake or leave something out, which can also result in a financial penalty or even a potential tax audit.

2. The Start Your Own Business Relief

There are a number of tax reliefs, deductions and exemptions in place that contribute towards the creation of jobs. The start your own business relief provides tax relief for someone who has been unemployed for at least 12 months before starting a qualifying business, and provides an exemption from income tax up to a maximum of €40,000 per annum for a period of two years.

3. Keep receipts and records of all your relevant expenses

Once an expense is directly related to the running of your business, you can make a claim for it in your sole trader tax return. However, you must be able to prove that you have made the expense by keeping all relevant receipts and a record of them, for six years. “Allowable expenses” for the day-to-day running of your business include items such as: the purchase of goods for resale, rent, rates, repairs, lighting, heating, the running costs of vehicles or machinery used in the business, accountancy fees, interest paid on any monies borrowed to finance your business, lease payments on vehicles or machinery used in the business, equipment, motoring expenses and commuting expenses. Things like mobile phones and cars can be a tricky area as many sole traders use them for their own personal use as well. Only the usage that is directly related to the running of the business can be claimed.

4. Don’t overlook your pre-trading expenses

Because you’ve only recently launched your business, you may be eligible to claim a tax deduction for some qualifying pre-trading expenses in respect of the business in the three years before the commencement. For tax purposes, these expenses are treated as if they had been incurred at the time that the trade started. These may include business-related costs like: leasing costs, legal fees, the cost of preparing business plans and feasibility studies, accountancy fees, advertising costs and rent paid for the premises from which your business operates.

5. Broaden your understanding of allowances

While the reliefs available to you when doing your income tax return are enough to keep you busy, there are other assets for which you may be entitled to claim a tax deduction for. If you look hard enough, they can make a big difference when getting your new business off the ground. Things that can easily be overlooked include things like intellectual properties your company may have acquired such as trade names, brands, know-how copyright and even good will, assets the cost of which qualify for tax relief; research and development costs; and even tax treatment on any losses you incur.

About the Author

Selfemployed.ie have over 25 years experience helping people through their self-assessment and income tax returns. So, if you are self-employed, involved in a start-up, working on a contract basis, or earning any other second income and need any help with any aspect of filing your income tax return, you can get professional, experienced income tax service starting from just €150 (+VAT). Get in touch with the experts today to get started.

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One area where people are traditionally slow to make the move is with their accountant as they feel it can be very time consuming and lead to a lot of headaches. Getting the right accountant for your business is of paramount importance and if you are not satisfied with your current accountant you need to make the move!

Below we look at some of the reasons businesses give for not making the move and why they should not hold you back:

There is loads of paperwork to complete –

The switching process is actually very simple. Once you find a new accountant more suited to your needs they will send a letter to your old accountant informing them that you have decided to switch and requesting the latest financial information relating to your business. The old accountant will then give their clearance to the new accountant to take over along with the information they requested and the switch is complete. You may wish to contact your old accountant yourself out of courtesy but it is not a necessity.

I need to wait until my last set of accounts are finished –

The process of switching accountant can take place at any stage during the year. The old accountant will need payment for any work done to date but a new accountant can pick up straight from where the old accountant left off with the minimum of fuss

My old accountant will not release my books and records if I switch –

Accountants are bound by ethical guidelines and are required to release any property belonging to you should you request it. This should not be an issue but your new accountant will assist should any issues arise.

Revenue keep an eye on people who switch accountants –

Switching accountant will not trigger any suspicions amongst Revenue as it is seen as a normal part of business life whereby people will choose to switch service providers from time to time, they will not see it as an attempt to conceal anything.

A new accountant will not understand my business like my old accountant does –

A good accountant will be able to get to grips with your business in a very short period of time and it has the added benefit of having a fresh set of eyes look over your business. This can often result in new ideas being suggested which can grow your business and put more money back in your pocket.

This blog was written by www.Taxassist.ie – if you would like to find out more please email info@Taxassist.ie

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For many it is a very attractive option which allows them more control over their career and offers opportunities that may not present themselves in the traditional employer/employee scenario.

Becoming a self-employed contractor is not without its pitfalls and below we consider the top 5 things that should be considered before making such a decision:

1. Job Security/Job Flexibility

As an employee your rights are protected by a raft of employment law swhich ensures that your employer is obliged to comply with. As a self-employed contractor you forfeit these rights and protections. It is also important to note that when work dries up contractors will be first to lose out on work as opposed to employees who are guaranteed certain protections by law. You are not entitled to any redundancy payments as a contractor.

While being self-employed, however, you are your own boss. You get to control the hours that you work, where you work and you get to be solely in control of how your career progresses. The better you perform your tasks the more likely you are to profit from managing your workload efficiently.

2. Contractor Rate/Salary

Contractors tend to get increased rates for performing the same job that employees would do. This is due to the fact that the employer does not have to account for holiday pay, sick leave, employers PRSI.

If you are on a salary as an employee you will normally be assigned a payment date each month and you are pretty much guaranteed that the money will be in your bank account on that date. As a self-employed contractor you are treated the same as any other supplier and getting paid on time can prove to be an issue which can lead to cash flow problems for the contractor.

3. Travel

The world of contracting opens up a huge number of possibilities as regards getting to see the world. Countries with skill shortages in certain professions can offer very generous rewards on short/medium term contracts which can be attractive depending on your personal circumstances.

On the flip side, if work is scarce in your particular field close to home you may be forced to travel further away from home than you would like especially if you have a young family, etc.

4. Social Welfare

As an employee your employer will deduct and pay over your PRSI contributions on your behalf. These contributions, usually under Class A, entitle you to a whole raft of benefits under the social welfare system should you require them.

As a self-employed contractor you will pay your own PRSI under Class S. While still entitled to certain benefits, this type of contribution does not provide the same level of benefits should you need them e.g. jobseekers benefit, disability benefit, etc.

5. Tax/Administration

As an employee, your tax is withheld at source by your employer and is paid across to Revenue on your behalf. Your obligations as regards filing tax returns and other administrative burdens are minimal and you don’t have the worry of additional costs for preparing annual accounts, etc.

As a self-employed contractor you are obliged to register for Income Tax at the very least and potentially VAT, payroll taxes, Relevant Contracts Tax, etc. All of these tax returns have to be prepared on a periodic basis with fines and penalties being applied should you miss a deadline or file an incorrect return. If you decide to trade through a Limited Company you will also have an annual return to make to the Companies Registration Office and will have to comply with extensive company legislation.

The Revenue Commissioners have become very active in investigating the area of contractors, as historically due to lack of knowledge and poor advice many contractors were found to not have their tax affairs in order.

The area of tax and accounting should not provide a burden for you, however, once you have an accountant on your side who knows the industry and can guide you past the many hurdles that you may face as a contractor.

By Alison McGinley

Contact www.Taxassist.ie for further information..

The post 5 Issues To Consider When Becoming A Contractor.. appeared first on Starting a Business in Ireland | Help for Ireland's Entrepreneurs | Start Up Your Own Business.

In this Blog we will look at how you get paid from your business and the effects on your ability to pay your tax liability.

The business has started but where are my wages?

As a self employed person you don’t follow the same rules as an employee. An employee receives a wage each (week/month) gross wage less PRSI, USC, PAYE and a net wage is paid, and the employer pays PSRI @ 10.75% on amounts over €376.00 per week. This tax is collected by revenue each quarter via the P30.

A Sole Trader wages is called Drawings. This is any money you have taken out of the business for personal reasons. E.g. Lunch paid for with the business card = drawings, cash taken out to pay your house rent, = drawings. Cash or expenses taken out of the business for personal reasons as outlined in Section 81(2) (a)–(o) TCA 1997

As a Sole Trader Drawings are not tax deductable expenses.

Here are some simple examples.

Business A                                                   Business B

Sales           €100,000                       Sales                   €100,000

Expenses     (€60,000)                      Expenses              (€80,000)

Drawing       (30,000)                        Drawings               (15,000)

Left In Bank          €10,000               left In Bank           €5,000

We have two businesses, in Business A the owner has drawings of €30,000 and in business B drawings were €15,000.

Both businesses have funds in the bank at year end.

A Sole trader is only taxed on the profits their business makes at the end of a financial year.

Therefore the following Case I profit will look like this,

Business A                                                   Business B

Profit           €40,000                         Profit           €20,000

Tax Note 1      € 10,576                      Tax note 1      €2,160

Points to note,

Business A has €10,000 in the bank and now has a tax bill of €10,576 for the year, and may have to pay preliminary tax for next year, in theory this could total €21,152. This could but severe pressure on the business to pay.

Business B has €5,000 in the bank and can cover the tax bill. With a preliminary tax payment this business still has enough cash in the bank to cover its tax bill.

Note 1

Assuming a single individual, subject to tax at standard rate €33,800 and marginal rate, normal USC rates and PRSI @ 4% applies.

Conclusion

You are capable to take as much drawings out of your business as you want, however consideration should be taken to your cash flows and your tax bill requirements. There is nothing more stressful than getting a tax bill and not having the funds to pay it. Having up to date financial information can help business owners decided how much they can afford to take from the business without putting the financial stress on the business owner.

Planning for something is better than reacting to something.

I hope you find some benefit from this post.

Be sure to make contact if you got benefit from this post or have a question?

Regards

Martin

www.mbaccountants.ie

Facebook https://www.facebook.com/MBcharteredaccountant/

Follow me on Twitter https://twitter.com/fit_funds

The post As a Sole Trader. What money is mine and what belongs to my business? appeared first on Starting a Business in Ireland | Help for Ireland's Entrepreneurs | Start Up Your Own Business.

One of the easiest ways to gain a competitive advantage on your competitors is to get better with daily business operations and master them. If you can optimise, automate, and master everyday business processes, you’ll find yourself doing better than most of your competitors.

Retailers struggle managing daily tasks. Master it to gain competitive advantage.

If you just started a new retail business, using SAP Business One will help stand out from the crowd and get better with managing your business.

This is, however, just one benefit of using SAP B1. It helps your new retail business in several ways across all verticals.

Here is a sneak peek into what it can do for you.

Is SAP Business One for you?

Before you can even think of using SAP B1 for your business, you must figure out if it is really for your retail business and it is really the best solution available.

Ask yourself following questions.

1. Are there multiple teams in your organization?
2. Do teams find it hard to communicate and share information?
3. Is it a pain to streamline tasks and projects?
4. Do you’ve multiple people working on the same projects?
5. Do you’ve to ask for reports and data for analysis from multiple teams and individuals?
6. Managing business activities and integrating information is complicated?

If the answer to all of the above questions is a loud Yes, SAP Business One is for you.

How it will help your new retail business

Let’s dig a bit deep and see how it will help your retail business in reality.

1. Business process integration

Imagine you’ve two (or even more) employees working on the same task and you only find it when at the month-end they come up with similar reports.

Imagine the resources wasted.

SAP Business One helps you streamline and integrate business processes. It helps you save resources. You and your team know what they have to do, how it has to be done, and they can monitor the progress in real-time.

All the business processes are integrated.

A new customer order will show in the sales immediately, the inventory will be recalculated, the financial statement will be adjusted, assets will be revalued, cash flow will be updated, and customer account will be created and updated.

Imagine doing it manually.

It will take at least a couple days for the order to reach finance department and warehouse where you then realize that you’re out of stock.

Nothing like this happens with the SAP B1. Everything works smoothly and the entire business operates as a single whole.

2. Automation

Don’t be afraid of automation.

In fact, putting your retail business on automation from day one will give you a jumpstart. If your business’s routine daily processes run on autopilot, you’ll have all the time to deal with strategic business processes.

SAP B1 has the power to put your business on automation. Starting from customer order processing to inventory management to order fulfillment to order shipping to customer services to billing to financial management to reporting and analysis.

You just name it.

It covers everything.

3. Easy decision-making

Making right decisions at the right time is crucial for retail businesses. Not just the decision has to be right but it must be timely.

You need to data and reports to make decisions.

SAP B1 helps you in making right timely decisions in two three ways.

1. It generates meaningful reports automatically on the basis of data that it deals with on daily basis.
2. Workflow-based alerts help you make decisions on the basis of specific business events such as reduction in conversion rate.
3. It keeps a record of exceptions and creates reports automatically. For instance, if sales increased significantly on any given day, SAP Business One will generate a report on the same and you’ll be notified. You can then take necessary action accordingly.

Since analysis and reporting are real-time, therefore, you don’t have to wait for your reporting and analysis team to create a meaningful report for you. It is always there in the system.

This allows making decisions right on time when they’re needed.

4. Easy-to-implement and use

SAP Business One is affordable, easy to implement, and easy to use complete business management system.

The transition doesn’t take ages, it is instant. Once it has been installed and implemented, your staff doesn’t need the training to get started, it is simple and extremely easy-to-use. Even if they need training, there are free online training resources available to choose from.

Here is a list of some major features that make SAP B1 user-friendly as well as business-friendly.

• It has a simple user interface that’s intuitive in nature. It is just like using Windows or any other software. The user-interface makes it super-simple for your employees to get a hold.
• It needs minimal maintenance and modification. Once it has been installed and implemented, you’ll rarely have to modify it.
• Managing and administrating the entire SAP system is quite simple that reduces the cost as well as helps streamlining the operations to a significant extent.

5. Improve customer satisfaction and relationship

Making your customers happy is a piece of cake with SAP Business One. It deals effectively with Customer Relationship Management by monitoring and understanding your customer needs based on demographics, buying patterns, and other variables.

Based on the advanced reporting on customer needs and behaviors, you can take steps to make your customers happy. Not just happy but you can increase revenue per customer and at the same time, convert customers into loyal customers.

Planning to start a customer loyalty program?

SAP Business One allows you to create and implement customer loyalty programs for your retail store. This helps increasing revenue and in building strong relationships with your customers.

This is just a basic overview of how SAP Business One will change the way you manage your retail business. Once you’re onboard, possibilities are endless.

The post How SAP Business One Can Help Your New Retail Business appeared first on Starting a Business in Ireland | Help for Ireland's Entrepreneurs | Start Up Your Own Business.

Startups and new businesses need an accountant too. Yes, you can manage your startup yourself but hiring a professional accountant has benefits beyond your expectations.

Over 40% small businesses reported that bookkeeping and taxes are the worst part of owning a business. In another study, 74% of business owners said that they have no clue how ghost assets impact their books while another 49% said they do not know what ghost assets are.

If you own a startup or planning to launch a new business, you need to hire a professional accountant.

1. Help in launching the business

An accountant hired in the early days of the business will help you make right decisions right from day one. He can help in laying a strong foundation of your business by choosing the most appropriate business model such as sole proprietorship or partnership or Limited Company.

Business owners normally do not have much idea of how to setup a business with strong financial foundation. Much of it is linked to the way you setup the business. An accountant will guide you what works and why you should do it.

2. Accurate financial forecasting

New businesses have to create forecasted financial reports for the first year where they have to report forecasted revenue, sales, expenses, and cash flows.

The progress and growth of your business depend entirely on these forecasted reports. Understating expenses will hurt breakeven and revenue for the first year.

Everything depends on the forecasted statements. There is no one better than an accountant who can forecast estimated budget and expenses.

3. Expert advice

Let’s admit it, not all the entrepreneurs are experienced. This is one reason why 50% of small businesses fail in the first four years.

Having an innovative business idea is one thing, but starting and running a business is another thing. There is a heck of a difference between the two.

You need advice. You need expert advice.

The best person who can guide you and your business is an accountant with right experience and skills. An accountant can give professional advice on pretty much anything and everything related to finance and accounting.

• Financial analysis for business planning.
• Which accounting software to use and why to use it.
• How to open a business account in a local bank.
• Guidance on which bank is most appropriate for your business.
• How to track and record expenses.
• Guidance on how and why to keep business and personal accounts separate.

4. Minimizing tax

Yes, accountants help reduce tax. There is nothing illegal here. They do it legally.

Your accountant will analyse your financial statements and will ensure that you are getting all the possible allowances for tax relief. You have no idea how much you can save with the help of government and third-party allowances.

Besides, the accountant will try to make your business eligible for more allowances and government reliefs. This is one area where nobody can beat an accountant. I mean they know how to save money for their business.

While your accountant is busy minimizing tax that you pay, your job is to make sure that he is not misinterpreting the financial reports to gain financial benefits. This should be avoided.

Stay in touch with the accountant so as to ensure he is following the standards and not trying to save money above and beyond what your business is actually eligible for.

5. Raise funds for your business

Perhaps the best benefit of having a professional accountant in the team is that he can help you raise money for your business without any risk to your business.

For instance, if your business is short of liquid cash and needs money urgently, an accountant can help issue an overdraft or crowdfund a specific business unit or a new product.

Of course, this is something that you can do yourself but an accountant will do it professionally. He can create reports and show you how much exactly you need, how quickly you can repay it, and how the funds will be used to ensure you do not run short of cash again.

This is something that entrepreneurs cannot do.

Accountants are also helpful in getting loans and finding angel investors for your business. This is specifically helpful in the early days of the launch. Investors are not interested in your business idea or product, they are interested in profit.

They will ask you one thing, what’s in it for them.

An accountant can prepare budget reports and forecasted income report for interested investors. These reports show them how the money will be used and how quickly it can be repaid.

If you are interested in raising funds for your startup, hire an accountant.

6. Prepare for audit

Yes, accountants help businesses prepare for the audit.

Not having an accountant can put your business in trouble. Even a slight mistake in financial reporting (unintentional) will influence all the reports and this is suicidal for two main reasons.

First, it will show incorrect reports and accounts.

Second, in the case of an audit, you might be fined for misreporting information and accounts.

Your accountant will follow all the standards and laws to prepare financial reports for your business. Just in case if an audit is necessary, you have to do nothing. Your accountant will handle it.

7. Business growth

Accountants are exceptionally helpful in identifying growth areas by analyzing cash flows, pricing strategies, and inventory.

For example, if your business needs cash in hand for setting up a new business unit, your accountant can come up with a business financing plan or maybe he can help you get rid of old stock that is of not much use.

Business growth is impossible without guidance and advice from a finance expert. An accountant is the best financial expert.

Conclusion

An accountant is sure to help your new business grow. Not just in its early days but he will keep helping your business for the years to come.

Start looking for a skilled accountant to make your business shine.

Leslie writes for Gilmour Co a small business accounting practice, that help businesses with financial planning, tax, and VAT.

The post How an Accountant Can Help With Your New Business appeared first on Starting a Business in Ireland | Help for Ireland's Entrepreneurs | Start Up Your Own Business.

When you set up a company and it is your intention to employ staff, you must first ensure that you are registered for Employers PRSI with the Revenue Commissioners. It is now quick and easy to register online via the Revenue Online Service (ROS).

When you take on that first employee it is important to get their P45 from their previous employer and then register them as your employee online. Once you have done this, Revenue will make available to you the employees tax credit, bands and USC rates through ROS.

All modern payroll systems will allow you to connect directly with ROS and import the employee’s relevant information. It’s important this is done correctly from the beginning to ensure both you are your staff are paying the correct tax.

You will be obliged to return to Revenue the payroll taxes deducted from each employee online via a P30 return. These returns are periodic in nature and are due for filing and payment by the 23^rd of the following month (i.e. your January 2015 P30 will be due for filing and payment by 23 February 2015).

You will also be obliged to file a year end P35 return with Revenue. This form gives details of all tax deducted from your employees during the year. Specifically it details all Income Tax, Employers and Employees PRSI and the Universal Social Charge.

Late filing and payment of P30 and P35 returns may attract penalties and interest from Revenue, so it is crucial they are paid on time.

Tax Saving tips

If your employee travels to work by bike, you can purchase the bike on their behalf and deduct this from their payroll. The employee’s taxable salary is reduced by the cost of the bike and potentially saves them up to 51% (For an employee earning under €70,044). The amount of Employers PRSI paid by you will also be reduced.

Staff who commute to work can save up to 51% tax on the cost of their annual travel passes with CIE, Bus Eireann and Iarnrod Eireann. This is similar to the bike to work scheme in that the employer needs to purchase the ticket and deduct from the employees taxable pay. Employers PRSI is also reduced.

Government Schemes

• Job Bridge Scheme –the National Internship scheme provides work experience opportunities for unemployed people. In order to avail of this you must first register with Job Bridge online, advertise the position you require to fill and the schemes will send you the relevant CV’s. Participants in the scheme will be offered an internship of 6 or 9 months with a host organisation. If they take up an internship they will keep their social welfare payment and will get an extra €50 per week.
• Jobs Plus Scheme – This is an incentive from the Department of Social Protection to encourage and reward employers who offer employment opportunities to the long term unemployed. Grants of €7,500 and €10,000 are available.

This Blog was written by our Good Freinds at Tax Assist Accountants – To Book Your Free 1 hour consultation with a local Tax Assist Accountant Click Here

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but it doesn’t have to be all pain and no gain…Here are some tips to take the sting out of a necessary business function, and using your accountant as a service provider to its maximum potential. Gone are the days when you only heard from your accountant when they were chasing cheques or an audit was due. In today’s difficult climate your accountant can play a pivotal role in your company’s success. So for those of you starting up a business, here is a checklist of what you should expect, and if your not getting it… its time to make some changes.

What is the Role of the Accountant?

• Operational – dealing with the day to day financial transactions of the business.
• Strategic – involved in long term investment decisions of the business.
• Advisory – as needed sounding board to bounce ideas off.
You should be able to go to your accountant with ideas, queries, thoughts and opinions. Their job is to advise and assist. Remember- a successful business is a successful client for them so they should be taking an active interest above the mundane details. Starting up a business from scratch is a tricky concept, and many ventures do not make it past the starting line because of certain technicalities. Your service providers are hired to take the weight off the creative centre of your business – you.

Understanding the Needs of Your Growing Business.

Company structures change from year to year, and start-up companies often get bogged down by the legal aspects of the development stage. Your accountant should be on hand to take this burden off your shoulders, so you can get on with growing and prospering. This includes the statutory burdens of increasing legal responsibilities on directors and owner/managers as a company expands, taxation and reporting legislation, as well as the practical needs of real-time accurate financial information on business performance, costing and pricing of products & services, risk and return on incremental growth and investment.
People start up a business because they are passionate about an idea, product or service. Your accountant should take the headache out of your finances so you can focus on that great product and getting it to market.

What can the Accountant do for your Business?

Your accountant should provide you with monthly/quarterly accounts, detailed margin analysis, and comparisons against budgets. Timing is important, some businesses are seasonal and their accounts and budgets will reflect this. As well as these core documents your accountant should provide you with capital investment information, and deal with banks and other lenders on your behalf. And of course, dealing with the revenue and the CRO (company registration office) to ensure the smooth growth of your company.
Start to see your accountant as an integral part of the business, build working relationships with those that have the resources you need and don’t be afraid to question each and every aspect.

Working With Your Accountant

How do you build these functional relationships so you can get the information you need?
Here are the steps you can take:

• Insist on full jargon-free explanations of all financial information no matter how small. There is no point leaving a meeting confused by the terminology, and it is far better to ask your accountant these details rather than admit to a prospective partner that you do not know the lingo!

• Be clear about what the key cost and income drivers are within the business and ask to have a simple financial recording system to monitor these key figures.

• Be willing to keep detailed records of all transactions in the business.

• Be willing to set annual / quarterly targets and monitor progress with your accountants help

• Provide the accountant with accurate stock/WIP figures for management accounts.

Include your accountant in the early stages of the decision making process to avoid later conflicts, and keep the accountant informed of all developments or changes within the business. Accountants know their figures and they know the rules, follow their advice but let them know your end goal and where you want the business to be. If you want an efficient system to continue into the successful growth of your company, invest time and resources now in a full recording systems for your financial information and have your costing and pricing structure reviewed regularly to adjust any changes.

By following these simple steps you and your accountant should be able to work together to ensure the success of your start-up business. An accountant can be a business partner for life; it should be a long-term collaboration so choose the right one for you and get the most from their services.

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In a lot of cases, the business owner will want the employee to be treated as a self employed individual because:

1) There will be no liability to Employers PRSI. In some cases employer’s PRSI can be as much as 10.75% of the gross salary of the employee.

2) There is no exposure to unfair dismissal which means that the individual can be hired and fired without any issues arising. There is no obligation to pay a wage every month as it will be linked to performance.

3) There is no requirement to pay holiday pay, sick pay, etc

For the employees who are classified as self employed, not only is there no job security but also there is a lessor degree of social welfare benefits available to them should they become unemployed.

Employees pay tax under the PAYE system while self-employed subcontractors pay tax under the Self Assessment system.
Whether or not a person is classified as an employee or self employed is a question of fact.

He/she is an employee if some or all of the following apply:

Is under the control of another person who directs as to how, when and where the work is to be carried out.
Works set hours or a given number of hours per week or month.
Does not supply materials for the job.
Does not provide equipment other than the small tools of the trade.
Is not exposed to personal financial risk in carrying out the work.
Receives a fixed hourly/weekly/monthly wage.
Is entitled to extra pay or time off for overtime.
Is entitled to sick pay.
Receives expense payments to cover subsistence and/or travel expenses.
Supplies labour only.
Cannot subcontact the work.
Does not assume any responsibility for investment and management in the business.
Does not have the opportunity to profit from sound management in the scheduling of engagements or in the performance of tasks arising from the engagements.
Will normally be covered under the employer’s public liability insurance.
Works for one person or for one business.

He/she is self-employed if some or all of the following apply:

Has control over what is done, how it is done, when and where it is done and whether he or she does it personally
(In the construction sector for health and safety reasons, all individuals are under the direction of the site foreman/overseer. The self-employed individual controls the method to be employed in carrying out the work.)
Controls the hours of work in fulfilling the obligations of the contract
Provides the materials for the job
Provides equipment and machinery necessary for the job, other than the small tools of the trade
Is exposed to financial risk, by having to bear the cost of making good faulty or substandard work carried out under the contract
Costs and agrees a price for the job
Receives an agreed contract payment(s) without entitlement to pay for overtime, holidays, country money, travel and subsistence or other expense payments
Is free to hire other people, on his or her terms, to do the work which has been agreed to be undertaken
Assumes responsibility for investment and management in the enterprise
Has the opportunity to profit from sound management in the scheduling and performance of engagements and tasks
Provides his or her own insurance cover as appropriate e.g. public liability insurance, etc
Owns his or her own business
Can provide the same services to more than one person or business at the same time

It should be noted that:

A worker paid by results (piece worker, commission, by share) is not automatically a self-employed contractor;
The fact that an individual has registered for self-assessment or VAT under the principles of self-assessment does not automatically mean that he or she is self-employed;
A worker who is a self-employed contractor in one job is not necessarily self-employed in the next job. Each job must be looked at separately.

Employee
If the worker engaged by the principal contractor is an employee, the principal contractor must operate PAYE/PRSI on any payments to him or her. This can prove extremely costly is the revenue insist on emergency tax and grossing up the employee’s salary.

Self-employed
Where it has been established that a contractor in the construction, forestry or meat processing industry is self-employed, Form RCT 1 must be jointly completed.

If you are unsure of whether you should be classified as self employed or an employee then do get in touch with us at info@irishaccounts.ie.

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* The company must be a Private Limited Company;
* The amount of turnover of the company must not exceed €7.3 million;
* The total assets of the company are less than €3.65 million at the end of its financial year;
* The average number of employees must not exceed 50;
* The company must not be a parent company or a subsidiary company;
* The company must not come within one of 19 classes of companies listed in the Second Schedule to the 1999 Act; (Generally banks and companies that are under the control of the Financial Regulator)
* The company’s annual return must not be late in either the current or the previous year;

Late Annual Returns

The condition which generally causes the most trouble is where a company is late filing of it’s annual return. This will result in the company loosing its audit exemption status for the current year and also for the next year. The CRO are very strict in this regard as they are unable to waive the exemption as a matter of law. There are also late filing fees of €100 and €3 per day for every day the return remains outstanding.

Ways to help you avoid loosing your company’s audit exemption status
1) Ensure that the company’s Annual Return Date is the maximum 9 months after the company’s year end.
2) Try to get the accounts of the company prepared as early as possible to avoid unnecessary delays.
3) Filing your annual return online gives an additional 28 days to file the company’s accounts.

Loss of audit exemption can prove to be expensive as a significant amount of additional time will be required to complete the accounts of an audited company as opposed to an audit exempt company.

If you wish to discuss any of the above do get in touch with us at info@irishaccounts.ie

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