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What are my legal and tax obligations?

What are my legal and tax obligations?

Every business – no matter what its legal structure – is required to register for any applicable taxes with the Revenue Commissioners within 30 days of starting to trade.

The registration form allows you to select the taxes you are registering for – and the date from which you want to register. In most cases, the dates for all the taxes will be the date you start in business – but if you don’t have any staff and don’t expect to be able to pay yourself any salary for the first few months, you might not register as an employer until the need arises later.

The main taxes applicable to businesses are:

If your business is registered for VAT, you must charge VAT at the correct rate on all your sales. You are allowed to deduct any VAT you have paid on purchases for your business from the VAT on your own sales before you pay it over to the Revenue Commissioners.  You must complete and submit VAT return forms every two months, unless otherwise advised by the Revenue.

If you are registered as an employer, you must deduct Income Tax on a pay-as-you-earn (PAYE) basis from the salaries you pay your employees (including yourself if you are a director of a company). In addition, you must deduct Pay-related Social Insurance (PRSI) and the Universal Social Charge (USC) and add an employer’s PRSI contribution. You must complete and submit PAYE return forms every month, unless otherwise advised by the Revenue.

Last, after the end of the year, you must calculate the profit (hopefully!) earned by your business during the year, adjusting it for the differences between accounting profits and taxable profits (leave this to your accountant – it’s his/her job!), and pay Income Tax (sole trader or partnership) or Corporation Tax (company) on the total of the taxable profits.

Next Steps

Your first step is to register for whichever taxes apply to your business – check with your accountant.

Next, register with the Revenue Online Service (ROS). This allows you to interact online with the Revenue, submitting returns, making payments (for which you get a few extra days leeway over paper returns), checking amounts due etc.

Third, apply for a tax clearance certificate. This important document certifies that your business is up-to-date in its tax affairs. Without it, you will not be able to draw down grants from State funding agencies, or get paid by State bodies.


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