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:
- Value Added Tax (VAT) – a tax on sales, offset by the VAT you pay out on purchases
- Employment taxes – Pay-As-You-Earn Income tax (PAYE) / Pay-Related Social Insurance (PRSI) / Universal Social Charge (USC)
- Income Tax (sole traders and partnerships) or Corporation Tax (companies)
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.