# Me sole trader - hubby PAYE



## Joshnot (25 Feb 2008)

I'm thinking of setting up a homebased business which initally will not be making much profit (starting small).  I'm trying to find out how this will effect our joint tax situation.  I am currently PAYE but will fininsh work soon.  If I go ahead with the business idea and register for tax as a sole trader - how does this effect our credits etc and also if I am not generating much (if any profit) for the first few years will I have to pay PRSI from money I am not earning?  Sorry if this sounds a stupid question but have surfed around and can't find the answer.


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## sue97 (25 Feb 2008)

I did the same thing, left hubby with my tax credits.  Made a loss in the first year so did not pay any tax (got a refund of tax earned PAYE that year )

Year two made small amount of profit and paid paye and prsi on the money I earned.  

Not an expert but don't think you pay PRSI unless you make a profit (I did not in the first year).

On a different note, I only got an accountant after 2 years in business - big regret, it would have saved me huge worries and headaches had I got one from the start.

If you have any questions, give me a shout.  Not an expert but have done the same thing


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## podowd (26 Feb 2008)

You can allocate your tax credits and low rate threshold to your husband, just call the Revenue on their PAYE lo-call number to ask them to do it. At the end of the year you will submit a joint tax return and if you have made a profit you will then pay tax/prsi on your income from the business (this applies in year one only, for year 2 onwards you will pay preliminary tax on your profits but that's not an issue for now, your accountant will advise you on that).

Regarding the PRSI, you will pay 5% on your income/profits. If you are not making profits you will pay the minimum contribution of €253

As Sue97 says, very important to get an accountant as getting things wrong can be very costly. If you only have a very small business the accountancy fees should be relatively low and a good accountant will be worth the money -try and get one that has been recommended to you.

Regards

podowd
www.prima.ie


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## Graham_07 (26 Feb 2008)

podowd said:


> Regarding the PRSI, you will pay 5% on your income/profits. If you are not making profits you will pay the minimum contribution of €253


 
The PRSI rate is 3% subject to the minimum.  The additional 2% Health Contribution will only apply if income exceeds the relevant threshold.


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## Joshnot (27 Feb 2008)

Thanks for that guys - so from that am I right in saying that I will have to pay a minimum PRSI contribution whether or not I earn anything?


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## Graham_07 (27 Feb 2008)

Joshnot said:


> Thanks for that guys - so from that am I right in saying that I will have to pay a minimum PRSI contribution whether or not I earn anything?


 
No, PRSI for self-employed is only payable if income exceeds €3,174. Then it's 3% or €253 whichever is the greater. So at income of €2,500 theres nothing (under the €3,174) At income of €4,000 theres €253 ( the minimum as 3% of €4,000 would be under the minimum)  At income of €10,000 its €300 ( 3% of ) 

However there are other conditions, calculations and existing PAYE income on which PRSI already paid can affect the calculation too as the mimum may have already been exceeded. 

If you earn nothing then there is no PRSI. This does bring the issue of a self-employed person having possible gaps in their contribution record in years when they are loss making or under the minimum income.  Remember self-employed PRSI is only for pension benefits. It does not give any entitlement to unemployment or disability supports.


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## fintans (27 Feb 2008)

[
Remember self-employed PRSI is only for pension benefits. It does not give any entitlement to unemployment or disability supports.[/quote]

The above statement is not accurate - self-employed PRSI payment ensures *maternity benefit* entitlement - my self employed Sole Trader wife currently availing of this handy €280 for 26 weeks!!


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## Graham_07 (27 Feb 2008)

fintans said:


> [
> Remember self-employed PRSI is only for pension benefits. It does not give any entitlement to unemployment or disability supports.


 
The above statement is not accurate - self-employed PRSI payment ensures *maternity benefit* entitlement - my self employed Sole Trader wife currently availing of this handy €280 for 26 weeks!![/quote]

Correct, MB is included, but unemployment or disability are not.


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## Joshnot (28 Feb 2008)

thanks guys - my days of claiming MB are behind me though!  You have given me some peace of mind.  I am planning on attending a "Start your own business" course but just wanted clarification on this issue upfront.  Thanks again


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