Dilemma sole Trader or LTD co?? - urgent decision

P

pennyboy1001

Registered User
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I have a rapid decision to make regarding whether to go as a sole trader or a LTD company.I'm working full time as an engineer earning 40,000E/year and developing a business on the side.I have registered the business name only. In the past week i have been offer a project worth 10,000E. I expect to turnover another 5 - 10k this year and 10 - 20 in 2009.
My doubts are about taxation on extra earnings. What would you do in this situation? It is easier to start as a sole trader but my earning will all be taxed at 40%,is this correct? whereas if i set up a LTD i will only be paying 12.5%.
Any insight into my decision greatly accepted
Penny
 
pennyboy1001 said:
but my earning will all be taxed at 40%,is this correct? whereas if i set up a LTD i will only be paying 12.5%.
Penny
Click to expand...

The earnings will only be taxed at 12.5% if they REMAIN in the company. If you want to draw them out then you will have to pay your 41% tax etc.

A fast decision on whether to go limited -v- sole trader is a bad decision. There are many threads on this forum on this topic, search a few. However you need professional advice where this can be explained face to face.
 
Once again I agree you need professional advice, but it sounds like there is no advantage to you registering either as a sole trader or as a Ltd. Co. in the short term and for the next two years at least you will be below the VAT registration threshold.

THis means you can't claim any VAT you pay out but neither can you charge VAT on goods or services sold.

Stick the extra income on your Form 12 tax return before the dead-line and pay the resultant tax and PRSI bill. Sometimes, subject to proper professional advice, it can be worthwhile keeping things simple until you see how it pans out.
 
Thank you both for replys,
I have spoken to the company i'm doing this 10,000Euro project for and they need me to supply them with a VAT no. Can I acquire a VAT no by simply fill out the RT1 form?
Penny
 
They only need a VAT number if you are going to charge them VAT so they can reclaim it.
 
look up the vat thresholds on www.revenue.ie if you are only supplying the amount above then you will not have to register for vat and you can explain this to who ever you are selling to. you would also have to put your pps number on any invoice. i would definatley recommend against setting up a limited company as this may opnly be a short term thing. you should get professional advice. ask your family and friends if they can recommend an accountant. a lot of smaller accountants wouldnt charge for an initial meeting to discuss your affairs.
 
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