Paye worker with additional Income

[NEVOSON]

I am a Paye worker and all my tax is taken care off through the company payroll. However, I now have an opportunity to make some additional income in my spare time by selling equipment I purchase myself directly to local companies.

How would I account for the tax on any profit I make on this additional venture? Thanks.

 

[Nige]

You should register as a sole trader (form TR1 from www.revenue.ie). Pick an accounting date, do up annual accounts and submit a tax return (form 12 or sign up for ROS) every year. Tax returns are due on 31 October of the following year and tax payments are made on this date too. The additional tax will be due at your marginal rate, plus prsi & levies.

Technically, the tax payment made on 31 October of any year is a preliminary payment for the current year. However, you can choose to base this on the prior year payment and pay the balance the following year. So, if you start business now, you won't pay any extra tax over until 31 October 2008 (though on this date you must pay your tax for 2007 and a preliminary payment for 2008).

As the tax is calculated on your tax adjusted profits (which can differ from your accounting profits) you should get yourself an accountant.

You will also have to consider registering for VAT.