sole trader/freelancer

I have recently started working for a company who are paying me into my hand by cheque. I have to sort my own tax out but have no idea how to go about it. Do I to register myself as a sole trader/freelance worker with the Revenue? Is there a form for such a purpose? Do I have to fill in a tax return for this year (I started in October)? The Revenue site isn't very helpful at all so any help would be greatly appreciated.

Are you for all intents and purposes an employee rather than a contractor? On what basis (employee or contractor) was the position accepted? Do you have a contract of employment? Note that an employer cannot avoid their obligations by ostensibly entering into an independent contractual relationship if the situation is actually a de facto one of an employer/employee relationship. If you were not expecting to end up in an independent contractor situation and are not prepared for it then you should think long and hard about your situation and perhaps seek independent, professional advice.

Sorry, I probably didn't explain this too well. I've to submit an invoice at the end of each month for the hours I worked but I am not an employee of the company (although I do come in to work every day). However, I work my own hours and am hoping to take on some more work from another company, so I am a freelance worker. Basically, all I want to do is work legitimately and pay my taxes.

Tommy McGibney's [broken link removed] might be of interest to you so. You might still need professional accounting advice though.

thanls clubman - greatly appreciated!

ClubMan said:

Tommy McGibney's [broken link removed] might be of interest to you so. You might still need professional accounting advice though.

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Actually, just read that and it's not much use to me - I really don't want to start my own business. I'm also not really in a position where I can afford porfessional financial advice. I didn't think legitimately freelanceing would be this difficult.

If you freelance then surely you are, by default, a sole trader so much of what's in that guide is indeed relevant to you?

Hi MrsLemon - You may well need professional advice. As Clubman has pointed out, the fact that you have reached this arrangement with your employer does not mean that Revenue will stand by. They may well deem you to be an employee.

I think you'll really have to consult an expert in this area. Find an accountant who works with other contractors in your area.

I think the main issue here is whether you have a VAT issue in 2006. You may have if this and similar income is over €25k. Its likely that the organisation you are providing services to may have it structured that you are a contractor. Its really back to them first.

RainyDay & Clubman are right, if you continue to work with them as you are with them being your only source of work and particularly going into their place of work to carry it out, the Revenue will deem it as an employer / employee relationship even moreso since you have not set up a limited company. Its them that should be worried on this point.

mrslemon, don't mind the scary warnings that revenue will have a problem with your situation - they wont. There's nothing at all wrong with what you are doing.

As WizzardDr says, the first thing to do is to register with revenue for VAT (presuming you expect to invoice over 25K). You have to do this immediately as you need to complete a VAT3 every two months. This is very straightforward and something you can easily do yourself.

Because of the way preliminary tax works, you have a longer window to organise your tax situation but I think you will have to pay an accountant at least to sort out the first year as you'll have the complication of a tax year made up in part by a PAYE period and part by a self assessment period so the calculations will be tricky. You should be able to get an accountant to sort everything out for you for abou 1k plus VAT. Ring around.

darag said:

mrslemon, don't mind the scary warnings that revenue will have a problem with your situation

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What "scary warnings"? These?

RainyDay said:

As Clubman has pointed out, the fact that you have reached this arrangement with your employer does not mean that Revenuewill stand by. They may well deem you to be an employee.

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Kitty Kat said:

if you continue to work with them as you are with them being your only source of work and particularly going into their place of work to carry it out, the Revenue will deem it as an employer / employee relationship even moreso since you have not set up a limited company.

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I don't consider these "scary warnings" but simply some prudent advice about possible issues to consider about this situation.