Hi just wondering is there a good rule of thumb when paying your self a wage to put x amount aside for tax/prsi/usc - if you don't think you will go into the 40% tax bracket is 35% of your drawings enough to keep aside?
Hi just wondering is there a good rule of thumb when paying your self a wage to put x amount aside for tax/prsi/usc - if you don't think you will go into the 40% tax bracket is 35% of your drawings enough to keep aside?
That would be way more than enough, yes. If you're going to be paying tax at the standard rate you could set aside much less, but we would need an idea on your net profit.
If you mean that you are paying yourself a wage with payslips, etc then should you not be be deducting tax, PRSI and USC and paying it the following month?
If you mean that you are paying yourself a wage with payslips, etc then should you not be be deducting tax, PRSI and USC and paying it the following month?
Hi just wondering is there a good rule of thumb when paying your self a wage to put x amount aside for tax/prsi/usc - if you don't think you will go into the 40% tax bracket is 35% of your drawings enough to keep aside?
If you are self-employed, it depends on whether your business is VAT- and expense-heavy or not. As a general approach, as income comes in, make sure you put all VAT aside. For the first few months of of the year, take out your "salary" after expenses, making sure to retain (or put aside, if you use a separate account) approx 20% of income (after expenses) as tax. As the year goes on, move it up to 30% of after-expense income, and then when you (hopefully) hit the higher tax bracket, retain or put aside 40% of after-expense income as savings for income tax.
These are just rough figures, but if you are self-employed as a consultant they should work, and also work well for cash-flow as the year progresses.