Starting out self-employed

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lyonsa3

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My wife is going to work part time from home earning about 7,000 euro p.a. She need to be self employed to do this work. What we are wondering is how do we go about setting her up as self employed and paying tax and getting her tax credits. At the moment we a jointly accessed as i'm the only earner. Any help out there greatly recieved
 
Re: satrting self employed

Hi,

Your wife needs to fill out a Form TR1, the link is below and she needs to submit same to your local tax office.

www.revenue.ie/forms/formtr1.pdf

As you are jointly assessed, you both receive the married tax credit, your wife will be unable to avail of the PAYE credit as she will be self employed. She will need to submit a Form 11 then in 2008. Hope this helps.

Jockey
 
Re: starting self employed

thanks for that.

I've looked at the revenue website and can find very little info on being self employed. Might seen as a studit question but is starting being self employed the same as starting a new small business? Only info I can find is "Starting in Business-A revenue Guide" and "VAT for small Businesses".
If this is the case does she have have to register for VAT or anything else?
 
Re: starting self employment

Hi,

Basically being self employed and starting a new business are more or less the same. If your wife will only be turning over €7000 then she is not obliged to register for VAT as this is well below the threshold. The revenue website wouldn't be the best place to research being honest, try www.fixmytax.com for more information.

Jockey
 
Re: satrting self employed

Just to be clear - you won't both receive the full married tax credit - but you can allocated it between you any way you wish, as you can with any of your tax credits if you choose to be jointly assessed.
 
Thanks for all the info. I'm starting to get a better picture now.


"As you are jointly assessed, you both receive the married tax credit, your wife will be unable to avail of the PAYE credit as she will be self employed."

As quoted above in a past message, if I'm using the full marriage tax credit and my wife doesn't get her own PAYE credit (as she will be self employed) does she thereby start paying tax on the very first cent she earns?
 
Only people in PAYE employment can avail of the PAYE credit, so self-employed people (even if they pay tax under the PAYE system) cannot avail of this.

The married tax credit is a seperate issue. You can allocate it between you any way you like. So if you keep all the credits, yes, your wife will indeed pay tax on the first euro she earns. She will pay tax at 20% on the first 25k, unless your taxable income is less than 43k, in which case she can add the difference between your salary and 43 k to her 20% band (in other words, if you were earning 40k, she could have up to 28k taxed at 20%.)

She'll also pay PRSI and health levies, of course, at 5% as a self-employed person
 
There doesn't seem to be a big incentive to starting to work for yourself if this is the case. She will be only earning approx 150 euro a week. The only reason is will be working for herself is that the company she works for are insisting on it. As the pay is only about 10 euro an hour, she will be only getting 7.5 euro after tax. Doesn't seem worth all the bother cosidering she will have to buy a computer and equipment to start off.
Thanks anyway for all the info.
 
lyonsa3 said:
The only reason is will be working for herself is that the company she works for are insisting on it. As the pay is only about 10 euro an hour, she will be only getting 7.5 euro after tax.
Click to expand...


This would worry me.... sounds like a way of avoiding responsibilities adn may be illegal. Your wife will lose SW entitlements in the long run as S/E yet it sounds like company still directs her in her "self-employment"....
 
Remember as you are currently claiming all of the personal tax credits (married couple), you can always allocate some of this credit to her. Not that it will make any difference to your combined take-home pay, but at least your wife's paycheck will be larger and she might feel better. But I agree with the above post - check carefully that this company can legitimately treat her as a contractor and that she is not a de-facto employee.

Don't forget your wife will be able to deduct business expenses. She can claim capital allowances on the computer and equipment. See this thread.
 
Just a quick query on the deductable business expenses. If she earns 7500 euro p.a. the tax will amount to 1500 euro (20%) and PSRI of 150 euro (2%). If she needs to purchase a laptop costing 1500 euro will she be able to right off her total tax or will it be only 20% of the cost of the laptop (300 euro). How does VAT come in to this purchase? Does she need to register for vat?
 
The laptop will be written off at 12.5% per year over 8 years. If she registers for VAT, she claims back the VAT portion of the computer purchase and writes off the remainder over the 8-year period. She will have to charge VAT on her invoices, and return it to the Revenue every two months (minus the VAT she pays on business expenses).
 
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