Starting up online business while working as a PAYE worker

Hi

Very new to the forum but looking for advice please.

I work full time in the IT industry and have being seriously thinking for a while now of starting up an online business.

Not sure what the course of actions are though.

I understand i have to register a business name.

But does the fact that i work full time restrict me in any way or require me to do some additional admin work.

Any help appreciated.

I have a similar query as regards this question i.e. what are the legal implications of incorporating a company or registering a business name whilst employed as a full-time PAYE worker? If my Company/Business is generating revenue whilst I'm a PAYE employee, then what, if any, claims would my employer have to my Company/Business?

In response to ITguy's question, I would have to say that starting up an online business is very straightforward and I have done this both for myself and others. My course of actions involve the following steps for my clients and obviously my own projects:

Graphic Design:
1. Finalise Branding & Colouring
2. Logo
3. Landing/Splash Page
4. Finalise Business Card
5. Corporate Identity Kit: Edit and Format Corporate Document Materials such as Client Contract Agreement, Sales Flyer and Client Project Plan

IT:
1. Website Build & Graphic Design
2. Domain Name Registration - (.ie & .com)
3. eBusiness Hosting
4. eBusiness Analytics
5. eBusiness Email Addresses
6. eBusiness Commerce store
7. Integration of Social Media on the Site

Product Management:
1. Shared document online that tracks the progress of your eBusiness Incubation
2. Monthly email updates with optional monthly meetings
3. Technical and Business Support via Email and Phone

SEO/SEM/Monetisation:
1. Integration of 5 most popular Social Media Resources
2. Marketing Products/Services across Social Media Platforms
3. Online Branding/Marketing of your Product/Service
4. Online Traffic generation
5. Discussion of over 150 methods to generate online revenue from your eBusiness

PR:
1. Social Media Releases to PR Professionals and Journalists
2. Provide a comprehensive list of all reporters in your area on Social Media
3. Ability to pitch to a distribution list of PR Professionals and Reporters
4. Setup of Online Monitoring System of terms & phrases mentioned online related to your industry

Sales & eBusiness Development:
1. Ongoing Sales Lead Development & Validation
2. Ongoing Click-through Sales Conversion Work
3. Build a subscriber/customer list

Customer Services:
1. Response to Customer enquiries within 24 hours
2. Compilation of feedback from customers to the Client

Research & Development:
1. Informational Content Updates related to Product/Service
2. Informational eBook products provided (relevant to your niche)
3. Daily informational updates on specific product/services niche
4. Online Feedback regarding your Product/Service

Hope that helps.

Thanks.

Hi ITGuy and Ivorystraws

In response to the first query there is no legal or other restriction on setting up a business while in full time employment per se. You should however check your current contract of employment which may restrict your activities, for example some contracts don't allow other interests or directorships but this should be job-specific.

The steps to setting up a business from the admin/legal/financial side would be as follows:
1 - Decide on legal entity e.g. sole trader or limited company - there are pros and cons to both. In essence compliance for a sole trader is easier and cheaper but there are significant advantages to having a company depending on the facts
2 - Set up the company (if that is decision) and get a bank account
3 - Get registered for taxes (different forms depending on decision from 1) - however VAT registration is not required if turnover is less than €37500 in 12 months
4 - You can register a business name as either sole trader or company. This is not required but a good way to protect the name and ensure the .ie domain

However before rushing headlong into setting up a company you should assess the financial potential for the business and speak to any current or future customers as this will help you answer the above questions. Also I would say discuss the above with an accountant to make sure that what you are doing makes sense.

Best of luck and if you want further information or a no strings chat about the above get in touch.

Regards
Gus

Hi Gus,

Thanks for your response and helpful information. I have done all of the steps you have outlined myself and I do have some comments/further questions, namely:

1 - If the legal entity decided upon is sole trader (approx cost 20 euro via CRO), that just means you have to reveal you additional income to the revenue and be taxed accordingly at the end of the financial year. However, if the legal entity is a limited company (approx cost 80 euro if Memorandum and Articles of Association are submitted to CRO and approximately takes 3 weeks), that means you could have a potential 18 month timeline before any accounts have to be submitted for that company (assuming a B1 form is submitted after 6 months) plus there are significant tax advantages.
2 - If a Company is setup, is there a legal requirement to have a bank account (as online businesses commonly deal via online accounts)
3 - Registering for taxes is fine but I personally would avoid registering for VAT assuming of course that turnover is within limits
4 - Registering a business name as either sole trader doesn't necessarily protect the business name does it?

I would advise that before rushing headlong into setting up a company, basically to road test the service/product as it's the most accurate way to assess the financial potential for the business. Surround yourself by like minded people and get as much feedback from as many sources as possible but do take action, one way or the other and avoid the usual "nay-sayers" or "Doom and Gloomers" as there's no shortage of them in Ireland currently.

Thanks.

Hi Ivory Straws
For self-employed there is no requirement to register a business name but it is inexpensive at €20. You are required to submit a tax return in the October of the following year (e.g. 31 October 2010 for 2009) and you must declare your total income as opposed to additional. You will of course get any credit for tax already paid.
You can go maximum 2 years before filing accounts with a company by filing a B73 but Revenue will still look for returns. Currently any company that started trading in 2009 or 2010 has an exemption in tax for 3 years.
No legal requirement to have a bank account but online bank accounts are the same thing. Unlikely in this day and age to operate a business without some kind of banking facilities.
VAT registration can be advantageous, even if below threshold, if you have significant inputs e.g. computers, and sell to VAT registered businesses. If you don't register makes your product cheaper to non VAT registered e.g. general public. Thresholds are low though for any worthwhile sustainable business.
Registering a business name is a good first step in protecting but not fool-proof.
I agree with your last point about asking for lots of feedback and going for it.

Regards
Gus
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Hi Guss,

Thanks for posting that information.

As regard self-employed, the information you provided is specifically for Sole traders. What advantages, if any, would you see to forming a partnership?

2 years is a good head start and lessens the costs and administrative overhead of preparing and filing accounts. For an SME, what are the basic data that would be required to be submitted/filed, are these specific to the Irish tax system (i.e. can they be outsourced) and what software would you recommend for a typical SME of less than 5 employees?

Can you ploease explain further what you mean when you detail that "You can go maximum 2 years before filing accounts with a company by filing a B73 but Revenue will still look for returns" i.e. what returns and at what stages?

When you state that "Currently any company that started trading in 2009 or 2010 has an exemption in tax for 3 years", do you mean that no tax is due from a corporate entity incorporated from 2009 onwards, for 3 years, regardless of profits or am I totally misunderstanding that response?

For online businesses, it is common to use simple payment processing options such as eCommerce shopping carts (endless variations) so would these be deemed online bank accounts? How can the money within these accounts be tracked by the revenue and is there a requirement to disclose this revenue if not based in Ireland?

Thanks.

Hi there
Partnerships avoid some of the compliance requirements of companies but in my opinion can be unwieldy when business partners move about or are in dispute. Companies are more flexible in this way and have better tax advantages if not dealing with property. A partnership is not taxed but the individual sole traders are taxed on their share of profits.

My firm has begun using xero, an online accounting system which you pay monthly and we find it works well for our own books and our clients. Equally depending on your size spreadsheets will suffice. Some client companies get their full accounting and tax service for as little as €75 per month.

Companies need to file a tax return with revenue within 9 months of end of accounting period or face a surcharge on their tax bill.

There was a general exemption to corporation tax for 3 years for new companies announced but the detail of this is disappointing and excludes lots of activities. Guide is available on revenue website Briefing 06 June 2010

Revenue don't need to track online accounts. Irish resident companies are obliged to declare worldwide income regardless of cash, bank, online etc.

Regards
Gus

Check if the contract for your day job has any restrictions on you taking on other jobs or working as self-employed.