What happens when you run a business as well as being in full time employment ?

I am more than a little confused in relation to tax due when someone is full time employed but also running a business.

Firstly I am employed on a full time basis and my wife is currently on maternity leave. We would prefer for her not to go back to work but would need to supplement my own income to pay the bills. We have a couple of ideas including some internet sites and some general services within the local community and are thinking of forming a partnership to act upon them.

A few points hit me off the top of my head and the revenue website isn't 100% clear here.
1) How are my tax credits etc handled - would they be left with the full time employment and then I would do a seperate return for the business - which would be for income less expenditure taxed at top rate ?
2) What is the PRSI situation - normal self employed people seem to pay a seperate class S prsi rate - would my rate with my employer need to change and would my wife be on class S ?
3) If my wife did not return to work I would get a certain amount of her allowances / credits but not all due to the paye credit and not all of the cut off being transferred. If she was to register as being self employed am I right in saying she could then avail of her full cut off and give some of it to me to offset against my full time employment. ( I currently have approx 32k for standard rate cut off which would rise to 41k if she wasn't working - if she registers as self employed can she take for example 20k for herself and give me the other 12k for my employment ?
4) I would expect that the business would run at a loss for the first year due to initial investment required to set it up - can such losses be offset against tax paid with my full time employer ?

Many many thanks in advance for anyone who takes the time to read and reply to this.

I am in a similar position and would be interested in any replies.

Are you jointly or singly assessed now

I cannot really answer your questions but would you consider that you be the one that registers for tax and file a return at the end of the year along with your P60 from your PAYE income.
I believe any losses in the business should lessen your tax liability

Also your wife will be entitled to approx 160per week from Soc welfare from her PRSI contributions for a period of 15 months. She may not get this if she starts a business even at a loss because she will not be 'actively looking for work'

Sorry don't know the answer to ALL your questions but: If you are a Sole Trader, you can assign your tax credits to your PAYE employment, the Sole Trader, or a mixture of the two. In the past we've found it better to assign them to the PAYE account. When it comes to filing a return, it is combined (PAYE/Sole Trader) you are asked to supply details of profit/loss and ROS calculates the amount of tax owed. There is a section for taxes already paid (PAYE) which is deducted. Hope this makes some sense!