Top Tax Tips for Start-Ups

  • Pay your tax on time. This way you avoid any unnecessary interest and penalties.
  • If your spouse helps in the business you can pay them a salary, getting full use of the tax band.
  • Pay your teenage child as a summer job. If it’s full-time there will be no PRSI cost.
  • Claim an element of your household expenditure (phone, internet, light & heat) as an expense.
  • Make sure to claim all relevant tax credits. Click here to view the current list of credits.
  • Invest in a pension. There are significant tax incentives on offer here. The value of your pension also grows tax-free.
  • Rent out a room in your home up to €12,000 tax-free.
  • If trading through a limited company use your own car and charge mileage to the company. Benefit in kind (BIK) on personal use of company cars can be extremely high.
  • If you are over 55 years of age you may qualify for Retirement Relief if selling your business.
  • Always use a qualified accountant or tax adviser. They will ensure that tax is calculated correctly and submitted on time.
  • Make sure to register for VAT where appropriate.
  • If you’re a sole trader, pay your income tax by way of monthly direct debit. This will help with cash flow management.
  • Pay your VAT liability by monthly direct debit. Again, this will help with business cash flow management.
  • Remember, client entertainment expenses are not allowable as a business expense.
  • Membership of your local gym or gold club, paid through your company, will be liable to BIK.
  • Permanent Health Scheme contributions are tax deductible.
  • As a start-up you may be exempt from income tax if you have been previously unemployed.
  • Does your company carry out any element of ‘Research & Development’? There are great tax credits available here.
  • As a start-up your company may be exempt from tax on its profits (Corporation Tax).
  • Why not invest in the bike-to-work scheme? Keeps you healthy and can be claimed through the company.
  • If you’re paying maintenance to a former spouse (not your children) you may qualify for a tax credit on any payments made.
  • Instead of paying costly bonuses to key employees, why not give them shares in the business using the ‘Employee Share Options’?
  • VAT can be claimed on the purchase of a commercial vehicle.
  • Don’t forget the single gift allowance of €3,000. You can receive this amount tax-free every year from any number of (generous) people.
  • If your business is looking for investment, look at the great tax incentives available through the EIIS Scheme.
  • Look at reclaiming tax at 41% through SURE (Startup Refunds for Entrepreneurs).
  • As a growing business, why not hire outside contractors instead of in-house staff? This way you can avoid costly employers’ PRSI costs.
  • If you want to incorporate your sole trade to a Limited Company you may qualify for relief from CGT (Capital Gains Tax) if you transfer all of the assets.
  • You may also qualify for the reduced 10% CGT Entrepreneur Relief. For more details please click here.
  • If you discover a tax problem it’s always advisable to hold up your hands with Revenue. They will look on your case far more favorably than if you try to hide the issue.
  • As a start-up, do not invest large sums into your company as share capital and then use this money to pay your wages. Instead loan the money to the company and take it back (tax-free) when funds allow.
  • Remember, as a proprietory director (i.e. owning more than 15% of the shares) you are obliged to submit an annual income tax return to Revenue every October.
  • If you are carrying on an exempt activity (food and drink, books and booklets, children’s clothes & footwear) you can still register for VAT. This way you can reclaim any VAT on your purchases.
  • If you supply both goods and services (i.e. photographer) you will be taxed to VAT under the two- thirds rule.
  • Be careful: not all business purchases automatically qualify for a VAT deduction (e.g. car hire, petrol, hotel costs).
  • If your customer is a government agency be sure to retain your Form F45 in order to claim professional services withholding tax (PSWT).
  • If you’re an artist you may be exempt from income tax.