What is a business?
A business is either a profession or a trade which supplies goods, services or both. Your own circumstances will decide whether you operate your business as either a:
- sole trader
- partnership
- or
- company.
You will find a brief description of each of these terms below.
If you are an employer, you will have to deduct the following from your employee’s gross pay:
Sole trader
If you are a sole trader, all business decisions are made by you. You will not have any partners in your business, but you may have employees. You are responsible for keeping records of your business.
To set up a business as a sole trader, you must register as a self-employed person with Revenue if your net income is above €5,000. You will have to pay Income Tax, Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) on your net business profits.
If you have employees, their salaries are paid through the Pay As You Earn (PAYE) system. You will also have to pay any employee PAYE, employer PRSI, Valu-Added Tax (VAT) and Relevant Contracts Tax (RCT) due.
You will also need to declare any reportable benefits or expenses you pay to employees. For further information, please see Enhanced Reporting Requirements (ERR).
Use Revenue Online Service (ROS) to submit your annual tax return, which is called a Form 11.
As a sole trader, your tax matters will always be dealt with under your Personal Public Service Number (PPSN).
Partnership
A partnership is where you run your business with one or more people. The person who is responsible for keeping records of the business is called the 'Precedent partner'.
When you register the partnership, Revenue will issue a Tax Reference Number (TRN) for the partnership. This number is used to register your partnership for employer PAYE, employer PRSI, VAT and RCT.
Each partner must include their share of the business profits (Income Tax, PRSI and USC) in their own personal tax return using their PPSN.
You will also need to declare any Enhanced Reporting Requirements (ERR) such as Small benefit exemption, Remote Working daily allowance and Travel and subsistence.
A partnership’s annual return is the Form 1 (Firms). The precedent partner must complete this form.
Company
A company is a legal form of business organisation. It is a separate legal entity from those who run it. If you are trading as a company, you are not self-employed.
A Statement of Particulars must be submitted to Revenue within 30 days after a company begins trading where your company:
- is incorporated in the State
- or
- begins a trading activity in the State.
This is done by completing a Statement of Particulars (Form 11F CRO) and submitting it via MyEnquiries to the National Registrations Unit. For applications that cannot be submitted via MyEnquiries, applications can be sent to businesstaxesregistrations@revenue.ie.
For further information on whether or not you are eligible for eRegistration, please see Who can access the eRegistration service?
The company must pay Corporation Tax (CT) on its business profits. The company’s annual return is the Form CT1. This must be submitted through ROS. The company will have to pay any PAYE, VAT and RCT due. All directors’ salaries and fees are paid through the PAYE system.
Revenue will issue a separate TRN for the company. Your personal taxes will be dealt with under your PPSN.