Guide | 4 min read
Running as a sole trader in Ireland – a beginner’s guide
Our guides focus on everything you need to know about running and setting up as a sole trader in Ireland.
By Patrick Onofrei
Published April 23, 2022
Last updated December 03, 2022
Published April 23, 2022
Last updated December 03, 2022
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What is a sole trader?
A sole trader or self-employed is the simplest type of business, as it’s the easiest to set up and run. A sole trader is defined by the fact that one person is solely responsible for the business.
Some examples of sole traders include:
- - Freelancers (designers, copywriters, marketers, and photographers)
- - Self-employed tradespeople (builders, plumbers, electricians, gardeners, and carpenters)
- - Gig economy workers (couriers, taxi drivers, delivery drivers, tutors, and nannies)
Operating as a sole trader
The business will be set up under your name, and you are entitled to keep all the profits. But this means you are also responsible for the tax owed, along with any debts incurred by the business. In essence, as a sole trader, you are the business.
Advantages:
- - Cheap and simple to operate
- - You don't have to worry about salary and dividends
- - You don't have to deal with CRO (Company Registration Office), only Revenue
- - Easy to set up and close down
Disadvantages:
- - You are personally liable for the debts that your business incurred
- - There's no distinction between the business' assets and the owner's assets
Registering as a sole trader
If you decide to start working for yourself, you must inform Revenue of your decision, regardless of whether you have already completed a Self-Assessment tax return.
It is best to register with Revenue as soon as you start trading.
Your accounting responsibilities
Just like any company, you are responsible to hold records of your books, receipts and file your self-assessments. You can choose to do them yourself or hire an accounting firm (like us) to handle it all for you.
Completing your bookkeeping
Bookkeeping is the recording of your day-to-day transactions on some kind of system, such as a spreadsheet or accounting software. These transactions are then used as a basis for completing your accounts and tax returns.
No matter how big or small your business is, you will need to ensure you keep accurate bookkeeping records to manage overall finances and get a view of everyday expenses.
How often should I complete my bookkeeping?
We recommend you complete your bookkeeping as often as possible, on a weekly or monthly basis. Doing your bookkeeping regularly reduces the chances of errors and allows you to clearly understand how your business is performing throughout the year.
Claiming your business expense
Different types of business will have different types of expenditure. But as a general rule the vast majority of business expenditure is allowable, even expenses you have incurred personally for business purposes.
The most common business expenses are:
- - Motor expenses
- - Staff cost and wages
- - Use of home as an office (rates and utility, bills)
For more information, check out our Business Expense Guide
When do I need to register for VAT?
You must register for VAT if your turnover exceeds €37,500 in supplying services or €75,000 if supplying goods in any continuous period of twelve months.
However, if your customers are also VAT registered, it could be beneficial to register for VAT voluntary before you reach this threshold.
How do I take money from my business?
As a sole trader, the profit generated from the business belongs to you. You can simply take money from your business as and when you need it.
What happens if I start employing someone?
If you take on an employee, you will need to register as an employer with Revenue straight away and start running payroll.
The bottom line
Registering as a sole trader is a great option for people wanting to start a small business. It’s the simplest and cheapest business structure to set up with very few obligations, unlike other business structures.
Still have questions?
Sometimes it’s better to talk to an expert. Book your free consultation with one of our small business experts now.
