Becoming self-employed in Ireland, also known as a Sole Trader, is a single person setting up a business on their own.

It is a quick and easy way to start a business in Ireland. Residents of Ireland can generally register as a Sole Trader in Ireland within a couple of days as long as they meet the requirements. There isn’t too much paperwork and no registration fees to pay.

If you currently have a full-time job and want to start your own business, becoming a sole trader while working full-time can be an excellent starting point. This allows you to balance your regular employment with your entrepreneurial aspirations, smoothing the transition to self-employment.

If you’re ready to dive into self-employment but grappling with uncertainties, our collection of common questions and expert answers will provide you with the clarity you seek.

Should I be a Sole Trader or Limited Company?

Opting for self-employment presents a relatively straightforward route to establishing your business. This streamlined approach allows you to get your venture off the ground swiftly.

However, it’s essential to recognise that becoming self-employed carries inherent risks, especially concerning your personal assets. In the unfortunate event that your business faces setbacks or fails to thrive, your personal assets might be exposed.

You may also miss the advantageous features of company registration in Ireland. A noteworthy benefit of registering a company in Ireland is the 12.5% Corporation Tax rate applicable to your business profits.

What taxes do self-employed people pay?

  1. Preliminary Tax. Self-employed individuals must estimate their tax liability and make a Preliminary Tax payment. This payment is due by the 31st of October each year or mid-November if using the ROS system.
  2. Universal Social Charge (USC). If your gross income exceeds €13,000 within a year, you must pay USC.
  3. Pay Related Social Insurance (PRSI). Self-employed individuals contribute to PRSI under Class S. This applies to those earning more than €5,000 annually. 
  4. Value Added Tax (VAT). Only certain conditions trigger VAT liability for businesses. If your business is VAT-registered, you’re responsible for charging VAT and submitting accurate VAT returns to Revenue.
  5. Employer’s Tax. If you hire staff to assist your business operations, you must register for Employer’s Tax and operate a payroll system. It’s important to note that self-employed people do not take a salary themselves. 
  6. Relevant Contracts Tax (RCT). Self-employed subcontractors in construction, forestry, or meat processing must register for RCT and submit RCT returns to Revenue.

How do I file tax returns as a self-employed person?

Self-employed people must prepare their Income Tax returns by completing Form 11 on or before the 31st of October each year or mid-November if you use Revenue’s Online System (ROS).

Tax returns for self-employed people are self-assessed, meaning you need to use ROS to calculate your tax liability. The process involves assessing your bills, receipts, and bank statements to calculate your tax amount accurately. Once this form is completed correctly, you must pay the Revenue tax.

We recommend seeking professional services from a qualified accountant to ensure accurate tax calculations and compliance with regulations. Our team streamlines the process of filing tax returns and ensures you are utilising the appropriate tax-deductible expenses, credits, and reliefs to minimise your tax bill at the end of the year.

Can I pay myself a salary?

Self-employed people don’t have a salary or take wages. Everything they earn is their income. You need to pay taxes out of that income at the end of the year.

Sole Trader’s earnings are also known as ‘drawings’ – the money you take from the business for personal reasons.

If you want more tax-efficient ways to pay yourself as a business owner, consider changing from a Sole Trader to a Limited Company. Directors of companies have more scope on how they pay themselves.

Can I set up as a Sole Trader as a non-resident?

To be self-employed in Ireland, you need to live in Ireland. As a non-resident, consider setting up a Limited Company instead.

However, if you reside in Ireland under a Stamp 4 Visa, you can establish and operate a business within Ireland.

When should you switch from Sole Trader to Limited Company?

Becoming a Limited Company offers several advantages worth considering:

  1. Contractual requirements: Some entities may require you to operate as a Limited Company before entering into contracts with your business.
  2. Liability liability: When you are self-employed, you’re personally accountable for business loans. In contrast, a Limited Company establishes a distinct legal entity, shielding you from personal liability in case of loans or debts.
  3. Funding accessibility: Certain organisations, like Enterprise Ireland, exclusively extend funding to Limited Companies.
  4. Tax efficiency: If your business generates profits exceeding your salary requirements, transitioning to a company structure can offer tax-saving benefits.

What support is there for new businesses in Ireland?

  • Talk to your Local Enterprise Office (LEO). Your LEO is a great place to go if you need support and grants to start or develop a business in Ireland.
  • Join a networking group. Check out platforms like Meetup or Eventbrite to check out events near you.
  • Short-Term Enterprise Allowance (STEA). The Department of Employment Affairs and Social Protection in Ireland offers this government support. It assists individuals who have lost their jobs in initiating new businesses.
  • Back To Work Enterprise Allowance. This government initiative is for individuals under 66 receiving specific social welfare payments. It aims to incentivise and assist unemployed individuals in launching their businesses.
  • Kinore’s monthly webinars. We’re delighted to introduce you to a valuable resource tailored just for you.

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