Sole trader losses

Oct 27

One of the most common questions new clients ask before starting their business is should I incorporate a company. ISole trader loss have covered the advantages of a limited company over a sole trader in the past. But if your business (like so many others) looks like it will make a loss in the first few years there is some advantages to keeping the business as a sole trade.

For example in the tax year 2010 Niamh, a sole trader makes a tax loss in her trade , but pays tax in her part time PAYE position, the sole trader (Case I) loss can be offset against the tax paid in the PAYE position.

If there is no other income to offset the loss against then the loss can be carried forward. But if carried forward the loss can only be used to offset profits in the same trade.

To do this Niamh should enter the loss at line 112 on the return.

If you require any advice on the matters above please do not hesitate to contact Ralph on 01 – 4800531

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