Sole trader losses

One of the most common questions new clients ask before starting their business is should I incorporate a company. I 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

Employee or Self Employed

The issue of employee or self employed was very topical with the revenue comissioners early this year. In particular in relation to locums. This blog post is a quick reminder of the questions which employers should ask them selves when determining whether a worker is employed or self employed.

If you hire sub contractors on a regular basis this is an area you should pay attention to as the penalties and fines could be significant.

He/she is an employee if some or all of the following apply:

Is under the control of another person who directs as to how, when and where the work is to be carried out
Works set hours or a given number of hours per week or month
Does not supply materials for the job
Does not provide equipment other than the small tools of the trade
Is not exposed to personal financial risk in carrying out the work
Receives a fixed hourly/weekly/monthly wage
Is entitled to extra pay or time off for overtime
Is entitled to sick pay
Receives expense payments to cover subsistence and/or travel expenses
Supplies labour only
Cannot subcontact the work
Does not assume any responsibility for investment and management in the business
Does not have the opportunity to profit from sound management in the scheduling of engagements or in the performance of tasks arising from the engagements
Will normally be covered under the employer’s public liability insurance
Works for one person or for one business

He/she is self-employed if some or all of the following apply:

Has control over what is done, how it is done, when and where it is done and whether he or she does it personally
(In the construction sector for health and safety reasons, all individuals are under the direction of the site foreman/overseer. The self-employed individual controls the method to be employed in carrying out the work.)
Controls the hours of work in fulfilling the obligations of the contract
Provides the materials for the job
Provides equipment and machinery necessary for the job, other than the small tools of the trade
Is exposed to financial risk, by having to bear the cost of making good faulty or substandard work carried out under the contract
Costs and agrees a price for the job
Receives an agreed contract payment(s) without entitlement to pay for overtime, holidays, country money, travel and subsistence or other expense payments
Is free to hire other people, on his or her terms, to do the work which has been agreed to be undertaken
Assumes responsibility for investment and management in the enterprise
Has the opportunity to profit from sound management in the scheduling and performance of engagements and tasks
Provides his or her own insurance cover as appropriate e.g. public liability insurance, etc
Owns his or her own business
Can provide the same services to more than one person or business at the same time
It should be noted that:

A worker paid by results (piece worker, commission, by share) is not automatically a self-employed contractor;
The fact that an individual has registered for self-assessment or VAT under the principles of self-assessment does not automatically mean that he or she is self-employed;
A worker who is a self-employed contractor in one job is not necessarily self-employed in the next job. Each job must be looked at separately.

CPD Galway

If any accountants, solicitors, bankers or insurance agents would like CPD this Winter Finance Training are running a Financial Crime and Anti Money Laundering Seminar in Galway on November the 29th. Speakers are Derbhail McDonald is the Irish independent legal affairs correspondent and author of the book Bust.
Kevin Prendergast is the corporate compliance manager at the office of the director of corporate enforcement.
Gert O’Rourke is a highly experienced financial trainer who has trained global banks on anti money laundering
Ralph Smith is a practicing accountant and member of the association of certified fraud examiners
Phillip Cox from the special investigations unit at the department of social and family affairs.

For further details CPD Galway