New company and startup costs

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FrM

Registered User
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I have been told that I can expense any startup costs that I had prior to company trading i.e laptop, website, business cards, etc.

As long as it is business related this can be done. Can anyone clarify that this is correct ?

Also is this tax free ?
 
Sorry, your question is not very clear. Are you operating through a limited company or as a sole trader? In general pre-trading expenses are not allowable against business profits. If you introduce an asset into a business you can usually claim capital allowances of 12.5% per annum in relation to the business use of the asset.

You really should get proper professional advice on your situation.
 
Okay sorry for the question not being clear...

I have registered my Ltd company in the last 2 or 3 months. Prior to that I got my website setup, bought a laptop and sourced business cards and more - but these are just examples.

The question is for example if I paid €1000 for the laptop can I claim this back as an expense for €1000 with no tax implications ?
 
A laptop is not an expense that you can normally write off against taxable profits. It is an asset. As I said above, you can usually claim capital allowances of 12.5% per annum in relation to the business use of such assets. If you wish, you can transfer personally -owned assets into the company, but this like all other tax issues would be generally subject to conditions.

As I said you really need professional advice.
 
If you have invoices say for the business cards they would go into stationery/advertising and written off as an expense in the company accounts. The laptop would have to be written of at 12.5% pa. You paid for those personally so you basically paid off creditors of the company so you would be intitled to take this money out of the company tax free. (debit expense, credit creditors with cost of asset and debit creditors, credit directors current account with payment).
 
Separately, regarding VAT, if the invoices are in your personal name the company cannot claim a VAT input credit on them even if they go in otherwise as assets/expenses.
 
I beg to differ with Graham07

It is not necessary for an invoice to be issued in the name of the company to be deductable for VAT purposes.

The requirement is that the goods or service in question need to be for use in the business and / or a genuine expense of the business.

Very often invoices are addressed to employees or officers of a company and are fully acceptable
 
Importer said:
I beg to differ with Graham07

It is not necessary for an invoice to be issued in the name of the company to be deductable for VAT purposes.

The requirement is that the goods or service in question need to be for use in the business and / or a genuine expense of the business.

Very often invoices are addressed to employees or officers of a company and are fully acceptable
Click to expand...

Invoices have to be in the company name for them to be deductable.
 
I'm with Niall and Graham on this one. Invoices must be in the name of the party reclaiming the VAT (ie the company).
 
For VAT - invoice definately must be in company name.

How to claim back VAT, for employees/directors expenses:
1. Employee incurs expense, takes just the receipt - brings to company accountant etc.

2. Company (A) contacts company who rendered the service (B), asks to invoice the company (A) for the amount of the receipt, in respect to the receipt.

3. Company (B) invoices with a valid VAT Invoice (based on receipt). Than VAT can be reclaimed.
 
Gents

I dont mean to be rude by contardicting your assertion that the vat invoice must be in the name of the claimant. This is a common myth in VAT.

The taxable person who incurs input tax is entitled to recover it provided :

1) the taxable person has a valid vat invoice and
2) the VAT incurred relatets to his / her taxable business

An invoice issued to an employee or an officer of the company is a legitimate vat input as long as 1 and 2 above are satisfied.

Its the substance of the transaction that is most important here and the requirement that the expense relates to the business of the claimant

I personally have been involved in umpteen vat inspections where this treatment has always been upheld / confirmed.

For those who doubt this in any way please provide some or any tax law or text that says anything different.
 
Importer said:
Gents

I dont mean to be rude by contardicting your assertion that the vat invoice must be in the name of the claimant. This is a common myth in VAT.

The taxable person who incurs input tax is entitled to recover it provided :

1) the taxable person has a valid vat invoice and
2) the VAT incurred relatets to his / her taxable business

An invoice issued to an employee or an officer of the company is a legitimate vat input as long as 1 and 2 above are satisfied.

Its the substance of the transaction that is most important here and the requirement that the expense relates to the business of the claimant

I personally have been involved in umpteen vat inspections where this treatment has always been upheld / confirmed.

For those who doubt this in any way please provide some or any tax law or text that says anything different.
Click to expand...

In my experience, this is correct on a practical level. Invoicing companies are not always aware of the legal name of a company and put all osrts of stuff on an invoice. This will usually be ok once the Revenue are assured that the substance is genuine.
 
The Revenue VAT Guide gives an example where a business can reclaim a portion of VAT on a homeowner's utilities bills where a portion relates to the business. In the vast majority of cases this bill will be in the homeowner's personal name and NOT the company name so it would appear that Importer is correct.

The onus is on the supplier to ensure that the invoice is correct
 
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