Black Economy Work Going Straight

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carriedaway

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Hi guys new user how do ye do. I have a question I hope someone can help with. I work full time in a regular day job. However I have been moonlighting as a dj for a few years outside the tax net, nothing major, a gig maybe two a month. However my business is snowballing this year due to being placed on reccommended service supplier lists in two hotels for weddings. I now have over 20 weddings booked for the year as well as alot of 21sts and parties etc that come up week to week, which is gonna add up to quite a bit of money. This is wonderful, however I would like to know what are the tax implications of this? I would like to go straight and start paying tax but where would I even start, would revenue want retrospective taxes for the past two years, that would be a problem as I have kept no records as the work was so casual, would I need to register for VAT? Could anybody give me advice on what way I should approach this?
 
There are two aspects to this- what you do for the future and how you deal with the past tax issues. In general, get professional advice.

Re the future-


  • you'll need to prepare basic accounts showing details of income and expenses. You'll probably do so as a sole trader but you may also consider seeking advice re the pros/ cons of using a company for the DJ business
  • you should go to your local tax office and ask for form TR1 (or you can download it . This form will be used to determine whether you need to register for VAT or employers PRSI. You can check here to see if DJ services are a VAT chargeable activity.
  • You will be required to submit tax returns for the business/ company and will pay tax on the 'taxable profit' (which may not be the same value as the difference between revenues and outgoings).
Re the past- the only advice you'll get here is that you are legally obliged to pay tax which is due. This means that you'll need to calculate the net income you earned for the period using whatever data you have available. This should be calculated on a calendar year basis if you have income for more than a single year.
Once you have this data you can go to the tax office and supply it to them, requesting a P21 Balancing Statement for the calendar years for which you have additional income. They will calculate the extra tax/ levies due.
 
Thanks deadlyduck, my income over the past two years (when I started) would have been very small, and probably just about covered expenses (DJ gear was over 5k) but obviously I kept no accounts and was very casual about it as it was just a bit of fun at that time, like I said the business has just exploded this year and that is why I need to start paying up. Thanks for the advice I will do that, I didn't want to approach revenue without asking somebody as I heard they can be extremely tough and give you a tax bill based on their estimate, which could be far more than I ever actually earned. I am more than willing to pay what I owe but I am not eager to pay more than I owe obviously. Thanks again
 
Some people have a very jaundiced view of the Revenue. By and large they are practical. If someone is trying to sort out their affairs, they will respect that. They will accept estimates for the past few years and if the amounts are small, they will probably agree to just start from this year.

Of course, if they suspect that someone is trying to evade serious tax, they will live up to their negative reputation.
 
Thanks Brendan, the amounts are very small so hopefully they will be reasonable about it. Regards
 
You will always impress the revenue if you go to see them with an efficient looking set of accounts. These can be fairly simple and basic but clearly laid out.
Get the memory into gear and you probably have some record of appointments and the amount you were paid per gig.
The cost of the gear and the expenses involved in each gig.

Once you have got that together you're half way there

Good luck with your new business
 
Yes, keeping up good records as of now is essential for you.

The past is fine as long as you can show some kind of records, whether it is what went into your accounts or just what you know as regards your income.

keep it sensible and legitimate, and you can't go wrong.
 
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