self-employed/bank a/c

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h20

Registered User
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Hello,

I have a student bank account and am also self-employed. I haven't made a tax declaration yet (I began my self-employed activity last September).

All of my clients transfer my fees into my bank account on a monthly basis.

My question is:
When I will make my first tax declaration will I have to produce bank statements to prove my monthly income or do the tax people have no interest in seeing my bank statements?
 
Bank statements are a vital link in the chain from sales billd to income in the tax return and as such would be relevant from a Revenue Audit point of view. However the actual statements themselves would not be provided when filing the tax return, they must be kept in case of Revenue Audit.
 
if you registered as self employed when you started trading you will have to do a self assesed tax return this october . your accountant will want to see bank statements showing monies comming in and any payments going out for purpose of the business expences etc. otherwise he will want to see cheque payments stubbs or cash reciepts . you must have a sellection of records for your business by law .look at the revenue site for f.a.q on starting a new business.get it right from the start and it can make life alot easier as your business grows. you need an accountant and its never too late to start your records.IF REVENUE PICK YOU FOR AN AUDIT YOU COULD BE ASKED FOR BOOKS AND BANK STATEMENTS AND RECIEPTS FOR UP TO 6 YEARS PREVIOUS.KEEP EVERYTHING ;) GOOD LUCK !
 
setemupjoe said:
if you registered as self employed when you started trading you will have to do a self assesed tax return this october . your accountant will want to see bank statements showing monies comming in and any payments going out for purpose of the business expences etc. otherwise he will want to see cheque payments stubbs or cash reciepts . you must have a sellection of records for your business by law .look at the revenue site for f.a.q on starting a new business.get it right from the start and it can make life alot easier as your business grows. you need an accountant and its never too late to start your records.IF REVENUE PICK YOU FOR AN AUDIT YOU COULD BE ASKED FOR BOOKS AND BANK STATEMENTS AND RECIEPTS FOR UP TO 6 YEARS PREVIOUS.KEEP EVERYTHING ;) GOOD LUCK !
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I don't have an accountant, as I don't think the procedures are that complicated. Obviously, I keep all the paperwork and enter the amounts I receive each month and when I receive them on an Excel sheet.

I don't have a profit and loss account as such, as I don't charge VAT so I don't reclaim it either. Basically, the few thousand I make a month is my profit (I have other sources of income unrelated to my self-employed activity that pay my rent and bills - my business also requires little money anyhow) and I note down the amounts I receive, and keep the proof. Is this enough? What more would an accountant be able to do for me?
 
h20 said:
I don't have an accountant, as I don't think the procedures are that complicated. Obviously, I keep all the paperwork and enter the amounts I receive each month and when I receive them on an Excel sheet.

I don't have a profit and loss account as such, as I don't charge VAT so I don't reclaim it either. Basically, the few thousand I make a month is my profit (I have other sources of income unrelated to my self-employed activity that pay my rent and bills - my business also requires little money anyhow) and I note down the amounts I receive, and keep the proof. Is this enough? What more would an accountant be able to do for me?
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Eh, the threshold for VAT registration is €35K per annum. That few thousand a month you're making puts you over that threshold!
I think you need to speak to an accountant urgently.
 
setemupjoe said:
if you registered as self employed when you started trading you will have to do a self assesed tax return this october .
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The OP states that self employment began last September (2006), so the first tax return, under revenue commencement rules is not due this October, but in October 2008, along with the 2007 return.
 
Joe1234 said:
The OP states that self employment began last September (2006), so the first tax return, under revenue commencement rules is not due this October, but in October 2008, along with the 2007 return.
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Oh, that's great news! So, I won't have to pay taxes until October 2008?
 
KalEl said:
Eh, the threshold for VAT registration is €35K per annum. That few thousand a month you're making puts you over that threshold!
I think you need to speak to an accountant urgently.
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In my first year, I won't be over that threshold, as I make a maximum of 2500 euro per month.

Ok, I know the threshold, but most of the work I do is exempt from VAT which means I can't charge VAT. Where does that leave me?
 
h20 said:
Oh, that's great news! So, I won't have to pay taxes until October 2008?
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Yes, but in October 2008 you will have to pay tax due for 2006, 2007 and preliminary tax for 2008, so you could be faced with a large tax bill. While October 2008 is the deadline it doesnt mean that you cant file the return sooner, or at least get your tax liability calculated so you can make some provisions for the tax due.
 
Joe1234 said:
Yes, but in October 2008 you will have to pay tax due for 2006, 2007 and preliminary tax for 2008, so you could be faced with a large tax bill. While October 2008 is the deadline it doesnt mean that you cant file the return sooner, or at least get your tax liability calculated so you can make some provisions for the tax due.
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Ok, I understand. How does one calculate tax liability? Is there an online calculator tool for this?
 
h20 said:
but most of the work I do is exempt from VAT which means I can't charge VAT. Where does that leave me?
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Have you checked with Revenue that you are clearly engaged in a VAT exempt activity? There are not many of these ( undertakers / carriage of persons - Taxi / travel agent are examples). Be mindful that ones customers being VAT exempt does not make you VAT exempt. Be absolutely certain that you are correct on this or you will have serious problems down the line. Again, a good accountant is well worth their fees (both VAT and tax deductible) and I must echo previous posters on this.
 
h20 said:
Ok, I understand. How does one calculate tax liability? Is there an online calculator tool for this?
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Get a good accountant ! They will not only calculate it properly but will almost inevitably save you more tax than doing it yourself.
 
Graham_07 said:
Have you checked with Revenue that you are clearly engaged in a VAT exempt activity? There are not many of these ( undertakers / carriage of persons - Taxi / travel agent are examples). Be mindful that ones customers being VAT exempt does not make you VAT exempt. Be absolutely certain that you are correct on this or you will have serious problems down the line. Again, a good accountant is well worth their fees (both VAT and tax deductible) and I must echo previous posters on this.
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No, my business activity is not tax exempt but some of the jobs I do are.
 
h20 said:
No, my business activity is not tax exempt but some of the jobs I do are.
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Ok you definitely need to see an accountant. In brief I am getting the impresion that you may be dealing with VAT exempt companies such as non-Irish , export orientated businesses who may have VAT Section 13 A/B authorisations which basically mean that they do not pay Irish VAT. However the firms supplying them would be VAT registered but then get a copy of the customers 13A exemption certificate which entitles them to charge the customer without adding VAT. The supplier in this case must still be registered for VAT if over the VAT registration threshold just that for those particular jobs does not actually charge it. All other jobs where the customers do not have Section 13 exemptions must be charged VAT at the appropriate rate. It is the suppliers responsibility to charge VAT in all cases unles they get Revenue evidence that the customer is VAT exempt.........getting confused.......well thats what its like when you tread in the VAT minefield without clear appropriate professional advice. Revenue do not believe in the defence of " oh but I thought that ..."

Also bear in mind that certain services must be notified to Revenue by the customer where the total paid to the supplier exceeds €6,000 PA. This is called "Third Party Information" and indicates whether VAT was charged or not. If Revenue get one of these showing someone over the limit and no VAT registration it may result in enquiry from them.
 
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KalEl said:
What exactly do you consider a tax exempt job?
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A job where my work is published, such as journalism. I cannot charge my clients VAT for my articles, as this area is exempt from VAT.
 
Graham_07 said:
Ok you definitely need to see an accountant. In brief I am getting the impresion that you may be dealing with VAT exempt companies such as non-Irish , export orientated businesses who may have VAT Section 13 A/B authorisations which basically mean that they do not pay Irish VAT. However the firms supplying them would be VAT registered but then get a copy of the customers 13A exemption certificate which entitles them to charge the customer without adding VAT. The supplier in this case must still be registered for VAT if over the VAT registration threshold just that for those particular jobs does not actually charge it. All other jobs where the customers do not have Section 13 exemptions must be charged VAT at the appropriate rate. It is the suppliers responsibility to charge VAT in all cases unles they get Revenue evidence that the customer is VAT exempt.........getting confused.......well thats what its like when you tread in the VAT minefield without clear appropriate professional advice. Revenue do not believe in the defence of " oh but I thought that ..."

Also bear in mind that certain services must be notified to Revenue by the customer where the total paid to the supplier exceeds €6,000 PA. This is called "Third Party Information" and indicates whether VAT was charged or not. If Revenue get one of these showing someone over the limit and no VAT registration it may result in enquiry from them.
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Sorry, none of that makes an ounce of sense to me at all. I don't deal with export companies. I work as a freelance journalist. By the way, I don't have a separate business account as my private and business life are basically one. I've just realised that in my profit and loss account my overheads would actually include phone and internet connection, paper, printer ink, and rent, but that's it I guess. And, if I've understood correctly, I'll be taxed at the rate of 20% on what I make.

If I hire an accountant, I need one that can speak French, German and Italian, as I deal with all of these countries, and my invoices, bank statements and so on are in these languages. I think if I learn basic accounting I'll be able to sort things out.

And after reading a booklet called Toil and Trouble, I think the first thing I need to do is open a Business Account. I've kind of been living in la la land, I guess. :-( I guess, I won't bother declaring whatever I've earned up to now, since it all went into a private account anyway, and ask my clients to pay me into my business account as soon as I set one up.

As a self-employed, I don't get audited anyhow, or do I?

I know, I'm clueless but I have to learn!
 
h20 said:
A job where my work is published, such as journalism. I cannot charge my clients VAT for my articles, as this area is exempt from VAT.
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Are you a journalist ? if so you might note note the following [broken link removed]
( go to J, then journalists )

Also, all self-employed persons whether sole-trader or company are open to audit ( examination) of their returns by Revenue.
 
Graham_07 said:
Are you a journalist ? if so you might note note the following [broken link removed]
( go to J, then journalists )

Also, all self-employed persons whether sole-trader or company are open to audit ( examination) of their returns by Revenue.
Click to expand...

Well, I'm not allowed to charge my client for VAT! :-(

I thought I just had to do the p&l accounts, calculate the income tax and then pay it. I don't charge VAT to any of my clients, as I don"t think I'll go over the trheshold. If in a few years, I do go over the threshold, I will start charging the 21% rate due to my clients in that case, but that means increasing my rates by 21% or does it?
 
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