Self-employed with no pension

brian81

New Member
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3
Hi all. It might be a bit late in the day to be only looking at starting a pension now (age 40) but better late than never I guess. Would anyone have any recommendations for who to go to? Should I be looking at a PRSA or personal pension?

Also, the ROS file and pay deadline is in a week's time so I guess it's way too late to get this up and running so as to reduce my tax bill for 2020?

Thanks.
 
How much is your annual net profit?

1st prize is always to consider is it worth setting up a limited company
 
Ah, that’s a little low. Often it's 50K plus where we start to flip sole traders into companies because of the extra costs.

If you think your net profit figure will grow from year to year then it might be worth considering.


Main advantages of a company:

· More formal structure so gives a better impression to customers,

· Limited liability. Not just from customers but also employees and in some instances even against Revenue.

· Ability to defer the personal taxes indefinitely by storing profit at the corporate level and paying 12.5% instead. This those not mean you can just pay 12.5% and take the money afterwards. What it does do is allow you pay only 12.5% and re-vest the money into the business, i.e. save up to open an office or purchase some equipment etc. It is also useful if there is an opportunity down the line to take income at a lower rate of tax, e.g. if you are going non resident or going back to college etc.

· Pension planning is generally better.

· You can pay unvouched travel and subsistence claims instead of vouched motor costs.

· 2 X gift vouchers. Saves up to €500 in tax if you are in higher rate tax

· Better structure for employing somebody

· Potential to get company vehicles of which some are tax efficient

· Universal Social Charge capped at 8%. 11% for Sole traders over 100K profit.

· A lot more large scale tax plays are available, but these are not typically something you do day to day, e.g. leave 20K in the company so that when you retire you can pay out a termination payment or liquidate the company and argue Entrepreneurial relief.
Main disadvantages of a company

· Accountancy fee’s are generally higher. Typically €800ish uplift to a sole trader fee.

· More admin for you as you have to operate a salary for yourself

· You do need to be more organised as you should not use the company for personal items.
 
@brian81

You can do either a PRSA or a PPP. You will get a better fund selection with a PPP but nothing wrong with options on a PRSA either, unless you've a specific niche fund/s in mind. You may also get a lower AMC on the PPP but might end up with exit charges on the contract.

It's not too late if filing through ROS, if you completed an application today, scanned/emailed it and did an EFT for the payment, the product provider would have the payment before the 17th and the date that they received the money would be the date that's on the RAC or PRSA1 Certificate.


Gerard

www.prsa.ie
 
Update:

Revenue announced extension to ROS Pay and File deadline 2021



Revenue acknowledges the on-going efforts by taxpayers and agents who are working towards a deadline of midnight tonight to finalise and submit returns to meet Pay and File obligations. In light of the current Covid-19 developments, Revenue is extending the Pay and File deadline for ROS customers to Friday, 19th November at 5.00pm.


Gerard

www.prsa.ie
 
Thanks Marc and Gerard, lot to take in there. Got sidetracked but the extension might give me enough time now to sort it out.
 
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