1) What is a sole trader?
A sole trader is a person who decides to conduct business on their own behalf. They do this by buying goods and selling them on or just selling on their own personal services.
Usually a Sole Trader is a one-man band and is what we call “self-employed” – you are your own boss and can decide when and how you work (you are not answerable to an employer, only to clients). It can be a lot of hard work and often you will not get a regular income.
2) What’s involved in setting up
It is really easy to start a Sole Trade (compared to starting a Partnership or Limited Company). It is also easy to shut it down.
Here are some things you must do when you start though:
- Register for taxes with Revenue on ROS.ie – you need to file your own taxes every year as a Sole Trader
- Register your business name if you are not trading under your own legal name – this can be done on core.cro.ie by filing Form RBN1
- Set up a business bank account – it’s best to keep the cash of the business separate from your personal cash and spending. You will need a Certificate of Business Name to open a business bank account
3) What about VAT?
One very important thing to remember is to register for VAT if required. The VAT registration limits are as follows:
- Services – €37,500 in sales within a 12-month rolling period
- Goods – €75,000 in sales within a 12-month rolling period
You then need to file VAT returns (normally every 2 months) and pay any VAT owed over to Revenue – so it’s best to keep an eye on cash flow and ensure you have this cash to pay.
4) Final Note
One final note – as a Sole Trader you are entitled to 100% of the profits of the business (after tax) but you are also liable for all the losses. If you make large losses in your business, your person assets could be repossessed from you to cover your debt.
Products related to this post:
Union VAT OSS Registration (in Ireland)€150.00
Union VAT MOSS Registration (in Ireland)€150.00
STARTER PACK: Irish Tax Registrations (for new companies)€450.00 – €1,050.00
non-Union VAT MOSS Registration (in Ireland)€300.00
Sole Trader/Company Director Income Tax Registration (with ROS)€150.00
VAT Registration (in Ireland)€150.00 – €300.00
Business Name Registration (in Ireland)€150.00