Probably the most frequent question we are asked by our newly (and sometimes not so newly!) self-employed clients is, “What are allowable expenses for income tax purposes?” In this post I will explain the basic principles that underlie the rules and give some practical examples to illustrate these principles in action.
SURE is a tax refunds for startups incentive scheme for entrepreneurs investing and working full-time in a new business.
How does it work?
The scheme offers a potential income tax refunds of up to 41% of the capital that is invested in a new business. Depending on how much you invest you may be entitled to tax refunds for the six years prior to the investment in the new business.
To avail of the SURE scheme you (the “Investor”) must:
Establish a new company carrying on a qualifying trade (the “Company”);
Invest in the Company for the purchase of new shares
Have mainly PAYE income in the previous 4 years. This would include a person currently in PAYE type employment, an unemployed person, a person recently made redundant or a retired person; and
Take up full time employment in the Company either as a director or an employee for a period of at least 12 months.
Claire makes a qualifying SURE investment of €100,000 in 2016 after being made redundant at the end of 2015.
Sole trader versus limited company ? This is probably the first critical decision you will be faced with at the beginning of your new venture. To a large extent this decision will be determined by the way you want to organise your start-up and whether you intend to work on your own or in conjunction with others.
The legal entity you choose will have a significant impact on the way you are protected under the law, the way your business profits are taxed and the compliance obligations you will face. So lets take a dive into the details of trading as sole trader versus limited company. Read more