Self-assessment to Income Tax in Ireland
Self-employed individuals are taxed under the 'Self-assessment' system. Accordingly, such individuals are required to file tax returns, pay income tax (where there is a liability) and pay preliminary income tax each year. For the first time self-employed person, there are a number of things to be considered :
They should register with Revenue as being a self-assessment taxpayer. They may also have to register for VAT and charge VAT on fees and sales to customers/clients. They may also have to register their business name with the Companies Registration Office (CRO).
As a self-employed person, being taxed under the self-assessment system, proper books and records may need to be prepared and back-up documentation such as receipts and sales invoices (to mention just a few) to be retained carefully. YOU SHOULD KEEP RECEIPTS FOR ALL BUSINESS EXPENSES. You will not get a tax deduction for expenses if you don't hold receipts or have other back-up evidence (such as bank records and cheque stubs) which clearly show the date, the amount and nature of the expense.
It is advisable to seek help from a tax adviser or an accountant if you are in doubt as to what you need to do or how to fill in a Tax Return properly.
If you are late in submitting income tax returns, PAYE or VAT returns, you should make it a priority to bring your tax affairs up to date as soon as possible to reduce potential penalties and interest.
Finally, a useful tip is to put aside some of your fee/sales receipts into a separate bank account to cover VAT or income tax due later in the year.