Many Entrepreneurs don’t take a wage out of their business in the first year. When you are ready to take out a wage, there’s an important choice you need to have made beforehand. Set up as a Sole Trader, or set up as a Limited Company and put yourself on the Payroll.
Take a look at the comparison below:
Aside from enjoying the benefit of Limited Liability there are a number of advantages to paying yourself as a Director of a Company.
- You can pay yourself through a Payroll Software Package, working out your tax automatically.
- You can pay yourself Mileage and subsistence for your business trips. You can’t do this as a Sole Trader.
- You can keep track of what you’re taking out of your business with ease. Taking regular similar amounts as opposed to irregular amounts at irregular intervals.
- As a Sole Trader, you have to pay Preliminary Tax once a year, estimating part of your earnings. As an employee of a Company you keep your taxes up to date as you go along.
- If you become ill or your business doesn’t succeed, you are entitled to Illness Benefit or Jobseekers Allowance
- You can pay yourself a bonus of €250 once a year, in the form of a voucher, and it’s tax free.
- You can pay into a PRSA through your Payroll and get tax relief on it. The allowable percentage rises with age.
- Your Company can contribute to your PRSA. Contributions paid by employers are fully deductible for Corporation Tax purposes.
- Use Bullet’s Free Formations Tool to set up your Business and you’re automatically set up with Accounts and Payroll software.
Here’s a few useful information websites if you’re thinking of setting up a business: