PAYE Modernisation – All your questions answered

Pay As You Earn (PAYE) modernisation is a new public consultation process initiative introduced by the Revenue to give the existing system a makeshift. The existing PAYE system is in place since 1960 and hasn’t been updated. The Revenue is working to modernise the PAYE system especially to overcome the problem of over and underpayment of taxes.

With PAYE modernisation, every employer must report their employees’ pay and deductions to the Revenue as and when they are paid. This helps the Revenue in deducting and paying the correct amount of Income Tax, Pay related Social Insurance, University Social Charges and Local Property Taxes.

How does the PAYE modernisation work?

At the end of every calendar month, the Revenue will issue a statement with the tax due for the period of time. The organization must positively return the statement to the Revenue by the 14th day after the month end after which payroll taxes have to be remitted by the 23rd day of the following month. If your company has employees paid both weekly and monthly, you must submit separate Payroll Submission Request (PSR)s to the Revenue.

Payroll submissions must be done by organizations before any taxable component cash payments are done to the employees. Employers must revise their internal processes and make sure the taxable expenses are calculated beforehand.

Can payroll corrections be made after submission?

Yes, payroll corrections can be made before or after the employee is paid. The organization has to make the payroll correction and send it to the Revenue which will replace the original submission.

When does the PAYE modernisation come into effect?

The new PAYE system is in effect from 1st of January, 2019.

What benefits does PAYE modernisation offer?

PAYE modernisation improves to streamline the business and reduces the burden of the employers to meet their PAYE reporting deadlines.

Should organizations complete the P35 after the year end? Should P60s be issued to employees?

No, the annual P35 is no longer required since the Revenue will be receiving the file submissions during each day period of time. This will also eliminate the need for P30s. However, organizations must remember that the P35 is still required for the year 2018 while it’s no longer required after that.

P60s need not be produced to employees after 2019, though it is still required for the year 2018 (similar to P35). The Revenue will issue a statement at the end of the year to all employees. All taxpayers will be able to view their certificate of earnings and deductions from the myAccount page on the Revenue portal.

How should Benefits and notional payments be reported?

If there are any Benefits-in-Kind (BIK) payments or notional payments, they must be reported to the Revenue on the day when it is paid or the earlier of the next payday or December 31 of the particular year. Company credit cards use is considered as notional payments. The benefit has to be provided by the organization on the date the card is used (and not when the bill is settled).

What are the penalty charges for non-PAYE modernisation compliance?

The Revenue implies a €4000 fixed penalty for every PAYE breach. There is also a fixed penalty of €3000 which will be imposed on the company secretary for every breach.

Have more questions regarding PAYE Modernisation? Speak to our experts today. Book your first no-obligation appointment here. 

How much should you pay to yourself as the business owner?

You wanted to start a business, and you’ve done it! Everything you do is working great, your product or services are selling fine and your customers start loving your product. But if you haven’t thought of giving yourself a pay check, think again. Most entrepreneurs tend to overlook paying their salaries. Here’s why you deserve a pay check –

  • You put in the hard work and it’s your valuable time that must be credited
  • Keeps you motivated and helps you perform better
  • Helps to manage your personal finances and expenses
  • Reduces the tax you pay on the total profit

How much should you pay yourself?

The first question that arises when talking of paying yourself a salary is “How much?” Getting paid is important and necessary for your personal well-being, but this should not slow the business growth. Paying too much will take a hit on the business while paying less might not seem the right thing. So it’s important to strike the right balance on how much you get paid as a business owner. And as always, treat your personal and business finances separately! Remember this general rule of thumb: You can take 20% of the profits as your salary and put back the remaining 80% as an investment in your business.

Take your pay according to your business type

Before drawing your pay, assess the nature of your business and see how much you are “eligible” to take as per Government norms. You can refer to the Government tax websites to get these details. This varies based on the market sector and the amount of profit your business is actually making. Do some research on how much other similar businesses will pay you, and understand if the pay is reasonable when compared to your employees and if it merits your work and efforts.

When can you take a paycheck?

If your business is on a low, taking a paycheck should be your last priority. Once the business stabilizes, it becomes easier to get paid. Here are a few questions you can try answering to see if you can take a paycheck or not –

  • Has my business starting generated a sustained revenue?
  • Am I on track with the projected revenue?
  • Are all my operational expenses covered, and is my business breaking even?

If you answered Yes to all these questions, you can take a paycheck as the business owner.

Ways to take a paycheck

The best practice is to take your pay from the business profits rather than the revenue. Also remember to factor in other expenses like payroll, taxes, overheads and so on. You can choose to take a paycheck either as a Salary or an Owner’s Draw. You can choose to earn at regular intervals based on a number of hours of work or a flat rate according to the nature of your business. On the other hand, you can take a salary from your company profits.

As a business owner, it’s important that you make a point to get yourself paid. It’s completely fair for all the work you do.

What other questions do you have regarding paying yourself as a small business owner? We’d love to provide you with custom advice unique to your business. Book your appointment with our Expert Now.

5 Inexpensive ways to promote your small business online

BUDGET! One word every small business owner is cautious about. More often than not marketing budget takes the cut when it comes to business expense management. The good news is that there are few inexpensive marketing techniques that can still put your business on the map where your potential customers can easily find you. However, this requires some careful consideration of platforms you choose to market your business and a lot of time before you start seeing some serious results.

1.    Get your business listed

The first step is to get your business listed on Google My Business. This is completely free; fill up a form and get your business verified with a Google representative through a phone call or email. Put your business on the local map along with other similar businesses. Your business shows up when users make a search relevant to your offering. Google My Business lets customers reach out to you and provides promotional methods to make your business more prominent. Alternatively, get your business listed on Yahoo and Bing’s local database.

2.    Make use of Social Media

Get your business listed on social media channels like Facebook, LinkedIn, Instagram, Twitter. Never use your personal account for your business; create a separate account and spread the word. Share it with your friends and ask them for a shout out so that the message spreads to your friends’ network. Find out relevant groups with the audience of your relevance to spread the word about your business. Be active and keep posting on these groups to gain traction. Create short business videos about your product/service and host them on YouTube.

3.    Blog Writing and Guest Blogging

Set up a business blog for your small business. You can get started with a simple blog on Blogger or a WordPress blog. Next, decide on what content will go up on your blog. This depends on your small business, the niche and the intent with your blog content. Remember that your blog is a high volume traffic directing medium. Use the power of social media to share your articles with the public. Popular mediums include LinkedIn, Facebook (groups), Medium, Quora and Reddit are good platforms to share content online.

Finding it difficult to get your own audience through your blog? Become a guest blogger! You can guest blog on other blogs or even deliver a podcast that can reach your target customers. Make sure to grab the benefits of guest blogging by adding backlinks to your business (in the About the author section) to drive traffic into your website.

4.    Community advertising

Sign up and become a part of local communities and meetup groups. Actively participate and engage in discussions with successful entrepreneurs, talk to them about your business, and get their suggestions. At the same time, passively put the word about your business in these events. Who knows? Word of mouth discussions can bring your business some luck. Attend local community events relevant to your business to increase your community presence and spread the word about your business.

5.    Freebies – Business Promotions

Simple yet effective technique – run a sweepstake contest and reward your winners. Take advantage of the power of social media to run these campaigns. This increases the curiosity levels and puts your brand into the minds of your future customers. Freebies can more be like “rewards” that your customers will cherish, and at the same time be tempted to share about your business to their network.

Want to know how to successfully launch your business online? Get in touch with our marketing team today to know your options. Check out the packages here.

5 Things you need to start a company in Ireland

Have a business idea or an innovation? Thinking of bringing out the entrepreneur in you and starting a business to put the idea into action? Perhaps considering the support and the initiatives you get from the Irish Government and the start-up communities in the country, starting a new business in Ireland isn’t really a challenge. However, before you get a move on with the process, it’s important that you get the basics right. See if you can answer the following questions and if you can, you are good to start your business in Ireland.

Do you have it in you?

While starting a business can be tough, before stepping into it, take a reality check to see if you are ready for it. Initial stages of setting up a business aren’t going to be easy. You’d be forced to make a lot of sacrifices – both in your professional and personal life. You are the boss and the servant till you have a team working under you. Do you have the entrepreneurial skills in you to run a company?

If you require coaching, get in touch with your Local Enterprise Office (LEO). LEOs have defined courses and training programmes for start-up companies that give insights on how to take your business idea forward.

Does your business have the success factor?

First and foremost point to remember – don’t jump into your business idea without knowing whether it will succeed in the market or not. Your idea needn’t be something that will reinvent the wheel; it can be something that’s already been tried in the market and a successful one. You can try something specific (a niche or a category) in the existing business and master the art. Discuss your business idea with possibly other young start-up owners or people who you trust and believe can give you wise suggestions.

Most important, do some analysis on the revenue that your business will generate. How much you will be spending on building the actual product? Can you recover the cost involved along with profits? What will be your expenses in a month, the cash inflow vs. outflow and costs to run your business. A handy tool as this cash flow planner will help you manage your cashflows. If you can arrive at realistic numbers for these factors, you’ll have an answer to whether your business will be successful or not.

Do you have adequate funding?

Next important factor to consider is whether you have sufficient funds to start the business. Should you require assistance, State Grants should be the primary option for start-ups in Ireland. The Local Enterprise Office is the best place to reach out.

LEOs also offer financial support and advice to start your business! They will help you to understand the business opportunity and validate it against defined norms. Feasibility grant from the LEOs can earn you up to €15000 (which is 50% of the cost excluding VAT). The Innovation Voucher worth €5000 can be used with the 3rd level institution in Ireland to hire college students to build prototypes of your product. The Competitive Start Fund offers up to €50000 or a 10% equity stake in your business if your business idea can scale and attract heavy investment. This can be the perfect investment to get a prototype product or Minimum Viable Product out in the market to attract customers. Crowdfunding can also be an option to secure funding for your start-up.

How will you manage the accounts of the business?

Once you are clear of your source of funds and the business, the next immediate step is to open a bank account for your business. Never mix your business transactions with your personal accounts. This is a big mistake lot of start-up founders make in their initial stages. If accounting is something you cannot handle, get the best accountants in Ireland who will monitor your accounts, bills and invoices, and keep a watch on the cash flow. Make sure that your accountant understands your business well.

Networking – is it important?

Yes, as the founder of your business, it’s important that you become an active part of physical networking communities in your locality – be it coffee table meetup events, or major events related to your business. A Google local search will give you an idea of these events around your locality. You can also become a member of online communities on LinkedIn or Facebook or other similar chat forums. Having a discussion with successful entrepreneurs will nothing but give you loads of confidence for your business.

 

Medical Expenses that qualify for Tax Relief in Ireland

In Ireland, an average family spends about €200-€250 every month on their medical expenses. Most of the Irish nationals do not understand the tax laws around medical expenses or ignore the relief that’s available for them on medical and dental expenses. Statistics reveal that only 40% of Irish people claim their tax relief on medical expenses in a year.

According to the tax laws in Ireland, if you pay for your medical expenses that are not covered under the State or Private Health Insurance, tax relief is available at 20% the tax rate on these expenses. Nursing home costs qualify for tax relief at the highest tax rate of 40%. For example, if your total medical expenses (qualified for tax relief) is €2000, you will be eligible to get 20% i.e. €400 as the tax refund.

Who can claim the tax relief?

You can claim the tax relief for medical expenses that are either incurred by you or your immediate family (parents, siblings, etc). The major requirement is that you must have all the bills and receipts of medical expenses for the year.

What are the expenses that qualify for tax relief?

  1. Doctor fees, consultant fees or treatment fees in the hospital
  2. Cost of medicines prescribed by the doctor
  3. X-Ray procedures (MRI, CT-Scan, normal X-Rays) carried out as a part of your treatment
  4. Expenses on physiotherapy after being referred by a doctor
  5. If you have a nurse employed at home, you can claim the expenses spent on their services
  6. Speech and language therapy costs spent on a qualified therapist for a dependent child
  7. Treatment in a nursing home with the bills of discharge
  8. Dental treatment expenses when prescribed by the doctor
  9. Kidney dialysis expenses. You can claim the expenses on electricity, medical appliances and your charges to visit the physician for regular appointments.
  10. Maternity care fees and hospital charges (with bills)
  11. IVF is known to be a costly treatment and you are eligible to claim 20% of the expenses as tax relief for IVF treatments
  12. Optical expenses such as eye check-up, eye vision tests, glasses and contact lenses when prescribed by the doctor. Even if you do corrective laser surgery, you are eligible to claim the expenses as tax relief.
  13. In addition, the following medical needs prescribed by the doctor are eligible for tax relief –
    1. Medicines and drugs
    2. Any medical diagnostic procedures prescribed
    3. Hearing aids
    4. Glucometer for diabetes
    5. Wheelchairs
    6. Beds and chairs for patients suffering from a disability or orthopaedic problems

 

How to apply for tax refund?

You can claim your tax refund using the Revenue’s myAccount Service or the app. The myAccount Service has the receipts tracker service which allows you to store your bills details. Alternatively, you can fill up the Form 12 and drop it in the Revenue office or email the details to custform@revenue.ie. For dental expenses, you need to get the completed medical form MED2 from your dentist and submit it on the myAccount Service portal or app.

Want to know more about the medical expenses that you can claim in your tax refund? Speak to our experts now. Book your first no-obligation consultation here.

Married or not, who pays the least tax?

Are you paying much of your earnings on taxes? What if you’re told that you can reduce your taxes just by .. getting married? You heard it right. As much as you would hate marriage proposals or getting hitched, there are benefits especially when paying taxes (read, your hard earned money). Married people (both working or one of them working) end up paying less tax than the ones who are single or in a cohabiting relationship. How? Why?

Preference for families by the tax system

The tax system has a preference for couples who are married or have a child. Especially, couples where both husband and wife earn their income, they pay the lowest taxes when compared to unmarried people and the ones cohabiting with one income. On the other hand, cohabiting couples with two incomes also get advantages on their taxes.

For example, if the income is €20000 per annum, a single person will pay taxes up to 13%, i.e. approximately €2500 in taxes. In case of a married couple where one of them is an earner, they will pay 6% of their income as taxes (€1200) while a married couple with both of them earning will not pay any taxes. This means that they can save up to 13% of their income every year.

Having a child? Pay even lesser tax

The news is even sweeter for married couples with a child. Be it with one or two incomes, their taxable income will be NIL. For a cohabiting couple with one income and a child, an annual earning of €20000 will still make them pay taxes of up to 13%. But if they were to be married, they can save the 13% of taxes (~€2500 every year). A single person with one child earning €20000 a year will have to pay 6% of their income as taxes.

Therefore, if a single person or a cohabiting couple with a single income have a child, they can reduce the amount paid through taxes every year.

Choose their assessment type

Married couples can choose from one of the three types of tax assessments: joint, separate, and single that will help to reduce the overall tax paid for the year.

With joint assessment, the couple is eligible for transfer of their unused tax credits among each other. Separate assessment is very similar to joint assessment, except that the tax allowances will be equally split between the husband and wife. A joint and separate assessment is beneficial for couples where they have two incomes and one spouse has earned more than the other. In a single assessment, the husband and wife will be treated as two single persons for tax purposes (in case of divorce or forced separations).

Tax Concessions

The tax system also provides various tax concessions for married couples where –

  • There will be no Capital Gains Tax (CGT) when assets are transferred between the husband and the wife
  • No stamp duty when transferring the assets between the couple
  • No Capital Acquisition Tax (CAT) when any gifts of gratitude is shared between the couple

Self-employed?

If you run your own business and you are married, you can ensure tax savings of €5000 every year on your income. For this, your spouse should be a part of your business and have an income of €25000 that can be shown as a part of your business to avail the tax benefit.

To understand how you and your spouse can save on taxes, speak to our expert consultants today. Your first consultation is on us! Contact us here

5 Most Commonly Overlooked Business Tax Deductions

Every year, business owners face their toughest and the most dreaded time – paying taxes. Though the business performs exceptionally well during the year, the amount payable as taxes is still a lump sum. But, there’s good news! There are lots of ways business owners can reduce the tax amount payable every year. One most popular and common method is tax deductions. Not many business owners are aware of this “nifty but priceless” method to lower their tax amount.

Here are the 5 most commonly overlooked business tax deductions by business owners. It’s highly advisable that you get in touch with your tax planning expert or look out for the best accountants in Ireland.

1.    Travel Expenses

Travelling is a part of the job for business owners. Do you use your car for business trips or your daily office commute? Expenses such as parking and toll charges, vehicle insurance fees, fuel, vehicle breakdown and repair charges, maintenance charges will be eligible for tax deductions. Additionally, if your travel involves a flight/train/bus journey, a hotel stay, all these expenses can be accounted for tax deductions.

2.    Accounting, Consultancy, Bank Expenses

Any fees that you pay related to your business such as amount paid to your accountant for preparing your tax returns, or business consultants are eligible for tax deductions. Even bank fees and finance payments such as credit card payments specific to your business will qualify for deductions. Interest charged on business loans can also be claimed as tax deductions. If you paid for the cost of education and/or training of your employees, the cost can be claimed as a deduction.

3.    Advertising Costs

Any business will require paid advertising efforts. For example, printing brochures and flyers, or online advertising as a part of your marketing campaigns. This is very crucial for the success of the business. These advertising costs can be tax deductible. It’s however recommended that you speak with your accountant to validate the expenses before paying your taxes.

4.    Personal and Home Office Expenses

As a business owner, you may be using a lot of your personal things for the business. For example, mobile phones, computers, stationery items, and more. You can add up these expenses and get them deducted when paying your taxes. Though not as significant as other costs, you can still save a few thousand dollars.

If you have a dedicated office premise, you can claim the rent paid, electricity and other associated costs as expenses. If you are using a room in your house as office space to conduct your business, you can claim the expenses under the Home Office deduction category.

5.    Medical and Insurance Expenses

Business owners have the liberty to deduct 100% of the medical expenses and insurance costs when paying their taxes (not the business tax, but personal tax). You can also claim the expenses of your spouses or your dependents.

As a business owner, you make money; and it’s important at the same time to pay your taxes. Your business might not be eligible for all the deductions listed, or there might be some restrictions.  Get in touch with the best accountants in Ireland and plan your taxes in advance.