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7 Questions to Ask Your Accountant in Ireland

For over a decade in the industry, we have had many questions about Irish accounting services from clients throughout our work. As a result, we have gathered the most common queries and sought the assistance of Mila, our accounting manager, to offer comprehensive responses. So here are the answers to 7 questions that every entrepreneur should know before starting a business in Ireland.
accountant in Ireland

Do I Need to Hire an Accountant for My Business?

If you’re not a former accountant who is now running a business, you’ve probably thought hiring an accountant is the best course of action for you and your company. Although it’s not necessary, employing an accountant for Irish Ltd might prove to be a wise investment. Consider the following inquiries to help you decide if your small business needs accounting assistance:
  • Do I have enough spare time to handle taxation?
  • Can I keep up with my company’s expansion?
  • Can I file taxes for my small business?
  • Can I afford hiring an accountant in Ireland?
. What are My Tax Obligations as a Ltd Company? You must comply with a range of legal requirements and tax duties as an Irish limited company (Ltd). Let’s examine the most typical tax categories you may run into:
  • Corporation Tax (CT) is deducted from the earnings of your business. The usual rate that most firms in Ireland currently pay is 12.5%. As of Budget 2024, there are certain exclusions, though. Businesses that have had yearly sales of more than €750 million in any of the preceding four years are subject to a 15% rate.
  • Applied to products and services at every step of production or distribution, VAT (Value Added Tax) is a consumption tax.
  • Payroll taxes, such as PAYE (Pay As You Earn), PRSI (Pay Related Social Insurance), and USC (Universal Social Charge), are withheld from employees’ paychecks and remitted to the government.
  • Extra Taxes: You might have to pay more taxes based on what your business does. For example, Relevant Contracts Tax (RCT) may be required for businesses involved in the energy, telecoms, construction, forestry and meat processing industries.

Is Setting Up Irish Ltd Generally More Beneficial than Registering as a Sole Trader?

It depends on different factors. In Ireland, forming a limited company might take longer and need more paperwork than forming a sole trader. Still, many of our clients opt for limited companies since they provide further advantages. As an example:
  • Because of their restricted responsibility, a corporate director’s assets are often shielded from being utilised to pay off the debt of the company.
  • Compared to firms in other European nations, corporations in Ireland pay a lower corporation tax rate.
  • Customers and suppliers may view your firm as more established if it is set up as a limited company.
  • Compared to a sole trader, a company director is eligible for additional tax reliefs.
  • Compared to sole traders, directors of limited firms have additional alternatives for compensating themselves. They can get a salary or dividend from the business.
  • As a limited corporation, you could have a higher chance of being granted government assistance or financing choices.
Read more information on what is better sole trader vs ltd company in this guide. However, take into account the following before deciding to establish a business in Ireland:
  • A limited business requires more time and money to get established.
  • There are further company filings in question.
  • Limited firms’ financial accounts are open to the public.
  • Fiduciary obligations are owed by directors. This implies that they are required by law to behave in the best interests of the business.
  • Your ownership stake in your business may be diluted if you sell shares.

What Business Expenses Can I Deduct?

Some business owners are unaware that there are plenty of business-related expenses they can claim back. This is a legal way to reduce your taxable income. If you work from home and wish to claim back expenses on your home office, we have an extensive guide on what home office expenses you can deduct and how to do it. You can also deduct costs directly associated with operating your business, including buying products to resell, paying employees, paying rent or bills for your business space, leasing a machine or vehicle, paying accountancy fees, paying interest on business loans, and pre-trading costs like creating business plans. Keep in mind that the declared costs shouldn’t include the Value Added Tax (VAT) amount if you are enrolled for it, you guarantee compliance with requirements, make sure you maintain proper records and get advice from a tax specialist.
home office

When Should I Register for VAT?

Businesses and individuals must register for VAT in Ireland starting in 2024 if their yearly turnover (determined using the calendar year as a basis) surpasses a certain threshold. The Irish Revenue has set thresholds that vary according to the kind of commodities or products.
  • Annual turnover reaches €40,000 for service providers;
  • Annual turnover reaches €10,000 from mail orders and distance sales;
  • Annual turnover reaches €80,000 for supplies of goods. This same €80,000 threshold also applies to companies that sell both products and services to the Irish market, provided that more than 90% of their turnover comes from the sale of goods;
  • Annual turnover €41,000 for persons making acquisitions from other EU member states.

What is Cash Flow?

The quantity of money that enters and exits a firm over a given time frame—typically a month or a year—is known as cash flow. It is a crucial sign of a business’s financial stability as it shows how well cash flows are handled. A corporation may engage in business expansion, pay its obligations on time, and maintain financial stability with consistent and balanced cash flows. Making educated judgments about how to manage the company’s cash resources and avert potential financial issues is made easier with the aid of cash flow tracking.

Are there Any Upcoming Legislation Changes I Should Be Aware Of?

Like any other country, Ireland’s tax laws are subject to change. The advent of electronic invoice interchange, or e-invoicing, is one of the important developments to keep an eye on as it is becoming more and more popular throughout the European Union. This might have an impact on the accounting and reporting procedures that your business uses, as well as how invoices are sent and received.

What Records Do I Need to Keep?

For every company, maintaining records is a crucial aspect of financial management. Documents like payment receipts, invoices that have been sent and accepted, and receipts for additional costs like office rent should all be kept on file. This is not only necessary, but it also facilitates proper tax returns, financial reporting, and other corporate processes. Maintaining correct records encourages prudent financial management and helps avert any issues.

Final Ideas

Navigating the complexity of accounting in Ireland requires careful thinking and proactive participation. Businesses are better positioned for success if they ask the proper questions and keep up with legislative developments. Every facet of accounting greatly impacts a company’s financial health, from comprehending tax requirements to efficiently managing cash flow. Reach out to Chern & Co for professional Irish accounting services. Our skilled experts contribute to the success of your company – whether you’re only at the beginning of your entrepreneurial road or wishing to grow your business.

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