In the excitement of starting your own business, there is often one very simple compliance mistake that many new directors make… and that is failing to register for income tax. In this blog post, we will take a look the exact situations you need to register for income tax, as well as point you in the riight direction in terms of getting registered.
What is a proprietary director?
You are considered a proprietary director in Ireland if you also own more than 15% of the share capital of the company. In reality this will be the vast majority of SMEs in the country, who typically just have one or two shareholders.
Proprietary directors in Ireland (owning/controlling >15% shares) are mandatory self-assessment taxpayers who must file a Form 11 annually via ROS, even if all income is taxed at source. The deadline is October 31st (extended for ROS pay-and-file) for the previous calendar year.
But what if my only income is a PAYE source?
It seems a little over the top, but unfortunately even in the case where you only have PAYE source income you are still required to register for income tax and completed a Form 11. On th plus side, your tax return will be relatively straight forward to complete (even by yourself). Your PAYE source income will automatically flow into ROS, as Revenue will have collected all of this information already when your company was completing its PAYE returns on a monthly basis.
Just make sure you are claiming all the potential tax credits available to you, such as;
- Rent tax credit
- Health expenses
- Year of Marriage tax credit
- Home Carer Tax Credit: For those caring for a dependent at home
- Single Person Child Carer Credit (SPCCC): For single parents
- Incapacitated Child Tax Credit: For children unable to support themselves
- And there are many more there to be reviewed for applicability
The only exception to the rule is if you are a non-proprietary director, i.e have less than 15% of the shares in the company and have no other income sources outside of PAYE sources.
Okay, so how do I actually register for Income Tax?
Luckily its only a very quick job, you just need to simply login to your ‘My Account’ on Revenue.ie and navigate to you Manage My Record section. There you will see an option to view your tax registrations – select income tax and provided the necessary information.
Once you are officially registered for income tax, your next task will be to obtain your own personal ROS digital certificate, which you will use to manage your own tax filings. You will have a separate ROS digital certificate for your company and personal taxes.
Disclaimer: this blog post is for informational and educational purposes only and should not be construed as financial advice.
