Becoming self-employed

When you start working for yourself, you are classed as ‘self-employed’ and a ‘sole trader’. A sole trader is when you set up a business on your own.

In general, you are a self-employed sole trader if you:

• Run your own business and are responsible for its successes and failures
• Have several customers
• Regularly sell goods or services to make a profit
• Are paid for the service you provide
• Decide how, when and where you work

If your business fails, your personal assets could be used to pay back your creditors (people or organisation your business owes money to).

You can learn ‘How to become a sole trader’ (see below).

Set up a business without becoming a ‘sole trader’

If you want to keep your personal assets and business assets separate, you can set up a ‘limited company’ instead. Read about the different types of business structures, including how to set up a business (or ‘partnership’) with other people.

If you are a non-EEA national, you can read about coming to set up a business or invest in Ireland.

Budget 2025: Increased tax credits

Budget 2025 announced that the Earned Income Tax Credit will increase by €125 to €2,000, from 1 January 2025.

If you choose to become a sole trader, you are self-employed and you do not have a business partner. This means you are personally responsible for the business. So, if the business fails, your personal assets can be used to repay any debts to your creditors.

To legally become a sole trader, you must register as self-employed with Revenue. Once you have registered, you pay income tax as a self-employed person, rather than through the PAYE system (which is used for employees).

As a self-employed sole trader, you become eligible for certain tax reliefs. Read more in ‘Paying tax as a self-employed person’ below.

You do not have to use a business name. But, if you choose to use a business name, you must register your business name with the Companies Registration Office (CRO) – read more below.

If you want to use a business name, you must register the name with the Companies Registration Office (CRO) within one month of adopting the business name.

You can do this in 2 ways:

• Download and complete the paper form RBN1 (pdf). There is a €40 fee to register a business name using the paper form. Visit the CRO website for information on payment methods
• Register online using CORE (Companies Online Registration Environment). There is a €20 fee to register your business name electronically

You will then get a ‘Certificate of Registration’, which you must display prominently at your place of business. In general, you will need the Certificate of Registration to open a business bank account (a business account lets you keep your business income separate from your personal income).

You can read more about registering your business name on the CRO website, or download the CRO leaflet on registering a business name (pdf).

To set up as a sole trader, you must register for income tax with Revenue as a self-employed sole trader, using the Revenue Online Service (also called ‘ROS’).

You must have a Personal Public Service (PPS) number to register with Revenue. After you register, your Tax Reference Number (TRN) will be the same as your PPSN.

If you are not eligible to register online

If you are not eligible to register online, you can register using the paper tax registration form TR1 (pdf). You can also use this paper form to register for VAT.

You will then get a ‘Notice of Registration’ confirming that you are registered for income tax and, if applicable, for VAT.

It is important to note that Revenue will not process a paper application if you are eligible to register online. Find more information about registering for tax as a sole trader on the Revenue website.

Once you have registered with Revenue

When you are registered with Revenue as a self-employed person, you pay income tax, PRSI and the Universal Social Charge under the self-assessment system.

This means you pay preliminary tax (an estimate of your income tax, PRSI and Universal Social Charge due for the current year) on or before 31 October each year. You will be charged interest for any late payments.

Pay and file system

By 31 October each year you must:

• Pay your preliminary tax for that year (see explanation above)
• File your annual tax return for the previous year
• Pay any balance of tax due for the previous year

Read more about paying tax as a self-employed person.

Keeping records

You must keep accounts to record:

• All purchases and sales of goods and services
• All amounts received and all amounts paid out

You must also keep supporting records, such as invoices, bank and building society statements, and receipts.

Tax relief (the Earned Income tax credit)

In 2024, self-employed traders can claim the lower of either:

• An Earned Income Tax Credit of €1,875
• A tax credit worth 20% of your qualifying earned income

However, if you also qualify for the PAYE tax credit (for example, if you are an employee of another company, as well as working for yourself), the combined value of these 2 tax credits cannot be more than €1,875.

Claiming business expenses

You can claim certain business expenses against tax, as well as your contributions to your personal pension.

For example, you can claim for expenses directly linked to your business, such as:

• Employees’ wages
• Rent bills for the business premises
• Accountancy fees

Read more about claiming for business expenses on the Revenue website.

Get a refund of previously-paid PAYE income tax

You may be entitled to a refund of PAYE income tax that you paid over the 6 years before you started a business. This is called the Start Up Refunds for Entrepreneurs (SURE) scheme.

The general qualifying conditions are:

• You have mainly PAYE income in the previous 4 years
• You establish a new company and engage in qualifying trading activities
• You invest money in the new company by purchasing new shares
• You must take up full-time employment in the company as a director or an employee

There are other conditions around qualifying companies and qualifying investments.

Read more about the SURE scheme on the National Enterprise Hub website.

If you are a self-employed subcontractor

If you are a self-employed subcontractor working in construction, forestry or meat processing, you can get detailed information about Relevant Contracts Tax on the Revenue website.

If you are self-employed, you pay Class S PRSI contributions. This entitles you to a limited range of social insurance payments (for example, you are not covered for any short-term payments, including illness and disability payments).

Class S PRSI contributions are paid at a rate of 4.1% on your total income (gross income minus allowable expenses), or €650, whichever is the greater, (before 1 October 2024 the rates were 4% and €500). If you earn less than €5,000 from self-employment in a year, you are exempt from paying Class S PRSI but you may pay €650 (€500 before 1 October 2024) as a voluntary contributor.

If you are using Revenue’s self-assessment system for 2024, a blended rate of 4.025% or a minimum payment of €537.50 will apply to your 2024 self- employed income. This is because the rate changed during the year.

When you register with Revenue (see ‘Paying tax as a self-employed person’ above), you are automatically registered for Class S PRSI. You can get information on PRSI for the self-employed from your local Intreo Centre or Social Welfare Branch Office.

You can also contact the Self-Employment Section of the Department of Social Protection – see contact details under ‘More information’ below. Or, you can read the Department’s leaflet about PRSI for the Self-Employed (pdf).

If you employ (or are helped by) family members

Most employees must pay PRSI. However, if you are a self-employed sole trader, and you employ or are helped in the running of your business by specified family member(s), these family members are not covered by the social insurance system. This is known as family employment.

There are different arrangements for family members working in a 'limited company', or two or more family members who operate a business as a 'partnership'. Read about the different types of business structures.

Read more about employing family members and PRSI.

Insurance

You are not legally obliged to be insured when you are carrying on a business, but you are advised to have insurance for various situations. For example, if the public has access to your business premises, you should have ‘public liability insurance’.

You may also want to look into other types of insurance, such as health insurance.

The Irish Insurance Federation has a free insurance information service, where you can get information and advice on all aspects of insurance.

Planning permission

If you are working from home, you may need planning permission.

Planning permission is needed if you want to significantly change how you use your land or buildings. For example, you will need planning permission if you want to:

• Convert your garage into a workshop for business use
• Open a crèche in your home
• Open a bed and breakfast with more than 4 guest bedrooms

You should contact your local authority for advice about planning permission. You may also want to read our page on applying for planning permission.

Getting funding

If you are starting a business, you can apply for funding and grants from a range of sources, including:

• Your Local Enterprise Office
• Microfinance Ireland
• Enterprise Ireland
• SEAI
• Government

See the range of business funding and grant opportunities available.

Credit difficulties

If your application for credit is refused by one of the participating banks, you can apply to the Credit Review Office to have your case reviewed.

Read more about what to do if you have problems getting credit, or if you need free financial advice.

Getting advice on starting a business

If you need help planning your business, or need advice about how to get started, you can contact your Local Enterprise Office.

You can also apply to New Frontiers, which is a national development programme for early-stage entrepreneurs. The programme involves practical and interactive workshops, as well as one-to-one mentoring.

Or, you can read our pages on:

• Starting a business
• Sources of information on starting a business
• Supports for making your business eco-friendly
• Closing or selling a business

You can get more information about becoming self-employed from your Local Enterprise Office