Becoming self-employed

Introduction

When you start working for yourself, you are classed as self-employed.

When you start a business you can set up as a sole trader, partnership or limited company. This page covers information on setting up as a sole trader. A sole trader is when you set up a business on your own. Being a sole trader is relatively straightforward to set up, but if your business fails, all your assets could be used to pay your creditors.

Preparation

Much of the process of preparing for self-employment is about starting a business. This is the same information whether you are a sole trader or a partnership or company. There are many organisations, websites and publications that can help you start your business. Read more about information and supports.

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

Registration of business name

If you want to use a business name you must register your business name with the Companies Registration Office. Complete the Form RBN1 (pdf) or online using CORE (Companies Online Registration Environment). You will then be issued with a Certificate of Business Name which you must display prominently at your place of business. There is an information leaflet on registering a business name (pdf).

You may need to have a business account with your bank. This allows you to keep your business income separate from your personal income. In general, you will need your Certificate of Business Name to open a business bank account.

Tax and PRSI

Tax

To set up as a sole trader you must register for income tax with Revenue as a self-employed sole trader. You do this using Revenue’s online service. Certain people can only register using the tax registration paper form TR1 (pdf). This form can be also be used to register for VAT. You will receive a “Notice of Registration” confirming that you are registered for income tax and, if applicable, for VAT. You can find out more information about this on Revenue’s website.

As a self-employed individual you pay tax under the self-assessment system. You pay Preliminary Tax (an estimate of tax due) on or before 31 October each year and make a tax return not later than 31 October following the end of the tax year. You must keep proper records to allow you to fill out your annual tax return. You pay the Universal Social Charge directly to Revenue when you make your annual tax return.

Earned Income tax credit: In 2021, you can claim an Earned Income tax credit of €1,650, if you are a self-employed trader. However, if you also qualify for the PAYE tax credit, the combined value of these 2 tax credits cannot exceed €1,650.

You must keep accounts which record:

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

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

You can claim certain business expenses against tax as well as your contributions to your personal pension. You can read nire about tax for self-employed people or visit the Revenue website.

Under the Start Up Refunds for Entrepreneurs (SURE) scheme you may be entitled to a refund of PAYE income tax that you paid over the 6 years before the year in which you invest in starting a business.

You must register for Value Added Tax (VAT) if your annual turnover exceeds or is likely to exceed the following annual limits: €75,000 for the supply of goods or €37,500 for the supply of services.

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

PRSI

If you are self-employed you pay Class S PRSI contributions. This entitles you to a limited range of social insurance payments. Class S PRSI contributions are paid at a rate of 4% on all income or €500 whichever is the greater. 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 €500 as a voluntary contributor.

When you register with Revenue you are automatically registered for Class S PRSI. For information on PRSI for the self-employed you can contact your local Intreo Centre or Social Welfare Branch Office or the Self-Employment Section of the Department of Social Protection – see 'Where to apply' below.

The Department of Social Protection has published a leaflet PRSI for the Self-Employed.

Family members and PRSI

If you are a self-employed sole trader and you either employ, or are helped in the running of your business by specified family member(s), this is known as family employment. These family members are not covered by the social insurance system.

Certain spouses and civil partners of self-employed sole traders can pay PRSI. These include people who work in their self-employed spouse or civil partner’s business doing similar or ancillary (supporting) tasks but who are not business partners or employees. The €5,000 income threshold applies to spouses or civil partners in the same way as other self-employed people. So if a spouse or civil partner earns less than this threshold they do not have to pay PRSI.

If you are an employee of a limited company that is owned by your spouse or a family member, you are insurable at PRSI Class A (or Class J). If you are not an employee but participate in the running of the company or if you hold a directorship or shareholding position and have control over its operations, you may be treated as a self-employed contributor and liable to pay Class S PRSI (provided you earn more than €5,000).

Two or more family members who operate a business as a partnership and share the profits are insurable as self-employed contributors at Class S (if they earn over €5,000). Family members employed by a partnership pay Class A (or Class J).

Insurance

Although you are not legally obliged to be insured when you are carrying on a business, it is generally advisable to have insurance cover for various situations. If the public have access to your 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 provides 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. For example, if you are using part of your home for business purposes or if you were to build a shed or an office in your garden. You should contact your local authority for advice about planning permission.

Supports available

The Back to Work Enterprise Allowance (BTWEA) Scheme and the Short Term Enterprise Allowance (STEA) Scheme encourage those receiving certain social welfare payments to become self-employed. For further information about the Back to Work Enterprise Allowance scheme contact the Employment Support Services of the Department of Social Protection – see ‘Where to apply’ below. You can read more about self-employed and unemployment.

Local Enterprise Offices provide supports to local businesses that are starting up or in development. You can find information about their training programmes and start your own business courses as well as mentoring and financial supports on localenterprise.ie.

Enterprise Officers in Local Development Companies can offer advice and information on starting your own business – see ‘Where to apply’ below.

New Frontiers is a development programme for potential entrepreneurs, funded and coordinated by Enterprise Ireland, which is delivered locally by Institutes of Technology.

Funding

Microfinance Ireland provides loans of between €2,000 and €25,000 to small businesses with no more than 10 employees, including sole traders and start-ups. Details of how to apply and forms are available on microfinanceireland.ie.

Regulations on lending, to provide increased protections for SMEs and guarantors, have been in effect since 2016.

Under the Trading Online Voucher Scheme vouchers of up to €2,500 will be available to businesses who demonstrate that they have a credible plan to trading online. Further details are available from your Local Enterprise Office.

You can read more about funding and accessing credit.

Credit difficulties

If you have a small or medium business and your loan application is refused by one of the participating banks you may apply to the Credit Review Office to have your case reviewed. The participating banks are AIB, Bank of Ireland, PTSB and Ulster Bank.

To be eligible for a review your loan application must have been in writing. There is an application form on the website of the Credit Review Office. The fee for the review ranges from €100 up to a maximum of €250.

The Credit Guarantee Scheme aims to encourage additional lending to small and medium businesses who are commercially viable but have difficulty in accessing credit. Under the Scheme eligible applicants will be helped to get a loan and establish a favourable credit history. You can find out more in the information booklet about the Scheme. There are also Customer Frequently Asked Questions as well as details of eligibility criteria.

If you are having financial difficulties the Chartered Accountants Voluntary Advice service - CAVA (pdf) can give free help and advice about your business. Contact your local Citizens Information Service or Money Advice and Budgeting Service (MABS) to see if they offer the service.

COVID-19 business supports

If your business is unable to operate, you have reduced revenue or you need financial support to help your business operate safely during COVID-19, there are specific support schemes and other supports available.

Where to apply

Contact your tax office.
Contact your Local Enterprise Office
Contact your local development company (pdf)

Companies Registration Office

Parnell House
14 Parnell Square
Dublin 1
Ireland

Tel: (01) 804 5200
Locall: 1890 220 226
Fax: (01) 804 5222

Department of Social Protection

Self-Employment Section

Social Welfare Office
Cork Street
Waterford
Ireland

Tel: (01) 704 3000

Department of Social Protection

Employment Support Services

Social Welfare Services Office
Government Buildings
Shannon Lodge
Carrick-on-Shannon
Leitrim
Ireland

Tel: (071) 967 2616 or 1890 927 999


Page edited: 16 February 2021