Step-by-Step Guide to Setting Up as a Sole Trader in Ireland (2024-2025)

Last Updated: October 8, 2024

If you want to start a business in Ireland, either as an individual or a freelancer, becoming a Sole Trader is a straightforward option. A sole trader is a self-employed person who runs their business independently without any business partners. One of the key steps in this process is choosing a business name. Once you decide on your business name, register it with the Companies Registration Office (CRO).

Registering Your Business Name as a Self-Employed Sole Trader in Ireland

To register your business name online, visit the CRO registration portal. The fee for electronically registering your business name is €20.

Steps to Register Using CORE

  • Create an Account: Sign up on the CORE platform by providing your user and account details to create a new account.
  • Follow the additional prompts to complete the registration of your business name. Setting up a company with CORE Setting up a company core portal
  • Log in to the CORE portal using the account you created earlier. Make sure to keep a note of your login details, as you’ll need them to access your account. CORE login
  • Once logged in, navigate to your dashboard and click on New Filing. Under the Register an Entity section, search for RBN1. Select Form RBN1: Registration of Business Name to proceed. New Filing and RBN1
  • Choose Individual and click Continue. Next, create your business name. Use the search function to check if the name is available. If the name is already in use, select a different one. Aim for a meaningful business name, such as Johnny's Store, to secure a matching domain, like Johnnystore.com. Business Name Creation on CORE

Once your business name is registered, you will receive a Certificate of Registration. This certificate must be displayed prominently at your place of business. Additionally, you’ll need the certificate to open a business bank account, which is essential for keeping your business and personal finances separate.

Registering with Revenue as a Self-Employed Sole Trader

To operate as a sole trader in Ireland, it’s essential to register for Income Tax with Revenue through their Revenue Online Service (ROS). You can manage your registrations through Revenue's eRegistration service or submit a Tax Registration Form (TR1).

If you already have access to myAccount or ROS—Revenue's online platform—you can use the eRegistration service. Otherwise, if you’ve recently received a Personal Public Service Number (PPSN) and haven’t registered yet, you’ll need to complete and submit the TR1 form. It typically takes 2-3 weeks for Revenue to process the TR1 form and issue your Tax Reference Number (TRN).

Typically, your TRN is the same as your PPSN. However, your PPSN does not automatically serve as your TRN until you officially register for tax. If you already have a PPSN and access to ROS or myAccount, you can expect to receive your TRN within five business days.

Using the Revenue Online System (ROS)

After successfully registering for taxes, ensure you sign up for Revenue’s Online System (ROS). You can use ROS to register for Income Tax self-assessment, among several other tax types. ROS is a centralized platform that allows you to manage several crucial tax-related tasks:

  • File tax returns and forms seamlessly
  • Make secure payments for your tax bills
  • Track and review your tax standing in real-time

To get started, sign in to ROS here and begin managing your tax affairs.

Registering on myAccount

If you are a Pay As You Earn (PAYE) employee transitioning to self-employment, you can register for Income Tax self-assessment through myAccount. Follow these steps to complete the process:

  • Sign in to myAccount here.
  • Click ‘Tax Registrations’ under the ‘Manage My Record’ section.
  • Then click ‘Register’ under the tax type ‘Income Tax’.
  • Confirm your NACE code, the date your business commenced, and your expected turnover.

By registering through ROS or myAccount, you will ensure full compliance with your tax obligations and have a clear overview of your financial standing.

Collaborating with a professional accountant can further simplify the management of your annual tax obligations, including year-end filings and financial reports. This partnership ensures accuracy, helps you meet deadlines, and avoids potential penalties, leaving you free to focus on your core business operations.

By registering with Revenue and using ROS effectively, you’ll have full control over your business tax responsibilities, ensuring compliance and simplifying your self-employed journey in Ireland.

Frequently Asked Questions (FAQs)  Income Tax for Sole Traders

1. What is the self-assessment system for Income Tax?

The self-assessment system requires individuals, including sole traders, to file their tax returns, make a self-assessment for the year, and pay the required taxes. This system applies to Income Tax and is part of the "Pay and File" system.

2. What is the deadline for filing my Income Tax return?

You must file your tax return on or before 31 October in the year after the year to which the return relates.

3. What is the Pay and File system?

The Pay and File system is where individuals are required to:

  • File their tax return for the previous year.
  • Make a self-assessment for that year.
  • Pay the balance of tax for the previous year.
  • Pay preliminary tax for the current year.

4. What do I need to do under the Pay and File system?

You need to:

  • File your return for the previous year.
  • Make a self-assessment for that year.
  • Pay the balance of tax for that year.
  • Pay preliminary tax for the current year.

5. What is the deadline for filing a paper tax return?

An exception is made for paper returns, which must be filed on or before 31 August in the year to which the return relates.

6. When do I need to pay preliminary tax for the current year?

Preliminary tax for the current year must be paid by 31 October under the self-assessment system.

7. How do I file my Income Tax return as a sole trader?

Most individuals, including sole traders, must file their Income Tax Return (Form 11) online through the Revenue Online Service (ROS).

8. Do I need to file my tax return online or can I file a paper return?

Most individuals are required to file their returns online through ROS. However, paper returns can be submitted by 31 August, though this is an exception.

9. What happens if I miss the 31 October tax return deadline?

If you miss the 31 October deadline, you may face penalties or late fees. It's essential to check with Revenue for specific details regarding any penalties.

10. How do I self-assess when filing my annual tax return?

You must self-assess when filing your annual tax return, which is part of the Pay and File system. The exception is if you file a paper return by 31 August.

11. Is it mandatory to file my Income Tax return electronically through ROS?

Yes, most individuals are required to file their returns electronically through the Revenue Online Service (ROS).

12. Where can I find more information on filling out the Income Tax Return (Form 11)?

You can find more information in the "Filing your tax return" section provided by Revenue or through the Form 11 guidance available online.

13. What is preliminary tax and how is it calculated?

Preliminary tax is a payment towards your tax liability for the current year. Details on how it's calculated aren't provided here but typically involve estimating your income for the year.

14. Can a sole trader have employees?

Yes, a sole trader can have employees. While the sole trader makes all business decisions and owns the business entirely, they can hire employees and are responsible for paying their salaries through the Pay As You Earn (PAYE) system.

15. What taxes do I need to pay as a sole trader?

As a sole trader, you must pay:

  • Income Tax on your net business profits.
  • Pay Related Social Insurance (PRSI) based on your income.
  • Universal Social Charge (USC), which applies to your net business income.
If you have employees, you are also responsible for paying employee-related taxes, including PAYE and employer PRSI.

16. What is Pay Related Social Insurance (PRSI) and do I have to pay it as a sole trader?

PRSI is a social insurance contribution that funds social welfare benefits. As a sole trader, you must pay PRSI on your business profits. The amount you pay depends on your income level.

17. What is the Universal Social Charge (USC) and does it apply to sole traders?

The Universal Social Charge (USC) is a tax on your income if it exceeds certain thresholds. Yes, it applies to sole traders, and you are required to pay USC on your net business profits, in addition to Income Tax and PRSI.

18. What is the Pay As You Earn (PAYE) system, and how does it apply to sole traders with employees?

The PAYE system is used to collect Income Tax and PRSI from employees' wages. If a sole trader hires employees, they must register for PAYE and deduct tax, PRSI, and USC from their employees' salaries, then remit these to Revenue on behalf of the employees.

19. When do I need to register as a self-employed person with Revenue?

If your net income is above €5,000, you must register as a self-employed person with Revenue. Once registered, you will be required to pay Income Tax, Pay Related Social Insurance (PRSI), and Universal Social Charge (USC) on your net business profits.