Liquidating a company to avoid tax
You could sell an existing business ( a Sole Trader ) to a new company and pay for Goodwill in the Sole Trader.Some quick Irish tax tips to help you avoid paying too much tax 1.Many tax options depend on getting notice in advance of transactions. Consider incorporating your business as there are many tax advantages. You can be taxed at Corporation Tax rates rather than Income Tax rates which would save a lot of money.You could rent property to the company, and you could take advantage of retirement relief if you ever sell or wind up the company.The Limited Company pays you for the business and you save by paying Capital Gain Tax at 33% rather than paying Income Tax at rates of 41% plus PRSI plus Universal Social Charge.
A director’s loan account can be a particularly complex issue for company directors to understand.You can do this by, for example, selling off part of your business. Directors can pay any amount into a pension – employees are restricted to contributing a proportion of their income. Pay your commuter train or bus ticket through the business, get your mobile phone invoiced and paid through the business, purchase your home office computer through the business.Could you start an easily-separated section of your existing business with a plan to sell it in a few years to take advantage of Capitals Gains Tax. Pay some of your rent and utilities bills to yourself for your home office. If you travel for work, then you are entitled to reclaim travel and subsistence from the business tax-free using Civil Service rates. If you are currently employed investigate if you can become self-employed.However you will have to pay Employers PRSI of 10.75% total bill €1,827. Allowances – widowed parent tax credit €4,000 for 5 years,one parent family €1,800 and the rate bands increase. Claim Tax Relief at source for Mortgage Interest on your home. You need to give your medical insurer your PPS number. Claim Rent paid on your Principal Private Residence if you don’t own your house. This means you can reclaim VAT on whatever you buy. This means that you pay VAT as you collect money from your customers.
You can do this through your bank or building society by giving them your tax reference number ( PPS number ). This allowance applies if you leave you house to get it renovated. Trade Union subscriptions, Teachers Allowances, Architects Allowances – check PAYE allowances. Assuming your customers are VAT registered then they can reclaim the VAT you charge so there is no impact on them. Normally you are liable to pay VAT as you invoice your customers whether they pay you or not.
From 1st May 2014 your Sales have to be less than €2 million per year to avail of the Cash Receipts Basis. The advantage to your business is that you don’t have the pay out the VAT as quickly as the normal basis of accounting for VAT. Become non-resident before making large gifts and avail of lower rates of Capital Acquisitions Tax.