For Sole Traders, Freelancers and Contractors
Updated January 2023
About this eBook + Webpage
This Guide will be of use if you have recently set up or are thinking of setting up a small business in Ireland as a Sole Trader, freelancer, solopreneur or contractor. You may be working part-time, a graduate, or recently been made redundant, want a change of job, or may have spotted an opportunity to create a business perhaps inspired by a hobby, skill or passion. But you don't want the hassle or cost of setting up a company just yet. Welcome to self-employment in 2023 where you conduct business as a sole trader! The guide is for entrepreneurs selling both products and services.
The eBook is published for the Kindle Reader (Amazon) - replicated in its entirety here - is available for £0.99 to download. It is also published at a cost of €1.00 for the Kobo Reader - available from Easons and free App for your smartphone.
It identifies and briefly discusses 26 key issues for sole proprietors to include funding, taxation and marketing - plus a newly added section on trading with the UK post-Brexit - to ensure that your new business is successful and compliant. See contents for the full list of self-employment-related topics.
Contents of Guide
- Updated January 2023
- About the Author
- Download eBook for Kobo Reader
- Number of Self Employed in Ireland
- Recommended Read - A Workbook
- #.1 Research Legal Structures and Supports for Your Business
- #.2 Business Planning (The Business Model Canvas)
- #.3 Apply for your Tax Back
- #.4 Social Welfare Enterprise Supports (to include Short-Term Enterprise Allowance)
- #.6 Consider VAT Registration
- #.7 Register a Business Name
- #.8 Open a Business Bank Account
- #.9 How to pay yourself as a Sole Trader?
- #.10 Pricing
- #.11 Cash Flow Management
- #.12 Employees
- #.13 Website & Email
- #.14 Social Media
- #.15 SEO : Search Engine Optimisation
- #.16 Marketing Formula
- #.17 One Page Marketing Plan
- #.18 Mentoring
- #.19 Health & Safety and other Regulations
- #.20 Insurance
- #.21 Other Taxation Isssues
- #.22 When to form a Company
- #.23 Get a Good Accountant
- #.24 Management Development
- #25. Prepare a Business Plan document or business plan presentation
- #26. Self Assessment
As a self-employed business consultant operating as a sole trader in Ireland since 2010, Donncha has a strong interest in all aspects of Entrepreneurship. He is a graduate of the University of Galway with – Masters in Marketing. Read full bio >>
Download eBook for Kobo Reader
This Guide to Self Employment in Ireland 2017 aims to be a concise yet comprehensive reference source for starting a sole trader, contractor or freelance business. The author, self employed since 2010 as a business consultant and trainer specialising in working with startups, shares the latest information on all matters legal, taxation, finance and marketing to get you started in a step by step manner. Preview and buy the eBook on Kobo.com
Number of Self Employed in Ireland
A sole trader runs their business without forming a company. It is the simplest and most flexible business concern to run. This may be for a short period of a year or two before a company is formed or could be for many years over the full life of the business.
According to the CSO (Central Statistics Office), the number of self-employed persons in Quarter 2, 2022 in Ireland was 341,000. This represents 13.5% of people in employment and 21% of private sector employment. In Q3, 2016 total self-employed represented 16.5% or 327,400 persons. BTW, self-employed income represented 11.9% of gross income in Ireland in 2016 (latest figures available from census). So it appears that while the total number of self-employed has increased its proportion of total employment has reduced - possibly due to a slight reduction in bogus self-employment.
A 2016 WDC Insights report highlights that self-employment is more common in the Western Region, with 20.5% of all working people in the region self-employed compared with just 15.7% in the rest of the state. The report adds that it is very common in skilled trade occupations (e.g. construction, farming) and such occupations are more important in the Western Region’s labour market (18.4% of all jobs v 13.8%). The region (seven counties) also has higher female self-employment rates.
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 two major strands of activity to be managed by a new business owner; how the business is going to make money; and managing the business from a legal and compliance perspective.
The first is how your business is going to make money. This involves figuring out who your customer is and what you are going to sell to them. So the question is what range of products or services can you provide that provides fantastic value to potential customers. Your ‘job’ is to find your first customers and deliver on your promises such that they pay you more money than it costs to provide the product or service (the essence of creating value). Hopefully this is the start of a wonderful cycle of growth. This first strand of activity encompasses: Market Research; Marketing to include Competitive Analysis and online marketing; and Operations and Sales.
The second major strand of activity is managing the business from a legal and compliance viewpoint. This involves creating a legal structure, paying tax, registering for VAT, hiring employees and other items such as Insurance and Health & Safety. This second strand of activity broadly covers: Operations; and Taxation and Governance to include finance.
The ultimate success of your business depends on managing both these strands which will be covered in this guide. It is hoped that you find this GUIDE to be a useful checklist for your new business.
Recommended Read - A Workbook
Starting Your Own Business: A Workbook 3rd Edition (2010) by Brian O’Kane and Ron Immink is available to buy online at O'Mahony's books (a great store in Limerick).
The WorkBook takes a potential entrepreneur through the whole process of starting a business, from first thoughts about self-employment and company formation to the practicalities of a start-up. It consists of three chapters: READY; STEADY, and GO; each of which is filled with checklists, flowcharts and questionnaires.
READY provides you with essential background information and preparation for making a commitment to a start-up. It includes both Self-assessment and Market Research as key elements.
STEADY takes you through the steps necessary to develop a Business Plan, including the Mission Statement, Strategy, Marketing, Staff, Finance, Taxation and Premises. Presenting the Business Plan and Financiers' views on Business Plans are also included.
GO provides forms, documentation and further guidance to help you put your business into action.
#.1 Research Legal Structures and Supports for Your Business
If you are starting a business you can get advice and information from a range of organisations. Your first task is to figure out what these organisations can or cannot do for you, and what you need to do to avail of their services.
The Citizens Information website provides comprehensive information on public services and on the entitlements of citizens in Ireland. Within this remit, it addresses the supports available to job seekers and the interaction between social welfare benefits and work. It also provides comprehensive information on the issues you need to consider when setting up a business and becoming self-employed. In particular, it explains the role of the many agencies involved in supporting new enterprises. As such it is a great orientation starting point.
Then, you can check out your Local Enterprise Office (LEO). Formerly known as Enterprise Boards, the LEOs operate in each county as the First Stop Shop for anyone seeking information and support on starting or growing a business in Ireland.
Later this guide will discuss When to Form a Company Item #.22. A key theme of this guide is that forming a company is not necessary in all cases and may offer no additional benefit. But the issue needs to be considered on a case-by-case basis.
This guide will discuss the primary supports for Sole Traders in Item #.4 BTWEA – Back to Work Enterprise Allowance.
#.2 Business Planning (The Business Model Canvas)
It is vital to plan your business. This does not equate to creating a business plan. Instead, I recommend completing a Business Model Canvas as outlined in the superb book, Business Model Generation (available from Easons). In one page it allows you to bullet point the key strategic issues for your business across the following nine areas.
- Customer Segments
- Value Propositions
- Customer Relationships
- Revenue Streams
- Key resources
- Key activities
- Key partners
- Cost Structure
Donncha has published a FREE online training programme on how to complete a Business Model Canvas. He also published one on how to create a Lean Canvas by Ash Maurya. Both are great planning tools. Sign up to watch the video-based programmes and download blank canvases that you can complete for your startup business.
A key step in business planning is market research. For a sole trader, market research essentially involves talking to potential customers. You will be looking for information that will help you to complete your business model canvas – actually you will be testing that the assumptions that you have written down in your business model canvas are correct. For instance, you will want to confirm your value proposition – why would someone buy from you as opposed to continuing to buy from their current supplier or the competition?
There is a brilliant free eBook called Talking to Humans that I recommend for all startups to understand how they should approach their market research. My blog post on secondary market research is complementary in detailing sources of information within Ireland.
#.3 Apply for your Tax Back
If you are working, your employer will be paying PAYE on your behalf. The Irish tax system is set up so that you pay an equal amount of tax in each week or month of the year. When you finish work you may have unused tax credits. So your first task is to contact the Revenue to figure out if you are owed tax back? Hopefully this can add to your savings!
FURTHER INFORMATION: Revenue Website www.revenue.ie
In general, sole traders will not be eligible for Enterprise Agency grants in Ireland. This is particularly where they intend to provide professional services; or produce or retail products solely in the Irish market. But it may be worth checking out what support your business might be eligible for – see my blogpost updated in January 2023 which includes a Pdf listing various supports available.
#.4 Social Welfare Enterprise Supports (to include Short-Term Enterprise Allowance)
Since late 2019, sole traders in Ireland are entitled to claim social welfare if their business closes - this is a deserved safety net.
When you finish work, you can sign on with your local Social Welfare office until you secure your next job or start a business. Your social welfare situation will be particular to your circumstances. Two separate schemes are worth investigating:
- The STEA ‘Short-Term Enterprise Allowance’ enables citizens to retain social welfare payments for up to nine months while setting up a new business. Payments will be paid into your bank account. You will need to apply at your local Social Welfare office (they may refer you to your Local Partnership company). The application requires a short business plan. When you are approved to join the scheme you can then register with Revenue as a Sole Trader; start your business and issue your first invoices. The Short-Term Enterprise Allowance Scheme includes a small grant fund for eligible business expenditures. Please note that the Short-Term Work Enterprise Allowance is subject to income tax in the same way as Jobseeker’s Benefit.
- The ‘Back to Work Enterprise Allowance’ (BTWEA) scheme encourages people getting certain social welfare payments to register as self-employed and retain a percentage of their social welfare payment for up to 2 years.
FURTHER INFORMATION: Citizens Information – provides comprehensive information on the services and entitlements available if you are self-employed and your income is reduced.
#.5 Register with Revenue
In December 2016, Revenue launched ‘RevApp’ a free mobile app (Apple and Android) to help Sole Traders manage their tax affairs on the go.
The form TR1 is used to register as a Sole Trader with the Revenue Commissioners. The advantages of being a sole trader is that your business can be involved in a number of unrelated activities. For instance you could have a Flower Shop and also be a Dancing Instructor and/or be a plumber. As a sole trader you personally are responsible for all debts of the business.
It may also useful to apply for a Tax Clearance form at this stage. This will be required if you intend to submit tenders. The easiest way to apply is via ROS – Revenue Online (addressed further in points #.9 and #.21).
Did you know: You can earn up to €5,000 in extra income as a PAYE employee? For example, Teachers could charge for private tuition in Maths or Music. Simply declare this additional income to Revenue using the myAccount service. You then don't have to register as a Sole trader.
#.6 Consider VAT Registration
Sole Traders can register for VAT using the TR1 form used to register as a Sole Trader. The VAT threshold for services businesses is €37,500 in revenue while for goods and manufacturing it is €75,000. You can elect to register for VAT at the start if you are buying equipment or you can register as you approach the threshold.
You will need to find out what VAT rate applies. For children’s shoes it is 0%, for Hairdressers it is 9%, for services such as plumbing it is 13% and for goods such as mobile phones it is 23%. The revenue has produced a nice guide on VAT for Small Businesses. VAT returns are submitted via ROS every two months on the 19th of the month following the end of the 2nd month ie 19th March for January and February. For more on VAT see this VAT section on Revenue.ie
#.7 Register a Business Name
Deciding on your business name is a critical branding decision. If you decide as a Sole Trader not to trade under your own name you will be required to register a business name with the Companies Registration Office (CRO).
Using the free Search facility on the CRO website you can check the details of Companies and Business Names in Ireland to see if your preferred business name is available. Please note that no protection is given to the name registered, i.e. there is nothing to stop someone else registering the name that you have registered (unlike a company where each name is unique).
Form RBN1 is used to register a business name by an individual. Form RBN1 can be completed online at core.cro.ie - electronic fee of €20 applies or you will fill in the details online print out the completed form, add your signature and send payment of €40 to the CRO by post. Your application will be processed in about 4 weeks.
ADVICE: The business name chosen should ideally be short, memorable, easy to spell and relevant or easy to associate with your product and services. It is also advisable to check the availability of the relevant website domain.
ADDITIONAL NOTE: A business may elect to Trademark its chosen business name. This is essential in the case of a business which wants to build a national or international brand or indeed intends to set up as a Franchise i.e. McDonalds is the classic example of a franchise whereby each Restaurant is owned by the local operator but conforms to rules set down by Head Office and pay an agreed fee each year to operate. It is advisable to consult a solicitor who specializes in Trademarks. However, you can do it yourself if you wish.
 In January 2012, there were 417 businesses with Hughes in their name.
 See http://www.patentsoffice.ie/en/trademark.aspx for more on Trademarks in Ireland. Apply online at https://euipo.europa.eu for an EU-wide trademark registration and www.uspto.gov for a USA Trademark.
#.8 Open a Business Bank Account
The advice is to open a separate Bank account for all business transactions.
Most mainstream banks offer free banking for up to 2 years and free online banking for Sole Traders. Services from operators such as Revolut and N26 can also be used. (great article on Best Business Bank Accounts for Startups in Ireland by Acccountant Online.ie)
All invoices should include IBAN and BIC and account numbers to facilitate Electronic Transfer Payment (EFT).
#.9 How to pay yourself as a Sole Trader?
The flowchart below summarises the 8 steps involved in figuring out how much to pay yourself as a self-employed Sole Trader.
Cash flow In - Customer Pays You
Picture this. A customer (or a few of them) pay you a sum of money – say €4,920. You sent the invoices out a few weeks ago and now the money has lodged in your account. Your family is looking for some money to pay the bills. Before you give them any money, you need to keep money in your bank account to meet ongoing costs, and ‘save’ some money to cover the tax bill due at the end of the year. This section suggests that you can pay yourself €2,500, as explained step by step in the following 8 points:
Step #.1 - Account for VAT
The amount less VAT is €4,000, assuming that VAT has been charged at 23%.
If VAT registered, the advice is to lodge VAT into a separate bank account. This is not your money. Please note that the threshold for Services is €37,500 and is double that for Goods & Manufacturing.
Step #.2 - Save money to cover tax bill
As a sole trader I advise putting money into a separate Bank account to cover the tax liability. RABO Direct is a great service. So how much should that be? Read on…
Step #.3 - Understand what you pay tax on?
You need to understand your tax liability. Sole Traders will pay themselves Wages such that there is no profit or surplus in the Profit and Loss account. This is the income figure that they will then pay tax on. This is referred to as a Self-Assessment Tax System.
You calculate that overheads in the business to date are €1,000. Bills paid (for which you have receipts) include business insurance; diesel plus the mobile phone. As such your ‘income’ to date is €3,000.
Please note that tax is of course calculated on an annual basis. So you will need to estimate your tax liability based on assumptions relating to Turnover (Income) and Overheads for the entire year.
Step #.4 - Understand that Taxes your pay and Tax rules and rates
As a sole trader you will pay PRSI, PAYE and USC – for more on these and up to date rates, please consult Revenue.ie
The tax system is based on the principle that the more income a person earns, the more tax they will pay - referred to as a Progressive Tax System if I recall correctly!
Step #.5 - Working out your Taxes
The easiest way to work out your Taxes is to work with an Accountant. BTW, I am not an accountant. But I do my own accounts for my Sole Trader business. This is perfectly acceptable. Your accountant will want records of all your Invoices and Receipts (Get a Good Accountant is Item #.23) . They will be able on a real time basis be able to advise you on how much money you should ‘save’ to cover your taxes.
As I say, if someone has knowledge of accounts, a Sole Trader can keep their own accounts. To work out your taxes, you can register for ROS and use that system to do all the 'taxation liability' calculations. Alternatively, your Accountant can register as your Agent on ROS to submit returns on your behalf.
ROS, which stands for Revenue On-Line, is an online system that works out your tax liability. ROS takes some figuring out but is a very manageable system. Essentially you put in figures for Total Income (or turnover) and Expenses incurred by the Business. ROS computes ‘Taxable Income’ and then provides a figure for Tax due. It also facilitates online payment.
Step #.6 - Guessimate your Effective Rate of Tax
But you can’t wait till the end of the year to work out your taxes. You want an indication of the likely tax liability so that you can spend some of your hard-earned money, knowing that you have enough to cover your tax bill. TaxCalc.ie is a fantastic website (and IoS and Android app) with an Irish PAYE and PRSI tax calculator, that allows you to make these very calculations.
In the case above I would decide to ‘save’ €600 in tax of the €3,000.
€900 is allocated to ongoing cash flow referring to funds that you need to keep in your Bank account to pay your ongoing bills. I like to have money to cover 3 months’ worth of bills but that is a personal decision that you make.
Advice: Check out my online training which includes a video-based workshop with an Excel template and an example of how to create Financial Projections for your local business. €50 including VAT.
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The calculations conclude that with €3,400 in the bank (€4,000 payment after VAT minus €600 put away to cover Tax liability) that ‘Wages’ of €2,500 can be paid leaving €900 for ongoing cashflow.
An electronic payment can be made from your business bank account to your personal bank account – I use Bank of Ireland for all my personal banking to include our Mortgage. You can now spend the money in your personal account as you wish – including concerts and a trip to the cinema with the kids! You can also make payments to a PRSA (pension) which can be included in your tax return!
The effective rate of Tax used here is 20%. Using TaxCalc.ie if one inputs Income as €40,000 and selects Self Employed, Single and No children (rents and doesn't own property so no property tax - and no pension contributions). It estimates that gross tax paid after credits is €7,927 including income tax, PRSI and USC in 2022 or 19.8%. Remember the figure for ‘net income’ is the figure for total income less business expenses. If it works out that you don’t reach €40,000 then it just means that you will have extra money in your Tax account. You can then transfer that money into your personal bank account! TaxCalc.ie returns an effective rate of 8.1% for Income levels of €20,000 such that net income is €18,380.
The effective rate of tax increases as your income increases. It reaches 34.6% when gross income is €80,000 for Self Employed, single people with no children such that net income is €52,324 - at that point you would definitely need to be looking at your pension contributions.
Step #.7 - Record all legitimate Business Expenses
Key to the tax liability is the figure for business expenses. The general rule is that any overhead wholly and exclusively related to the business can be included as an expense. I include:
- Business Mobile Phone (advice is to get an all-inclusive package for calls, text and data)
- Business Insurance
- Travel to include Hotels
I often travel to Dublin, Letterkenny and Dundalk for business. If I stay over in a hotel that can be included as an expense. Networking and event fees; rail tickets, Parking and tolls are included at 100%.
- Office Costs
All costs relating to a rented office can be included. If you have a home office, a reasonable proportion of home bills such as light, heating and broadband can be included.
- The proportion of motoring expenses
I record all my mileage for business. Over the first 6 years, a consistent figure of 71% of km driven were accounted for by business. So I can put 71% of my Diesel, Car Maintenance and other Motoring Expenses in as Expenses. Please note that any mileage to the office or place of work (such as Hairdressers) is not included in those calculations as this is considered as a commute. But you can travel from that place of work to a customer or client meeting. My % figure dramatically reduced during Covid but so did the actual amount spent on diesel as we all switched to Zoom. Thankfully the hybrid model has reduced total mileage for business which is good for the environment and the pocket as fuel prices skyrocketed in 2022.
The revenue publishes very good guides on what constitutes a legitimate business expense. Common sense applies, e.g. expenditure on business suits is not valid on basis that employees in similar businesses have to buy their own clothes.
Step #.8 - Remember Tax Payment deadlines?
So when is Tax paid? Firstly VAT is paid bi-monthly. So a business will pay VAT on the 19th of March for all paid up invoices during the period January to end February - deadline extended by 4 days if file electronically so that is the 23rd of the month. The reality is that invoices may not be paid for several months so you need to keep careful track of payments. Payments for VAT are via ROS. I pay using my debit card and a return takes only a few minutes.
Income Tax is paid on the Tax Year which runs from January to December. A sole trader then has 10 months to pay their final tax liability. When you use ROS the deadline for payment was 16th November in 2022 - the paper deadline was 31st October.
Pay tax for 2021 in November 2022.
It is critical that you do NOT leave it till late in the year to do your tax return. I generally aim to get my tax return done by February or March. At this stage all invoices will have been paid by Customers so Turnover will be finalised. A final figure for expenses will also be available. When you do your return ROS will provide a printout of your Tax Liability. You will then have a few months to make payment.
This sounds good so far. Ten months to pay your taxes. But now we need to discuss Preliminary Tax. After the first year, a sole trader will need to pay an estimate of the tax liability for the current year in the current year.
Pay Preliminary Tax for 2022 in November 2022.
There are a few formulas for working out Preliminary Tax, the simplest of which is to pay 100% of the amount you paid last year. So if you have a tax bill of 5k in 2015, a Sole trader will have preliminary tax of 5k in 2016. This is a total tax payment of 10k. The idea is that you do your final tax return after year's end and either make a top-up payment or apply for a refund.
Preliminary tax can be difficult to manage. You have to pay 100% of your tax liability despite the fact that you have only traded for 10 months. This might equate to 80% of the final turnover for the year – less if you have a seasonal business where Christmas is important. Cash flow is also a factor. A sole trader will have collected a fraction of the total money owed to them during the year. Despite this, you have to pay 100% of your tax.
But Preliminary Tax has to be paid. So it is even more important to do your tax return early and be able to plan to have the money to pay your tax bill.
Please note that you can set up a standing order to pay tax to Revenue on a monthly basis. The idea is that you can pay any balance owing at the end of the year when you submit your final tax return. This never appealed to me as my business does not generate regular income amounts every month (for lots of different reasons).
Here is a summary table with the answer, how much do I pay myself as a Sole Trader if a customer pays an invoice?
So while almost €5,000 sounds good, 'take home pay' is just over 50% of that.
Pricing is a critical issue for all businesses particularly startups. A price has to be assigned to each service or product in your portfolio. It is generally finalized in conjunction with your route to market strategy – direct to the customer; via shops and wholesalers; or online.
Pricing is determined after gathering lots of information and analysis:
- Know your costs.
- Benchmark the market rate which customers expect to pay for the product solution category.
- Decide if you can successfully charge your customers the market rate or indeed more than the market rate. This can have a big impact on the perception of value of your product solution and your brand.
- Equally you might be able to charge less than the market rate if there is some aspect of your business model that facilitates this approach.
- Test your pricing.
- Please note that you may not need to publicise your prices. It is perfectly acceptable in some sectors to have a Contact form on your website, asking customers to email you for a quotation.
As such you may decide not to charge the exact same rate to all your customers.
- It is important to provide a price when asked. A simple to understand pricing model should be devised that suits your customers. This should include agreement on payment terms to include stage payments as appropriate.
Pricing is a key issue identified in this article which I published on LinkedIn, ‘Time for Money : Setting goals within a service business’, which discusses 3 strategies to grow a service business:
#.1 Get more customers by selling more to existing customers, and by attracting new customers to whom you sell existing services and products or indeed a related line of products and services.
#.2 Increase your Daily Rate – this will have a marked impact on profitability. The real question is what is it that you do that customers will pay more for? Can you be the best in 'your field' and get paid accordingly.
#.3 Increase capacity by hiring Junior staff.
The employment of staff is discussed in Item 12
#.11 Cash Flow Management
Cash flow is vital to every business to include Sole Traders. I like to keep sufficient funds in the business bank account to cover at least 3 months expenses.
In January 2015, I wrote a blogpost entitled Running a ‘freelance’ business in Ireland in 2015 in which I presented the following chart.
This illustrates that there can be a big delay between when invoices are issued to when you get paid. It is important to establish payment terms as part of the pricing agreement. This could include deposits and stage payments. If your customer uses a Purchase Order system, it is advisable to request a PO as soon as possible. It is then advisable to promptly issue invoices.
For a simple explanation of Cashflow see my blogpost which includes this video by way of a simple example.
Sole Traders can register to employ people. The key question is whether you can do all the work required by the business or whether you will create some jobs in your business.
Sole Traders can use the TR1 form to register to employ people in their business. If you employ someone you will have to notify revenue (submit part 3 of P45 to employee’s Revenue office) and then pay PAYE and PRSI on their behalf in addition to employer PRSI. This is done using a P30 form.
A P35 is then submitted each year before the 15th of February of the following year. Employees must also be issued with a P60. This is a service that your accountant can provide.
The subcontract and partner options can also be considered to increase your resources to win business.
#.13 Website & Email
Online marketing is vital for the majority of businesses. The figure below summarises ten steps to create a website for your website – the starting point for all online marketing.
For more detail on each of the ten steps see my blogpost on Startupwebtraining.com – whether you do it yourself or work with a web designer.
I have personal experience with Blacknight Solutions and highly recommend to:
- Buy your domain (annual renewal);
- Buy hosting (annual renewal) to host your website and email accounts.
- Buy SSL Certificate (so that your site is HTTPS:// and is considered secure by search engines and browsers)
A website URL or domain is your website address. Generally, you will choose either a .ie web address or a .com that matches your branding. The .ie is associated with Ireland while .com is available worldwide. You can of course choose to register both for your business plus others associated with other countries - .co.uk is the United Kingdom.
Professional email addresses will be supplied with your hosting package. You can then use your new email address with email packages such as Microsoft Outlook. You can also use them on your smartphone – asks your hosting provider for instructions as discussed in my blogpost about email setup.
A key issue when developing a website is creation of a Website Plan. Please consider: who will be reading your site, and what information will they be looking for, and what do you want them to do on visiting your site!
Website owners need to be able to update their site. WordPress is a brilliant option for both creating and most importantly keeping websites up to date. As a provider of WordPress group training, I highly recommend WordPress for the reasons presented in this blogpost.
#.1 Do it Yourself
#.2 Cost-Effective and Professional
#.3 Brilliant for Content
#.4 Integrate your Branding
#.5 Platform for SEO and Social Media
#.6 eCommerce functionality
#.7 Fast & Secure
I remember hearing from a reputable source that almost 25% of all websites on the internet are built using WordPress.
#.14 Social Media
Social Media is a good option to build awareness of your business. Some businesses can really engage with their Customers on Facebook, LinkedIn, Twitter and other platforms such as Pinterest, YouTube, TikTok and Instagram. As a starting point with Social Media, I would recommend the following:
1. Set up a Facebook Business Page
A Facebook Business page can be a great way to engage with your market. I often say that if you can imagine your customers talking about your type of business while they are with their friends in a café, then Facebook can work for you. For the purposes of branding, I first suggest securing your vanity URL. You can then put your Facebook URL on your email e.g. facebook.com/startuphughes – you can secure at facebook.com/username
If Facebook is important to your business, it is important to upskill. My favourite Irish blog on all things Social Media is by Spiderworking.com
2. Complete your LinkedIn profile
When a customer ‘googles’ your name, the likelihood is that the first result in SERP will be your LinkedIn profile. From here you can direct them to your website. LinkedIn is described as the world's largest professional network. For businesses focusing on B2B markets, training programmes on LinkedIn can be beneficial as can reviewing eBooks written by LinkedIn experts (many are free!). BTW, there is a way to get a short URL for LinkedIn also.
3. Whatsapp for Business
4. Secure your Twitter Handle
5. Join Instagram and/or create a YouTube channel
Video has become increasingly valuable as a content medium that people like to share. It might be worth participating in content and video creation and editing training for your startup to generate awareness.
For my business, Slideshare and Google Slides are useful platforms for sharing content.
The key point is that content (blogposts, videos and images to include infographics) should be added to your website and then shared via Social Media to your network.
It is very important to take SEO – search engine optimization – into account when developing and populating your website. It will be beneficial to your business if your website can rank on the first page of Google for keywords and phrases which your potential customers are searching for. This is referred to as ‘organic search’. This is certainly possible when one optimizes for local search which combines keywords with locations e.g. tyres in Limerick, or restaurant in Galway.
In this regard, registration with Google Business is highly recommended (free of charge). A listing will allow your business to be found within Google Maps and most importantly on Smartphones.
In August 2016, I wrote a blog post entitled, ‘Role of SEO in marketing your freelance business’ which highlighted the positive outcomes associated with writing blogs on my own website and network blogs. I continue to receive enquiries from people who had found me via my website.
This reaffirms my belief in Inbound Marketing – as popularized by Hubspot. I recommend their Certification in Inbound Marketing as per this post – free of charge eLearning!
#.16 Marketing Formula
Every business will have to establish its own formula for success in marketing. The starting point is to understand the objectives of marketing:
- Understand the market
- Raise awareness
- Create interest amongst target market
- Facilitate Sales
In my aforementioned SEO blogpost, I presented a Marketing Formula that works for my freelance business- click to enlarge image.
The first major element of the formula is winning repeat business which results from excellent service delivery. I deliver some services for clients on an annual basis e.g. training programmes. Repeat business also includes follow up consultancy and mentoring. [In 2015, I had 19 customers of which 9 were repeat. These 9 accounted for 72% of income].
Other important elements include:
#.I Tenders & Sales Proposals
For many businesses, tenders responses and Sales proposals will be important in winning business. The first step is to create a professional document that matches the format of what is expected by the client. Thereafter the document must showcase how you can provide value, and fully meet the needs of the client and project. The criteria for tenders are generally:
- Methodology – what you are going to do (the service plan). Quality control is important and in many sectors, Health & Safety is vitally important.
- Profile – track record and experience of Team delivering the service. This should be demonstrated with reference to case study examples.
- Price - value for money
- New criteria - Green Credentials and Sustainability Plan
Sustainable Energy Ireland (SEI) has published a two page pdf case study on the installation of a CHP plant in St Patrick’s Hospital. It is a brilliant example of how to illustrate the business value in an investment project – every small hospital should consider copying St Patrick’s.
My blogpost for network blog, Tweak your Biz, on ‘How to create powerful testimonials for your business’ provides a format for writing both a short and a longer format testimonial for tenders and sales proposal documents.
The key to testimonials is to focus on the customer and the value that they derived. Other potential customers, when reading the testimonial, will recognise the value if they are experiencing similar issues.
Over recent years, video testimonials are become hugely popular – the best ones feature real businesses explaining how they valued from working with another business.
People buy from people. By attending networking events you can work to extend your network. When I deliver training on networking, the key points I like to focus on are:
- Choose the right networking group or event – the ones which your potential customers attend.
- Focus on quality contacts versus quantity.
- Make a positive first impression.
- Be able to clearly state what you do.
The follow up step from networking is to meet for tea/coffee. This is shorthand for a meeting of 20 minutes. So networking is not to sell straight away but to get to next step in the buying process. Following up by connecting on LinkedIn can assist in setting up that coffee meeting.
My favourite business book is The Jelly Effect by Andy Bounds because it has a brilliant section on networking. The follow-up book ‘The Snowball Effect’ is different but equally to be recommended.
#.17 One Page Marketing Plan
Every business needs a marketing plan. A one page format which I recommend is as follows:
- Set Business Goals
- Identify Reference Customers/ Segments
- Summarise Customer Needs & Trends
- Product Solution
- Specify Route to market
- Marketing Action & Budget
For more see my blogpost ‘Format for a One Page Sales & Marketing Plan’ which includes a link to a pdf download. Under Item 7, Marketing Action & Budget, it states:
… You need to know what marketing budget is available. The first step is to find out the cost of promotion options such as social media/ digital advertisting, classified (offline) advertising, PR, business cards, sponsorship, and networking events to name a small few. The next step is to take a creative approach to these so that your business stands out. Marketing costs money. It can be very expensive. But it works if done properly providing the additional sales replenishing the marketing budget and adding to the bottom line. This means measuring the response and impact of your marketing and understanding the cost of acquiring customers. I generally find that small businesses engage in 3 to 5 marketing activities in a set period and build up their knowledge of what works over time. So you might organize signage, flyers and business cards first along with your website. When those are done you would spend time getting Social Media up and running in conjunction with the website and SEO. Then you might look at PR, Email campaigns, surveys, networking and maybe specific advertising that you know targets your customers. What you decide to do depends on the business – ask a mentor or experienced marketing people for advice!
Another highly recommended book is ‘Traction – A Startup Guide to Getting Customers’. In this blogpost I explain that the book identifies 19 traction channels or customer acquisition tools - click to enlarge imaage.
Enterprise Ireland, Local Enterprise Offices (LEOs) and many startup programmes offer mentoring. As an advocate of Business Mentoring, the two ‘pro bono’ services recommended to Sole traders in Ireland are:
Bizmentors.ie has operated in Galway for several years. A network of experienced mentors, the majority of which have run their own business, are available to provide mentoring at no cost to the mentee. An assignment is 3 sessions of one hour each. The programme includes induction for both the business mentor and the mentee – business promoter or startup who needs guidance and advice. All areas of business are covered. Once you have an assigned finished you can apply for another Bizmentor to review another area of your business.
- Small Business Advice
Small Business Advice.ie operates a similar service to Bizmentors in other parts of the country to include Cork and Dublin. Check out their website for details.
#.19 Health & Safety and other Regulations
The Health and Safety Authority’s website BeSMART has a free tool that will help you to identify the hazards in your workplace. This guided step-by-step process will assist you in generating your own risk assessment and safety statement, in consultation with your employees, as required under health and safety law. .
Decisions regarding premises may affect H&S and the regulations that apply.
The business planning process will identify other Regulatory requirements which are particular to your business. These could include: licenses for some trades; complying with HACCP regulations for food businesses; registering with RSA for driving schools; joining industry associations to ensure continuous professional development (CDP); RECI for registered electricians; RGII for registered Gas Installers; and many more. The Department of Enterprise, Trade and Employment website Business Regulation.ie is a great source of information.
A mentor can be useful to identify these strategically important issues.
It is important for sole trader freelancers, contractors and consultants to purchase sufficient insurance for their business.
- Professional Indemnity
Covers claims for compensation resulting from financial loss arising from provision of a professional service.
- Employer, Product and Public Liability
- Personal accident, sickness and travel
Specific thresholds of Insurance are normally mandatory requirements for tenders from government funded agencies.
Most sole traders will work through a recognised broker to arrange quotes for insurance to match the requirements of their business.
#.21 Other Taxation Isssues
I. People in full and part time employment can earn additional money from other sources. Tax must be paid on this income.
Ireland’s Self-Assessment system was discussed under Item #.9 How to pay yourself as a Sole Trader. As per Revenue guidelines (reviewed October 2021):
- An individual who is a ‘chargeable person’ for the purposes of Income Tax Self-Assessment should complete a Form 11 Tax Return and Self-Assessment ie use ROS, where a chargeable person is an individual with a PAYE source of income and with net accessible non PAYE income of €5,000 (€3,174 for 2015 and previous years) or total gross income of €30,000 (€50,000 for 2015 and previous years) before expenses from all non-PAYE sources (trading income, rents, dividends, deposit interest). These thresholds include income subject to DIRT.
- An individual who is not regarded as a ‘chargeable person’ for the purposes of Income Tax Self-Assessment should complete a Form 12 Tax Return and Self-Assessment. This is where net assessable non-PAYE income is less than €5,000 in that year (and total gross income is less than €30,000). The easiest way to do this is via PAYE Anytime provided by Revenue. The eForm 12 allows you to complete a return of your income and claim tax credits, allowances and reliefs (including any health expenses) electronically.
II. Tax Clearance
Self Employed businesses may be required to produce Tax Clearance Certificates before being awarded contracts by Customers including Public Sector agencies and bodies. Once registered with ROS, sole traders can apply online for Tax Clearance. If all documentation and payments are up to date, this certification can be made available within a short timeframe (a few minutes on renewal) as it seems to be processed automatically.
This printout will include details of the Sole Trader's Tax Reference number and Access number. I include both of these on all invoices (included in my Excel template).
III. Withholding Tax
A withholding tax (WHT), at the rate of 20 per cent, is deductible at source from payments for "professional services" made to sole traders and companies by "accountable persons" including Government Departments, local authorities, Universities, health boards, and State bodies. The tax is charged on payments net of (after deducting) value-added tax. A wide range of professional services is included – including consultancy and mentoring.
The tax deducted is later set off against the tax chargeable on profits earned by the business. Equally any excess tax deducted over the determined tax will be refunded to the taxpayer.
IV. Pre Trading Expenses
Sole Traders can include allowable business expenses incurred in the 3 years before commencing trading in their first tax return. Known as pre-trading expenses these have to be wholly and exclusively expended for the purposes of the trade or profession to be allowable.
Losses: Similar to companies, if you incur losses in your sole trader business these can be carried forward year on year, until such time that you generate profits to reduce your income tax liability.
V. Capital Allowances
The cost of purchasing capital equipment in a business is not a revenue tax deductible expense. However tax relief is available on certain capital expenditure in the form of capital allowances. Sole Traders can claim capital allowances within their Tax Return on capital items purchased as explained on page 17 of this Revenue document entitled 'Guide to Completing 2021 Pay & File Self-Assessment Returns'. For sole traders the prime example is a car. The key issues are:
- The current annual rate of Wear and Tear allowance is 12½% of the allowable cost (maximum of €24,000 - dependent on VRT category/ Co2 emission level). Allowances are therefore claimed for a period of 8 years. .
- Capital allowances are not generally affected by the way in which the business pays for the purchase – loan or hire purchase agreement.
- The car can be used for private use. However, the capital allowance is only claimed on business use – as calculated based on proportion of total kilometers travelled.
- If disposed of, all remaining capital allowances are claimed for in the year of disposal having allowed for any trade in value reducing the total allowance claimed over the lifetime. See Revenue pdf on ‘Claim for Car Expenses & Capital Allowances’ for worked examples.
- Interest on the loan finance is an allowable expense. The car loan repayment amount is not.
As a sole trader I was entitled to Accelerated Capital Allowances on the purchase of Solar panels for my home (where office is based) in 2021. See full blogpost for details of why I recommend Solar panels.
Your sole trader accounts and records (invoices and receipts) should be retained for six years in case they are required by Revenue for the purpose of an assurance check or an audit.
#.22 When to form a Company
As discussed in this article, 'Self Employed Sole Traders Tax Guide' published on Lawyer.ie there are advantages and disadvantages to trading as Self-Employed Sole Traders.
For anyone, who wants to set up a Company, I would recommend the superb Frontline Ventures eBook (2016) ‘Startup Navigation Manual’ which outlines the major first steps founders take, and the pitfalls to be avoided — at the beginning of the long road from company formation to the ultimate mature stage as a large and free-standing company, active in global markets
When advising startups on company formation, the following are relevant factors:
- Many supports for startups are contingent on forming a company. I would include here SURE (Startup Refunds for Entrepreneurs) which is a Tax refund of up to 41% of the income tax paid over the 6 years prior to the year in which you invest. T&Cs apply - See Revenue.ie for more detail on Relief for Investment in Corporate Trades to include Start-up Capital Incentive (SCI), a tax relief available for investing in a new business where a family member is an existing shareholder.
- Only companies can avail of Innovation Vouchers – a support of €5,000 provided by Enterprise Ireland to assist companies to work with Universities and Institutes of Technology in Ireland on specific research challenges for their business.
The other key determinants are:
- If you are going to have significant pre-trading expenses including R&D.
- If the business is likely to incur debt. This could be the case for small operators in say the construction sector who need to purchase or lease expensive capital equipment.
- If your customers expect you to be a company
The compliance and reporting obligations on companies are more onerous than those facing Sole Traders. But they are manageable for well-managed businesses. Check out the Companies Registration Office (CRO) for more details.
#.23 Get a Good Accountant
The position of this item at position 23 does not downplay its importance – you will see that accountancy and finance related items are discussed at many points in this document.
As mentioned earlier, a sole trader is not obliged to work with an accountant. You can prepare your own accounts if you have an aptitude for bookkeeping. There are a number of software packages for bookkeeping and payroll that you can buy to assist you – but I just use Excel.
However, most business promoters find that an accountant offers invaluable services to include:
- End of Year Account preparation.
- Self-assessment tax returns + advice.
- VAT returns.
- Payroll + P30s + P35s + P60s.
- Registering employees.
- Company formation.
Accountants are paid to take out the hassle of preparing accounts and having to remember important deadlines. This will free up your time to allow more time to invest in your business. However, it is ultimately your responsibility to ensure that your accounts are correct and that returns and payments are submitted to Revenue on time. Collaborative use of cloud accounting software such as QuickBooks Online and Xero is recommended.
To facilitate your accountant you will need to keep and furnish the following records:
- Receipts for all eligible expenditure.
- Records of Sales.
- Bank statements for all relevant account, cheque and lodgement books.
The added value provided by your accountant is analysis to facilitate decision making. Your accountant should assist you to understand the finances underpinning your business.
Finally, you may ask how one can find a good accountant. I would ask your business network for referrals. Then you need to go meet them and ask them questions.
Getting a good accountant early is vital.
#.24 Management Development
Management Development must be an ongoing activity. There are many organisations providing subsidized training to startups in Ireland.
In particular, the Start Your Own Business (SYOB) Programmes provided by the Local Enterprise Offices (LEOs) are fantastic.
There are also several female founder-focused programmes that facilitate startup founders to build a peer network. Most of these programmes will address how to complete a business plan and a Pitch for your new venture (see next topic).
The LEOs also provide a range of other programmes in areas including online marketing, social media, innovation and finance.
— Donncha Hughes (@donnchadhh) December 29, 2016
#25. Prepare a Business Plan document or business plan presentation
The introduction to this guide makes the point that business planning is critical for all startups - this is finding the sweet spot where your product or service provides sufficient value for customers so that you win business and the business finds its position in the market.
Business planning helps you to answer the tough questions about your business. It helps you to prepare for the tough road ahead. If applying for a bank loan or enterprise agency grant you will need to prepare a proper business plan. This will require a full set of financial projections to include assumptions and 3-year Profit & Loss, Balance Sheet and Cash flow statements.
However, a business plan need not necessarily be a long written WORD document. I find that a presentation of key business areas can be as useful as a full business plan (and easier to update). Suggested headings for a Business Plan presentation could be:
- The Customer’s Pain or Burning Problem
- The Market
- The Solution (your product service offering)
- Unique Selling Proposition
- Competition (differentiation)
- Operations & Innovation (Technology and R&D)
- Marketing Communication
- The business model (to include Pricing Model)
- Financials - set up investment and summary projections of revenue and costs
- The Promoter/ Team
- Action Plan (What’s next?)
You can of course add new slides or move the headings to fit the flow of the story. I have created a PowerPoint slide deck which you can use as a template to create a business plan presentation for your business. Click the button to download my PowerPoint slides which you can tailor to your business.
I have noticed that a lot of people have never seen or read a proper business plan and therefore struggle to write one for their own business. To address this I published an online course entitled ‘Writing a Superb Business Plan’.
It includes a Template for writing a business plan (based on InterTrade Ireland's Guide to Writing a Business Plan entitled Business Cube) plus videos on how to complete each section.
It also features a full proper business plan with realistic financial projections for a fictitious business.
#26. Self Assessment
Self-employment, despite being promoted by the Irish Government and the EU, is not for everyone. This guide is not necessarily promoting self-employment but rather sharing my experience and knowledge of someone who has operated as a Sole Trader for 10+ years.
I address the key topic of self-assessment as the final point in my list to highlight that the complexities involved in starting a business can be managed. All the points from 1 to 25 can be addressed successfully. It takes time and organisation. Be prepared to ask for help. The good news is that in my experience there is fantastic goodwill among the business community and the general public for new businesses. Everyone remembers what it was like starting out.
AN OPTION: This guide has not discussed Idea Generation. Under that topic, buying a franchise is certainly an option that brings with it an important evaluation requirement.
Have you got what it takes to be an entrepreneur?
This is a tough question to answer. For many people, it is not a choice they may have opted for or envisaged in their careers but it is an opportunity that they now embrace. They are enthusiastic but nevertheless aware of the uncertainty that change brings. In any event, it is important to acknowledge the following points in terms of starting a business:
- You will work long hours.
- Your personal earnings will probably decrease initially and definitely, will not be as regular.
- Your family life could be affected.
There are lots of positive reasons for starting a business and lots of rewards but the realities of new business life need to be addressed in this guide. The support of friends and family will be critical as starting a business is stressful. However, the good news is that hundreds of thousands of people have taken the journey successfully. Every business small and large in every corner of Ireland started as an idea in someone’s head.
I have included two Self Assessment exercises with this email. Click the button below to download:
1- Self Assessment Exercise 1: Business Evaluation
Part I- Identify the key success factors (KSFs) for any business operating in the market that you wish to enter?
KSFs are what make the difference between business success and failure.
Part II - Evaluate if you can deliver on each KSF for your chosen business.
2 - Self Assessment Exercise 2: Personal Evaluation
List at least 3 bullet points to answers each to these questions:
A. My reasons for setting up this business?
B. Strengths that I bring to the business (could include: technical knowledge, experience, contacts, or partners)
C. Says who (on basis that your business to include your first customers may need references)
Implications for Irish Business of Brexit
The UK left the European Union on 31 January 2020. The transition period that was in place ended on 31 December 2020. Brexit issues need to be considered from three points of view, firstly importing from the UK to Ireland, exporting to the UK from Ireland (importing to the UK from Ireland) and thirdly trade with Northern Ireland.
- As an Irish business, you will now need to register for VAT if you are selling services to a client (business, charity, sports organisation or end consumer) in the UK to include Northern Ireland, England, Wales and Scotland – no threshold applies. You have to charge VAT @ 20% and submit returns every 3 months.
- The UK VAT charged can be reclaimed by the customer if applicable.
- If sending goods to a VAT registered business in Northern Ireland, VAT does not need to be charged, if the UK VAT number is provided.
- eCommerce businesses selling Goods from Ireland, for example via a Shopify website, also need to register for VAT in the UK if selling to UK consumers and charge the applicable UK rate. They won’t charge Irish VAT but will need to do a full customs declaration. If using an Online Marketplace such as Amazon the OMP will look after VAT and Customs.
- The exception - VAT is not charged on goods that are gifts worth £39 or less. Specific rules apply to gifts.
6. To import into the UK, Irish based businesses will need a second Economic Operator Registration and Identification (EORI) number: a UK EORI is available from HM Revenue and Customs separate to the EU EORI obtained from Irish Revenue. Used on customs declarations, an EORI number uniquely identifies the exporter in customs procedures and documentation.
7. If you are selling Goods to a business in the UK, most likely directly to an Enterprise or a Route to Market partner (distributor), one party (most likely the UK based business) will take on the role of Importer. The Irish based business may also take on the role of Importer. They will then be responsible for payment of the applicable import duty. Consulting with an Export /Customs Agent is recommended.
8. With regard to Customs, there is no duty on Services.
9. A Zero Customs rate may apply for Goods depending on ‘rules of origin’ if the product is deemed to be sourced from Ireland.
10. The consignment value is also important as no Customs charges apply where the consignment value is under £135. Customs Duty is charged on all goods sent from outside the UK that are excise goods or worth more than £135. It is charged on both on the price paid for the goods plus postage, packaging and insurance.
If, after your evaluation exercises, you and your advisors deem that you have a good business and you are the person to do it, then your next task is to Get Started.
“Choose a job you love, and you will never have to work a day in your life.” ― Confucius
To get started you will need to get your first customer(s). After that please enjoy the rollercoaster of emotion that is starting a business. I have learned the following from talking to hundreds of people who have walked the entrepreneurial road:
- It’s not what you do it’s the way that you do it. Technical skills are important but you delight your customers by treating them as individuals and with respect and appreciation. It is how people are treated that will determine if they will recommend you to their friends, family, colleagues and business contacts. The best businesses benefit hugely from Word of Mouth. Your personnel are the greatest asset of your business. You set the tone for your business with your actions.
- Approach each customer and each day as an opportunity to learn. This is the best marketing research you can undertake.
- Don’t be afraid to tell your potential customers that you are brilliant if you can back it up.
- Be prepared to leave your comfort zone, outside this zone is where things get done!
- A positive attitude is worth its weight in gold. Surround yourself with positive people. No job is too big if you break it down into small steps and proactively take those steps to achieve your goals.
Best of Luck
It is hoped that this Guide to Self-Employment 2023 will first get you to ask some key questions about your business. In setting out the answers, the guide aims to be as understandable as possible. But this approach can mean that technical details might not be as precise as they need to be. As such please seek appropriate professional advice and guidance on your specific circumstances.
‘Everyone who starts a business is to be congratulated and supported’ – Donncha Hughes
It is hoped that this Guide to Self-Employment 2023 is a useful reference document. There are 26 items addressed in the Guide - you won't be able to tackle them all at once.
I recall that it took me two years to pull the content together for my website. This was because I knew broadly what I wanted the business to do but I had not fully figured it out. After two years I had it stripped back to focus on what I now do based on market feedback – point being that the checklist is never finished but it provides some focus for deciding priorities. The suggestion is to fully read the Guide and make a plan. Time should be scheduled to think about the implications for your business. The plan should include a timeline for tackling each of the issues given available resources in terms of time, money and expertise.
I now wish you all the best in your startup endeavour. Feedback and comment on my website and via social media is appreciated. Please feel free to contact me if you have any questions.