While it’s great to be your own boss, being self-employed in Ireland brings with it the responsibility to stay on top of your finances. This will be new territory for many freelancers so here are some pointers.
Income and Expenditure
First up, make sure you get paid well for your time and for your costs. Set an hourly or daily rate that adequately compensates you for your service, perhaps having done some research on what your competitors charge. Don’t work for free, however tempting it is to do favours, and be very clear about when you need to be paid. Record and store receipts for all income and expenditure in a spreadsheet to help with book keeping, tax returns and business analysis.
Banking and Accounts
Make sure to keep your business earnings separate from personal finances, preferably in different bank accounts. Doing so will make it much easier to keep track of cash flow, chase overdue payments and file annual accounts and tax returns. Beyond basic spreadsheet book keeping, consider getting accounting software to save time. It may ultimately make sense to hire an accountant to oversee accounts, help with tax returns and offer objective business strategy advice.
Money and Pensions
You should plan to build a cash savings buffer inside the company for unexpected business needs or tax bills. Such a safety net will also help you cope with leaner months. Once an appropriate cash reserve is in place and business is steady, as self-employed in Ireland you can and should think about starting a pension. You will receive tax relief on anything you can save and can grow an investment pot that is there for you when you retire. A good financial advisor can help with all of this.
Tax and Legal
Make maximum use of tax efficiencies. Employing your spouse, claiming travel expenses and claiming some utility bills are some of the most obvious tax breaks. Most freelancers start as sole traders but, over time, being self-employed in Ireland may not be ideal. Some clients will deal only with limited companies or partnerships. You might also want a company structure that protects you from future legal claims – a “limited company”. This will increase admin costs for sure, but companies can usually claim even more generous tax allowances.
For more help, take a look at this Citizens Information page on becoming self-employed in Ireland.
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