Are you returning to Ireland and starting a business? I met Tom this week, who has done that. Back from Canada after spending over 10 years there. Back to help build the country. Driving along the highway in Toronto, he saw a billboard that grabbed his attention.
“You have helped build Toronto. Come home and help build Ireland”
So, advertising works, and Tom is back with his partner and new baby in tow. He is anxious to get going and has been a bit frustrated so far. Let’s look at
- Tom’s background
- Our meeting
- Why Choose us
Tom’s background
Tom is a local lad who emigrated to Canada in 2013. There wasn’t much happening here at the time. He set up a roofing business in Toronto and still has that, but will be managing it from here. There was a slowdown over there. Property prices are even crazier than here. With the arrival of a new child, local family support was a crucial factor for them. The Canadian winters are harsh, and that impacts the bottom line when you can’t work because of snow, ice and the rest.
He’s an outlaw living with the in-laws for now. The trip home was scary. He mentioned 16 suitcases. Say no more, I thought. Back since December, he hasn’t been idle. He set up a company and launched a website. Anxious to get working, he arranged to meet me this week to help with a few things that he was unsure about. Skilled, young and enthusiastic, he’s mad to get going.
Our Meeting
In our meeting, the four most important things for Tom are
- Registering the company for taxes
- Deciding what pay to take and how often
- Getting the accounts and tax returns right and on time and
- Help with a mortgage
Registering for Taxes
Tom needs a van, equipment and tools to get started. Let’s assume a cost of €30k. Adding VAT to that at 23% results in a VAT cost of €6,900. He wants to get that back. Unsure if he could buy these things without having a VAT number, he has held off. A few pointers for him are as follows.
The company is electing to register for VAT because its turnover will be over the threshold of €42,500. As a result, the company can only register from the beginning of the VAT period in which the application is made. If we register the company for VAT in January 2026, it will be registered from the start of the Jan/Feb VAT period. This is important. If the company bought a van in December 2025 and only registered for VAT in January 2026, the VAT on that van is lost.
Vat registration
I did point out that getting a VAT number isn’t easy. Revenue will do plenty of checks to make sure it is a legitimate business. There has been plenty of fraud with VAT numbers. Some of the documentation and checks that Revenue look for would include
- Copy of a purchase invoice for a van or equipment
- Copy of a sales invoice for work done
- Website or advertising material or
- Call to the business premises
The company should buy the van, equipment and tools. It is the company that will be VAT registered. As such, all the invoices should be in the company name. Tom will introduce money into the company, which we will talk a bit more about below.
He will also need to register the company for PAYE and Corporation tax. That should be more straightforward.
What salary to earn and when?
The salary he can earn is up to €44,000 at the lower 20% rate. If he wants or needs more than that, he’ll go into the 40% rate. His tax credits will be €4,000, which is the single tax credit of €2,000 and the Earned Income credit of €2,000. He’ll also pay PRSI and USC on his salary. PRSI, which is going up all the time, is 4.2% from January to September 2026. It increases to 4.35% from the 1st of October 2026. Paying PRSI is good as it goes to your state pension and other benefits. Paying USC is not so good. It’s just another tax.
How often should Tom pay himself from the company? A simple answer. Monthly. That means the company would run a payroll 12 times a year. If he pays himself weekly or every fortnight, that’s 52 or 26 payrolls a year. By doing it monthly, there’s less admin time and less cost if he’s hiring someone to do this for him.
Assuming he takes a salary of €44,000, the taxes on that would be about €7,500. That leaves him with a net of €36,500 or a little over €3,000 a month. Getting the payroll right at the outset is important. Especially so for owner-directors to avoid unnecessary employers’ PRSI costs.
Director’s loan
Tom will introduce €30,000 of his savings into the business to buy a van and equipment. This is a director’s loan to his company. He can take this out tax-free. If he needs another €1,000 or €500 a month, he can take this monthly as a loan repayment. That way, he keeps his salary at the lower rate for the first year or so. This will help keep the company’s PAYE bills down and give him time to build up cash in the business.
Accounts are right and on time
Tom has experience with running a company and dealing with tax authorities. He has a Canadian accountant for his company over there. He asked if we use QuickBooks. The answer was no. We use Xero cloud accounting. We use that because we think it’s the best one to use for our clients. He also mentioned that he has a garage full of paper in Toronto. Invoices, statements, the whole lot. When I mentioned Dext to him, he was all ears. No paper, if you use it right.
As you know, trying to get a tradesman in the country is like looking for your contact lens after it fell into the sea. An impossibility. And when you do get one, the price doesn’t matter as much as before. You want a thing fixed, and you want it done right. So, I don’t see Tom being idle in the coming months and years. I also don’t see him coming home, ignoring the partner and child, and getting stuck into VAT returns.
Dext
Take the company’s first VAT return, which will be due in March 2026. He should be in a VAT refund position. Most of the company’s sales will be to other builders, and reverse charge VAT will apply. The company will be due back the VAT on its business costs. Let’s say there’s a VAT refund due of €7,000. Revenue won’t give that back until they are happy it’s correct. As a result, they’ll look for the top 10 invoices for the period. If Tom puts those into DEXT, we have them at the touch of a button. A quick download of the invoices and get them to Revenue through My Enquiries. This will speed up the refund, and all the while, we are not bothering Tom. He’s busy earning money.
Take a simple diesel receipt. He scans that on his Dext app on his phone and bins the paper. We review it to ensure the VAT amount is right, get it into the correct expense category and push it into Xero.
Xero
Tom doesn’t need to know Xero inside out, only the bits that are useful for his business, like invoicing. We’ll get him set up on it so he can send correct invoices with the right VAT rates and the right description. Plus, we’ll link his company bank account to Xero. Bank feeds will then come straight into the cloud accounting software. That saves him and us time as we are not waiting for him to send us statements.
The beauty of Xero for us is that we have access to all the information. All the invoices in Dext are visible in Xero. Plus, all the income coming into the bank account that matches the sales invoices in Xero. When we do the VAT in March, we can quickly see how the business is doing. We’re not doing management accounts as he doesn’t need that service yet, but we can review the numbers.
Once we have everything we need, it makes the year-end accounts easier and less time-consuming to do. That means they can be done earlier in 2027, and that has advantages for Tom.
Corporation Tax
The first set of company accounts will be for the year ended 31 December 2026. After deducting Tom’s salary and other costs, let’s assume the company has a profit of €40,000. That profit will be liable to corporation tax [CT] at 12.5%, resulting in a CT liability of €5,000. The company’s CT return and payment are due on or before the 23rd of September 2027. The company is then into the preliminary CT rules. It will pay preliminary CT for 2027 of €5,000 [100% of the 2026 liability] by the 23rd of November 2027.
Help with a mortgage
One of his most important goals in the next year or two is getting a mortgage. I’ve gone through the mortgage application process in the last two years. I know from experience what it’s like and what a mortgage provider is looking for. They’ll look for
- Company accounts
- Payslips for 6 months
- Your latest Income Tax return and assessment
- Proof that taxes are up to date
- Proof of savings
- Tax clearance
Having all this stuff ready for them paints a picture that you take your finances seriously. You are a good prospect to repay the money they give to you. You can afford to because your salaries show you have more than enough income to do it. A simple thing like not having tax clearance will delay that VAT refund due in March. That’s €7,000 that should be in your company bank account, but Revenue hold onto it because your taxes aren’t right.
There could be some planning to get Tom’s partner a salary from the company for the admin work she does. She could also earn up to €44,000 at the lower rate and would show increased repayment capacity.
Why Choose Us
Why would Tom choose us? Sure, you are an accountant like every other accountant. Yes and No. What would differentiate us from another accountant? Quite a lot. Tom would get
- An accounts manager who is a qualified accountant. And with lots of experience in the building trade in VAT and RCT.
- A payroll expert
- Xero and Dext to go paperless
- VAT expertise
- An agreed, up-front monthly fee, so no surprises
- All deadlines met for the CRO and all tax returns on time, every time
- Help with Revenue. All queries answered on time.
- Help with his mortgage
- Ongoing advice when needed.
- A partner in his business. A responsive team that will always get back to him.
We love helping young, enthusiastic people who have a business and want things done right. As I said to Tom
“Why wouldn’t you do things right when you’re only paying Corporation Tax at 12.5%?”
So, if you are returning to Ireland and starting a business, don’t worry. We’ll get you sorted if this is the type of service you’d like.
Returning to Ireland and need help with your business? If so, start here
