Managing your music business accounts
4th July 2014
Kevin Kelleher – Secretary/Finance Officer RIAM
Introduction
Forms of Business Structure
Keeping Proper Records
Tax Matters
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Legal Structures
Sole Trader
 Run the business alone
 Your risk and responsibility
 Simple to set up
 Register as self-employed – Form TR1
 Revenue online service – www.ros.ie
 Register a business name with CRO
 VAT
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Legal Structures
Partnership
 Two or more persons
 Joint risk and responsibility
 Register as a partnership – Form TR1
 Register a business name with CRO
 Essential to have formal partnership agreement
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How are profits shared? Are holidays paid?
What happens if one partner gets sick and can’t work?
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Legal Structures
Limited Company
 Generally not necessary for a small business
 Must register with the CRO – TR2
 Keep a company register
 Hold an Annual General Meeting and file reports
 Have books audited by a chartered accountant annually
 Lodge the accounts annually with CRO
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Music Teaching Business
Sole Trader
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Book-Keeping
 Keep proper books and records
 Keep it simple at first – A notebook or basic cashbook
 One side for income and one side for expenses
 List everything you earn and everything you spend
 An invoice should be raised for each class being taught
 Keep all receipts, invoices and statements
 Preferably keep a separate business bank account
 All cheques and cash received should, in the first
instance, be lodged to this account
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Book-Keeping
 Expenses, in so far as possible, should be paid by cheque
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or card – cash doesn’t have the same audit trail
Update books regularly - good habits from day one
You do not have to have computerised accounts, as long
as the information is kept in a tidy and logical manner.
Why bother to keep books at all? It’s a hassle!
Preparing a Profit and Loss account – a summary of your
books over a given period.
Basis for preparing your Tax Return
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Tax Returns
 PAYE - the onus for paying your tax is on the Employer
 Self-Employed - the onus for paying your tax is on you
 Legal Obligation!
Must submit a tax return by 31st October each year
Tax year runs Jan 1st to Dec 31st
Revenue wants to know:
How much money did your business bring in?
What are your legitimate business expenses?
Details, if any, of employees and wages paid?
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Tax Returns
Popular misconceptions on filing tax returns
“I don’t earn enough to file a tax return”
“I’m making a loss so it doesn’t affect me”
“I’m not liable to pay tax so I don’t need to file a return”
All sole traders are required to keep proper books of
account and submit an income tax return regardless of
whether they make a profit or a loss.
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Tax Returns
Revenue will assess your liability for income tax, PRSI and
the Universal Social Charge based on the information
supplied by you and any amounts that you owe are paid
directly to Revenue.
You will be entitled to the normal income tax credits and
reliefs and to claim legitimate business expenses.
Form 11 is the return of income that you, or your
accountant submit to Revenue on or before 31 October
each year.
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Tax Rates and Credits
Personal income tax rates
Single person €32,800 taxable income at 20% - Bal 41%
Married couple (one income) €41,800 Balance at 41%
Personal Tax Credits
Single person €1,650 Married couple €3,300
Self-employed PRSI contribution, Universal Social Charge
PRSI 4% No income limit
Universal Social Charge 2% up to €10,036
4% between €10,037 to €16,016
7% €16,017 to €100,000 and 10% > €100,000
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Taxation Reliefs
 Medical expenses not covered by the State or by private
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health insurance – Med Form 1
Dental expenses Med Form 2
Health Insurance Premiums – granted at source
Long-term care
Tuition fees 20% up to max €7,000
Start your own business –
two-year income tax exemption up to a maximum of €40,000
income per annum if unemployed for at least 15 months
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Tax Offsetting
General Rule: Expenses incurred must be ‘wholly and
exclusively’ for the purpose of your business.
 Music materials and consumables
 Reasonable proportion of household bills - % of area
 Internet and phone- Broadband
 IT- PC, printer, software, stationery
 Advertising and promotion
 Professional Fees
 Capital Allowances – 12.5% pa for 8 years
 Bank and other charges
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Tax Offsetting
Reduce your tax bill
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Claim all of the tax credits available to you
Pension contributions
Split income with Spouse
Offset tax losses against PAYE of Spouse
Motor expenses
Incorporate the business - 12.5% tax
Engage an Accountant and/or tax advisor
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Useful Sources
www.revenue.ie
www.ros.ie
www.cro.ie
www.citizensadvice.ie
County Enterprise Boards
www.mabs.ie
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Thank you for Listening
Any Questions?
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