Turnover Tax - Help

[Freaksta]

Hey people,

Im hoping someone can give me a little more insight into turnover tax, a friend of mine is opening a business selling clothing etc.. They will be trading as a sole trader. I understand that turn over has to be under 1million to register for turnover tax, but if you are registered for turnover tax is there any other tax one would have to worry about when drawing the profits(taking money out of the business monthly). I know a sole trader doesnt have a seperate legal entity so surely you cannot be taxed on taking money out of the business, or would this be considered as gross income? (As much as it may look like im here for advice it is more in lines of trying to settle a discussion we had.)

Thanks
Freaksta

 

[momo786]

Hi

Turnover tax was designed to replace all taxes with only one tax payable by small businesses. So yes, no other taxes.

When you say taking money out, is this as income to the owner? If the only option is a sole trader, then the income of business and any other income of the owner (besides the income from the business) are lumped together, and the normal individual tax rates apply (the business and owner are seen to be the same). Taking money out shouldn't have any effect, as it would have already been taxed in your friends personal capacity.

I don't think that turnover tax applies to sole traders, but I stand to be corrected.

Also take into account VAT implications. The thresholds for compulsory VAT registration may have changed with the new budget speech, but I haven't gone through it in detail as yet.

 

[Freaksta]

Turnover tax does apply to sole traders i have check up on that. Basically my question is short is would there be anyway to avoid paying other tax besides the turnover tax that she would have to pay. Is there a way to take money out of the business on a month to month basis without it being considered gross income to her.

 

[BTTB]

Somebody does not like turnover tax.

 

[Freaksta]

Yup i saw that site but i think that person is mis-informed(maybe i am).. Im argueing that you dont pay income tax because you are already paying turnover tax, with CC's and other seperate legal entities i understand that the person you are paying would pay income tax and the business would pay turnover tax but im wondering how it would work for a sole trader because the business is the person they are not seperate legal entities.. Hopefully someone with a little more knowledge on this matter can comment!

 

[Freaksta]

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