Tax as a Sole Trader in Ireland – Part 2: Tax Registrations

How to Register as a Sole Trader in Ireland

If you're starting your own business as an individual (and not forming a company), you’ll need to register as a sole trader. This means letting Revenue know that you’re self-employed and beginning a trade or profession.

Who needs to register?

You must register if:

• You are earning income from self-employment (e.g. freelance work, selling goods or services)
• You are receiving income not taxed under PAYE (e.g. rental income, foreign income)
• You’ve started trading, even on a small scale

What form do I need?

If you’re new to self-employment, you must complete a TR1 form. This form registers you for:

• Income Tax (mandatory for all sole traders)
• VAT (if applicable)
• Relevant Contracts Tax (RCT, if applicable)
• Employer PAYE (if you’ll be hiring staff)

There are two ways to submit:

• Online via Revenue’s eRegistration system (requires a verified MyAccount or ROS account)
• By post using a paper TR1 form (slower, but accepted)

Once registered, Revenue will issue you with a Tax Reference Number. If you’re already registered for PAYE (as an employee), this will be your existing PPSN.

What Taxes Do Sole Traders Need to Consider?

Not all taxes apply to all sole traders — it depends on the type and scale of your business. Here’s a breakdown of the main taxes to consider:

Income Tax (required)

Every sole trader must register for Income Tax. Your tax is calculated on the net profit of your business (income minus allowable expenses). You’ll file an annual Form 11 under the self-assessment system.

You’ll also be liable for:

• PRSI (Pay Related Social Insurance) – Class S for the self-employed
• USC (Universal Social Charge) – based on gross income thresholds

VAT (maybe required)

You must register for VAT if your turnover exceeds:

• €37,500 per year for services
• €75,000 per year for goods

You can voluntarily register if your turnover is below these thresholds — this allows you to reclaim VAT on business purchases and may give your business a more professional image when dealing with VAT-registered clients.

Things to consider:

• Your client base (B2B vs. B2C)
• The volume of VAT-able expenses
• Whether voluntary registration puts you in a refund or payment position

VAT returns are usually filed every two months via ROS.

Relevant Contracts Tax (RCT) – specific trades only

RCT applies to subcontractors working in:

• Construction
• Forestry
• Meat processing

If you're providing services as a subcontractor in these industries, you may need to register for RCT. Your principal contractor will then deduct tax at source and report the payment to Revenue.

PAYE (only if hiring employees)

If you plan to hire staff (even part-time or casual), you must register as an employer and operate the PAYE system, which involves:

• Calculating and withholding tax, PRSI, and USC from wages
• Submitting monthly payroll reports to Revenue
• Issuing payslips and annual statements (e.g. P60, now part of the Employment Detail Summary)

Note: You don’t need PAYE registration if you’re working alone or only hiring other self-employed contractors (check Revenue guidance to ensure they’re not deemed employees).

Common Mistakes to Avoid

Waiting too long to register

Some sole traders delay registration until they hit a certain income threshold — but Revenue requires you to register when you start trading, even if it’s a side hustle or part-time gig. Late registration can lead to missed deadlines and penalties.

Forgetting VAT registration

Many businesses don’t realise they’ve crossed the VAT threshold until it's too late. VAT is not optional once you exceed the limit — and Revenue can backdate liability to the point where registration should have happened, which means you may owe VAT on past sales.

Using the wrong business category

On the TR1 form, you’ll be asked to describe your trade. Some individuals choose "trader" when their work (e.g. accounting, graphic design, consultancy) is actually a “profession.” This can affect how Revenue treats your income and what reliefs or deductions apply.

Assuming you’ll be notified of obligations

Unlike PAYE workers, self-employed individuals are responsible for knowing and fulfilling their tax obligations. Revenue does not send reminders — missing filing or payment dates can result in surcharges and interest.

Final Thoughts

Registering as a sole trader is your first official step into self-employment. While the paperwork may seem straightforward, understanding what taxes apply and when to register can save you from costly mistakes down the line.

Taking the time to register correctly and early — especially for VAT or PAYE where applicable — sets a solid foundation for your business’s success.

Need Help Getting Started?

We help sole traders register correctly with Revenue, avoid costly errors, and make sure the right taxes are set up from day one. Whether you're unsure about VAT, worried about RCT, or just want help navigating the TR1 form — we're here to support you.

Contact us today for more information.