How to register as a sole trader in Ireland
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Posted: Fri 14th Feb 2025
With the rise of the gig economy and an increasing desire for flexibility, many aspiring business owners are considering registering as sole traders.
In Ireland, the process can seem overwhelming at first glance, filled with red tape and regulations that can put off even the most motivated of people.
But understanding exactly what's involved – and how to get there – can set you on the path to success.
Before you dive into the exciting aspects of running your own business, you first need to tackle the legal bit.
Whether you're setting up a freelance gig, offering consulting services or launching a small shop, knowing how to properly register as a sole trader in Ireland is crucial.
This short guide takes you through the necessary steps, so you can navigate the process smoothly.
What is a sole trader?
A sole trader is a self-employed person who runs their business as an individual rather than as a company.
If you set up this way, this means there's no legal distinction between you and your business. As a result, you're personally responsible for all the business debts and liabilities.
Benefits of being a sole trader
Easy to set up: Registering as a sole trader is simpler and quicker than forming a company.
Lower costs: There are fewer costs associated with setting up the business and all the admin that comes with it, compared to a limited company.
Full control: You make all business decisions without needing to consult shareholders or directors.
Flexible taxation: You pay personal income tax on your profits, rather than corporation tax.
Potential drawbacks of being a sole trader
Unlimited liability: If your business runs up debts, you're personally responsible for paying them.
Tax rates may be higher: Depending on the level of income you generate, your personal rate of income tax may be higher than the corporation tax you'd pay as a limited company.
Less business credibility: Some clients and investors may prefer to work with limited companies, as they see them as more credible and trustworthy.
Registering as a sole trader in Ireland: The steps involved
Step 1: Choose a business name
If you plan to trade under your own name (for example, John Murphy), you don't need to register a business name.
However, if you want to operate under a different name (like "Murphy Web Design", for instance), you must register your business name with the Companies Registration Office (CRO).
How to register a business name
Go to the CRO website. (Tip: Before registering, check the CRO database to make sure the business name you want is available.)
Complete the RBN1 form (or RBN1B if you're setting up a partnership).
Pay the registration fee (€20 online or €40 by paper application).
Wait for your business name certificate to arrive – usually within a few weeks.
Step 2: Register for tax with Revenue
As a sole trader, you must register with Revenue for tax purposes.
By doing this, you make sure you can file the necessary tax returns and meet all your financial obligations when it comes to paying your taxes.
How to register for tax
Visit the Revenue website.
Download and complete the TR1 form (tax registration form for sole traders).
Submit the completed form online through ROS (Revenue Online Service) or send a paper form by post.
Revenue will issue a tax reference number and confirm your registration.
Once your income tax registration has gone through, you'll be responsible for filing an annual self-assessment tax return (Form 11) and paying any taxes due.
Step 3: Register for VAT as a sole trader
Not all sole traders need to register for VAT. But if your revenue exceeds specific VAT thresholds (see below), it becomes mandatory.
Some businesses voluntarily register for VAT to reclaim VAT on expenses.
When do you need to register for VAT?
You must register for VAT if you:
sell services and your business's annual turnover exceeds €37,500
sell goods and your business's annual turnover exceeds €75,000
How to register for VAT
Download and complete the TR1 form (the same form as used for the tax registration process).
Indicate on the form that you need to register for VAT.
Submit the form via Revenue Online Service (ROS) or by post.
Revenue will assign a VAT number once it's approved your registration.
Step 4: Open a business bank account
While there's nothing in the law to say you must have a business bank account to operate as a sole trader, it's great for keeping your personal finances and business income separate.
How to open a business bank account
Choose a bank whose accounts come with business-friendly features (for example, AIB, Bank of Ireland, Revolut Business). Some banks offer special incentives for new sole traders, so shop around.
Prepare the documents the bank will ask you to provide as part of your application – such as proof of identity, proof of address and your tax reference number.
Before you settle on an account, compare the fees and any transaction limits, so you know what impact it might have on your finances and financial management.
Step 5: Understand your tax and accounting responsibilities
Income tax and the self-assessment system
As a self-employed sole trader, you're responsible for filing a self-assessment tax return (Form 11) every year.
The tax year runs from 1 January to 31 December, and the deadline for filing is usually 31 October of the following year.
PRSI and USC contributions
PRSI (Pay-Related Social Insurance): Class S contributions (4% of your business profits) provide access to state benefits like the contributory pension.
USC (Universal Social Charge): Applies to income over €13,000 per year, with rates ranging from 0.5% to 8%.
Keeping financial records
To help make the process of filing tax returns quick, easy and hassle-free, keep records of:
invoices and receipts
business expenses
bank statements
annual tax returns
You can either hire an accountant or use accounting software like Sage Accounting, QuickBooks or Xero.
Step 6: Know your other legal responsibilities
Business insurance
Consider getting the following types of insurance (if relevant).
Public liability insurance: Protects you if someone makes a claim because they've suffered an injury or damage to their property as a result of your business activities.
Professional indemnity insurance: Covers legal costs and compensation if a client claims your professional advice or services caused them to lose money.
Employer's liability insurance: Needed if you have employees. It covers you if a staff member makes a claim because they've suffered an injury or illness while working for you.
Complying with GDPR
If you handle customer data, you must make sure you're keeping to the General Data Protection Regulation (GDPR).
Under this data protection law, your business must:
get a customer's consent before collecting their data
store data securely
provide opt-out options for marketing communications
Licences and permits
Whether you need any licences or permits will depend on the type of business you run. For example:
food businesses need a licence from the Food Safety Authority of Ireland (FSAI)
taxi operators need a licence from the National Transport Authority (NTA)
childcare providers must register with Tusla, Ireland's Child and Family Agency
Visit your Local Enterprise Office (LEO) for guidance on the licensing specific to your industry. You can also use the Licences.ie portal for a full overview of permits you'll need.
Final thoughts
Registering as a sole trader in Ireland is straightforward, but it's really important that you understand your financial and legal obligations around tax, VAT and so on.
By following the steps in this blog, you can legally start your business and set yourself up for success.
If you're not sure about any part of the process, consider consulting a tax adviser or accountant to make sure everything is done correctly.