Startups Ireland

Employing staff for the first time, what are your tax obligations?


Employing staff for the first time, what are your tax obligations?

Here we take a look at what you need to know when employing staff for the first time, the common pitfalls, tax saving tips and Government schemes available.

When you set up a company and it is your intention to employ staff, you must first ensure that you are registered for Employers PRSI with the Revenue Commissioners. It is now quick and easy to register online via the Revenue Online Service (ROS).

When you take on that first employee it is important to get their P45 from their previous employer and then register them as your employee online. Once you have done this, Revenue will make available to you the employees tax credit, bands and USC rates through ROS.

All modern payroll systems will allow you to connect directly with ROS and import the employee’s relevant information. It’s important this is done correctly from the beginning to ensure both you are your staff are paying the correct tax.

You will be obliged to return to Revenue the payroll taxes deducted from each employee online via a P30 return. These returns are periodic in nature and are due for filing and payment by the 23rd of the following month (i.e. your January 2015 P30 will be due for filing and payment by 23 February 2015).

You will also be obliged to file a year end P35 return with Revenue. This form gives details of all tax deducted from your employees during the year. Specifically it details all Income Tax, Employers and Employees PRSI and the Universal Social Charge.

Late filing and payment of P30 and P35 returns may attract penalties and interest from Revenue, so it is crucial they are paid on time.


Tax Saving tips

If your employee travels to work by bike, you can purchase the bike on their behalf and deduct this from their payroll. The employee’s taxable salary is reduced by the cost of the bike and potentially saves them up to 51% (For an employee earning under €70,044). The amount of Employers PRSI paid by you will also be reduced.

Staff who commute to work can save up to 51% tax on the cost of their annual travel passes with CIE, Bus Eireann and Iarnrod Eireann. This is similar to the bike to work scheme in that the employer needs to purchase the ticket and deduct from the employees taxable pay. Employers PRSI is also reduced.


Government Schemes


  • Job Bridge Scheme –the National Internship scheme provides work experience opportunities for unemployed people. In order to avail of this you must first register with Job Bridge online, advertise the position you require to fill and the schemes will send you the relevant CV’s. Participants in the scheme will be offered an internship of 6 or 9 months with a host organisation. If they take up an internship they will keep their social welfare payment and will get an extra €50 per week.
  • Jobs Plus Scheme – This is an incentive from the Department of Social Protection to encourage and reward employers who offer employment opportunities to the long term unemployed. Grants of €7,500 and €10,000 are available.

This Blog was written by our Good Freinds at Tax Assist Accountants – To Book Your Free 1 hour consultation with a local Tax Assist Accountant Click Here



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